U.S. netcos look to broker content abroad

For the online entertainment community, it might just be a small world after all. Seeking new revenue streams, studios that develop Web animation are turning their attention overseas to find customers for their content.

Striking out at home due to a widespread sentiment that Web content is poisonous to investors and ignored by users, Netcos are trying to tap into fledgling broadband markets abroad that are actually desperate for product.

“I’ve seen a real openness to content that originally premiered on the Web,” says Rick Mischel, prexy of children’s site Rumpus.com, which plans to start selling its branded content at Mip and Mipcom.

“I would say a year ago there was a general confusion in the marketplace where you could would try to sell three-minute online shorts and you couldn’t find anybody who wanted to buy them because they were initially from online sites. I think that’s changed. This is just content, not Internet content, and it can be shown anywhere.”

There are several reasons that this move could result in some serious coin.

In some European countries, like those in Scandinavia, the percentage of homes with broadband access is much higher than in the U.S. With broadband access, consumers are more likely to spend more time on online entertainment, according to a report by the McKinsey Marketing Practice.

The study says that with narrowband access, a typical Internet user is likely to spend 14% of their time engaging in online entertainment. After broadband is installed, it jumps to 32%.

William Morris Agency-repped British Telecom has two licensing relationships for animation with Cartoon Network and AtomShockwave.

“We chose these companies in particular because of their broadband content development efforts,” says John Raczka, director of content programming for high-speed Internet service.

“In addition, both had well-respected and recognized brands, offline and online, respectively. We did consider additional animation-licensed relationships with the likes of Mondo Media, however we refrained since … we were not convinced we would receive a sufficient return on investment and … many of the other sites were focused on narrowband-delivered content which we felt were inferior consumer experiences.”

Mondo Media admits that it’s at the very forefront of looking abroad to syndicate content, but believes that it has taken a step in the right direction with its most recent investment round of $17 million, lead in part by consulting firm VenturePark.

“In our last round of financing, VenturePark invested in us with the notion of telling us what the European Market really looks like and how quickly we should be expanding there,” says Douglas Kaye, prexy of Mondo Media. “As best as we can tell, the interest is very high. Animation is much more easily translated to foreign markets than other content might be. There’s always been a strong market for it in Europe and South America.”

Then there’s the matter of cultural differences — it’s generally accepted that Americans are just more easily offended by outre material than the rest of the world, and most of the content on the Web pushes the envelope.

Take, for example, Romp.com’s pact with Britain’s Channel 4 Television. Two of its raunchy shows included in the pact are “Booty Call,” an interactive Webisode where the user tries to help a poor sap get some action, and “Those Fucking Animals,” which features, well, guess.

Channel 4’s Web site will feature eight episodes of each show over the course of the next year and feature a link to Romp in case Blighty Netizens can’t get enough of the blue humor.

On the flip side, American companies looking to license or syndicate overseas realize that some of the content just won’t make sense unless it’s tweaked.

“What you can do in terms of content ultimately depends on how it translates,” Kaye says. “How extensively do you have to change it? Looking at distributing ‘Thugs on Film’ (a humorous movie review show) in Europe to non-English speaking countries is one of the interesting aspects of it. You have to translate into a different language, and maybe even change the personalities to work in a different culture even though they would be reviewing the same movies that are released in the U.S.”

Countries in Asia are looking to incorporate entertainment into wireless devices and feel that Web content is a step closer to that technology than television or film.

“We just got a call from GaGa Communications in Japan interested in content for TV, homevideo and (wireless service) iMode,” says Simon Assad, co-CEO of Heavy.com. “Those are the kinds of deals that we think are efficient for us to do. It’s impossible to build a business based on one revenue stream, we want to extract value out of all of them. If you have a TV deal and a homevideo deal, it’s much easier to get a merchandising deal.”

The days of foreign deals based on advertising revenue are long over, Assad says. Just because an audience is global doesn’t mean that an advertising-based business model is more effective.

“We probably get a call every week from a foreign company offering to put our stuff on their site and then split the revenue that comes in on banner ads,” Assad says. “We just don’t do it. There’s no point. More important to us is to find partners that have extensive contacts and the ability to pay up-front. We know our product is worth something.”

Several Netcos already have been successful in taking content offline in a different country.

“Only a minority of our business is on the Web,” says Jeff Ulin, CEO of animation studio WildBrain. “We have relationships with most of the major networks around the world on the TV front. The same players in the TV space are looking to bolster what they have on the Net.”

WildBrain has such a deal with television network M6 in France, and is in negotiations with stations in Italy, Germany, Spain and Japan. After Mip, Ulin hopes to make a push into secondary markets, including South Africa, Israel, Turkey and South Korea.

“They know we’re good co-production partners on the Internet so they know we’ll be good production partners on TV,” he says. “I think people are looking for good content. We’re not trying to pitch it as just animation for the Web.”

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