Beat the big boys abroad

Written by Susanne Baillie

Most normal kids don’t care about overseas branch offices, market fragmentation or Web-content licensing. But they might change their minds after learning how those ingredients help DECODE Entertainment Inc. deliver way-cool cartoons such as “Olliver’s Adventures”, “The Zack Files” and “Angela Anaconda”.

Founded in 1997, Toronto-based DECODE creates and distributes live-action and animated programming for the family and children’s markets around the world. Today, kids in 33 countries can tune in to DECODE programming. Last year the firm notched sales of $36 million — two-thirds of which came from outside Canada — in an arena dominated by a handful of giant competitors.

How? As partner Neil Court explains, DECODE’s large publicly traded rivals, such as Nelvana Ltd. in Canada and Germany’s TV-Loonland, churn out more programming than DECODE could ever afford to produce. So DECODE has worked its small size to great advantage by concentrating its efforts on a small stable of extremely high-quality programs.

“We knew we had a sustainable competitive advantage by being private and focusing on producing a half-dozen-odd shows at a time,” says Court. “The publicly traded companies would never be able to compete with us creatively because the needs of the stock market meant that they would not be able to shrink their volume so they could compete on a creative level.” When DECODE does need to upsize, it forms strategic partnerships with other animators.

In the 500-channel universe, quality counts. “To compete in these increasingly fragmented markets, broadcasters need standout programs that are distinctive and different, and therefore highly promotable,” says Court. “If you try to produce large volumes, you end up with generic programming that starts to look the same and lacks a special ‘zing’ that makes a show stand out.”

The firm has complemented sales by helping broadcasters promote their DECODE properties — and charging them for it. DECODE then licenses interactive online material relating to its shows to broadcasters, who use it on their own websites. “We saw that broadcasters focused on using their Web sites as promotional vehicles to retain audience rather than as a place to generate extra revenues,” says Court. “Kids’ broadcasters are especially willing to pay for the websites because it helps them to keep their audience. Kids spend a lot of time online, so kids’ broadcasters need to have an online destination.”

Court encourages Canadian businesses to consider exporting, but offers these words of warning: “Don’t treat exporting as a sideline or as a fun trip to go see Europe or the States — it is something you need to devote serious time and effort to.” Court would know: he operates full-time from DECODE’s branch office in London, England.

© 2003 Susanne Baillie

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