It’s as hard to sell a one-off in the home video market as it is to sell one to broadcast. Unless you happen to have the rights to something like Titanic, most video vendors say volume is the key to successful sales.
IVN Entertainment is a company involved in many aspects of production, from stock footage to home video, with offices in California and London. Success, explains director of marketing, Jenny Manocchio, partially depends on the number of titles you have to offer. ‘You need to have a full library, because what [international partners will] normally do is take ten titles out of the roll-out, and then they’ll add another ten each quarter. People are looking for enough programs to ensure that, each quarter, they can have new titles, so they can continue to expand their market.’
Discovery’s experience has been similar. ‘They’re not looking for five or six titles,’ explains director of international business development, Laurie Windrow. ‘They’re looking for 20 or 30 in a series. Sometimes we have to find product that might not be part of the same series and [build one]. One-off products can sell very well, but it depends on the market.’
To get a series of substantial length, Discovery assembles productions from their 1500-hour library, along themes which traditionally sell well: natural history, weather, travel and science and technology. These areas are usually evergreen and tend to rely less on talking heads. They also cross borders well, and slip past censors without much consideration.
…AND HOW IT’S BEING SOLD
What to sell is less important than how to sell it. Many distributors are guilty of a shotgun approach to home video sales which invites failure. There is no single avenue that will get videos to consumers in every territory. Several options are available:
The thought of selling home video at newsstands is completely foreign to North Americans, but the market is huge in many parts of the world. In Latin America, Spain and Italy, kiosk sales are the backbone of home video.
Last year, Discovery attempted a kiosk release of their Wonders of Weather video series in France. Aided by some unforeseen marketing – there was a tornado just before the launch – the videos sold 500,000 units. Discovery is planning on one, possibly two, more kiosk launches. The first is scheduled for the fall, and the second may come next spring. In Latin America, Discovery sold three million units through kiosks last year.
Kiosks also offer a non-traditional opportunity for marketing and advertising. When Discovery launched their own kiosk in Brazil, they sent posters and banners to all the others in the region. Windrow happily observed that when she landed, Brazil was literally awash in Discovery paraphernalia.
Kiosks also provide an opportunity for home video premiums, a concept which makes little impact in most markets, but works well at newsstands. In Italy and Latin America, many magazines are polybagged with videos.
Observes Windrow: ‘The Discovery Channel purchaser and viewer are the same people. It just makes sense to be selling on the air.’
Direct marketing is a natural avenue for broadcasters. With air time at their disposal and a self-selecting audience, it’s the perfect marketing tool to reach the demographic purchasing the product. Discovery is making direct sales their priority, and they claim it doesn’t cut into retail sales. While North American viewers are familiar with the `If you’ve enjoyed the program you have just watched…’ line tagged on to the end of most of the cablecaster’s shows, most foreign viewers aren’t yet. Discovery hopes to change that.
According to most polled, the U.K. market is best approached via direct marketing. Whether on-air or in print, the U.K. responds best to the direct approach. Doug Jones, president of Los Angeles-based International Travel Films, claims he has had his biggest successes with direct marketing campaigns on the radio, of all things.
Germany is also becoming responsive to direct marketing campaigns. Discovery sold 100,000 units last year through their fledgling network, and are forecasting much greater sales once their branded block on ZDF begins this fall.
The Internet is becoming the marketing tool of choice for many distributors. While it may never replace international licensees completely, it does offer the opportunity to centralize your sales force and maintain complete control over production and distribution. Internet marketing is one of the few ways a video vendor can work successfully from their own offices.
Scott Hanock, international managing director of Sherman Oaks’ Unapix International, sees the Internet as a possible boon for home video. ‘I think what’s happening is that we’re finding [a market] outside our licensing business. We’re beginning to hold back what we’re calling internet-direct-to-the-consumer marketing rights.’ It’s a global market which can be accessed through any PC, and can be controlled from any point on Earth. Hanock says products he’s marketed on the internet enjoy a high response rate, and don’t appear to have affected the sales of his international licensing partners.
RETAIL AND EDUCATION
Retail has traditionally been the way most people approach video sales. Many Asian markets respond well to retail. Discovery, for example, has had good success in Taiwan. France is also a good market for retail. Germany remains a tough sell.
Education is often an over-looked market which has the possibility for high volume sales, albeit at low margins. As might be expected, science, technology and natural history are the big sellers in the educational arena.
When the rules change this much from region to region, making inroads into foreign video markets is difficult. From the largest producer to the smallest, the advice people give to those beginning the journey is to find a local partner you can trust.
Discovery (with domestic, non-direct sales handled through bmg), never goes into a territory without a partner. Now selling in 54 countries, DCI does a lot of homework to find the right partner. ‘We research,’ explains Windrow. ‘We go there. We talk to them. We look at their business. We look at who they represent. We look at the stores within the territory and see whose products are around. We see which companies are represented in which way, and decide how we want to be represented in that market.’
Once you’ve found a partner, there is still a decision to be made. What makes more sense in the territory: a licensing agreement or a straight buy-out?
Doug Jones explains that sometimes a buy-out is the best deal. For a medium-sized market like Korea, Jones expects to receive around US$3000 per title. While that might not sound like a lot, it adds up over several territories, and Jones estimates that 15 – 20% of his business is foreign video sales.
Buy-outs offer a chance at more restful sleep. The deals are cut and dried, and as long as the title has a reasonable chance of being contained in a territory without being secondarily sold to buyers, it’s a quick and easy approach. According to Jones, ‘The general theory is: there are certain places it is pointless to sell on a royalty basis. Sell it as a buy-out. Let them do what they’re going to do with it.
‘When you sell to the foreign markets you are relinquishing a certain level of control of your product. No matter how much you try to keep it clean and legal, once the master goes out of the country, it’s hard to follow up on it. Generally speaking, I take the money and I’m happy with it, and I hope they don’t make too many sub-masters and sell them to too many other places.’
Most video producers lean towards licensing agreements with international partners rather than buy-outs, in the hopes of making more money in the long run. The deals are usually similar to what ivn offers their partners: a licensing agreement for three to five years, with an advance paid by the partner against future sales, which is fully recoupable and can be cross-collateralized against all the titles in the deal. Once the advance is repaid, royalty payments are made quarterly.
The two parties have different responsibilities under a licensing deal. The supplier should provide (at the very least) scripts, and a master with separated audio tracks so the video can be easily reversioned. The international partner incurs the cost of dubbing, translation and packaging.
Two points of caution: Always get an advance. While your partners may be trustworthy, there is no guarantee the video will sell. The advance should cover the cost of the deal. Secondly, while many partners will request the right to edit the material, either for censorship or for time constraints, be wary of allowing the right to combine titles, as it can lead to convoluted royalty issues and lower margins.
MARKETING AND PACKAGING
‘The more you are able to assist [your partners] in marketing your programs,’ explains IVN’s Manocchio, ‘the better off you are.’ IVN tries to supply what they describe as `licensing templates’ to their partners. Along with the masters, they provide all the packaging on CD-ROM, so that only text translations have to be done. They also provide sell sheets, and all the marketing material pertaining to the title or series.
In most cases, the home video market in foreign territories is a low-percentage sale. International partners will want to spend as little money as possible to get the video to the customer. Providing the materials, Manocchio points out, also guarantees a standard look for a series internationally, and helps build a brand awareness.
Doug Jones cautions, however, that not all international partners will be happy with this arrangement. Flexibility in marketing is key. ‘Most places will want to handle the design, because home video is not like broadcast. In broadcast, quality sells the program. In home video, quality doesn’t have anything to do with it. This is a sad but honest fact. The thing that sells video is packaging and concept. So, packaging and concept become the lion’s share of the marketing tools for home video. Generally, whoever is doing the deal will want to have control over the packaging, and develop it for their own individual market so that it will sell.’
Trust is the most important factor. If you’ve invested the time researching your international partners, you should be able to allow them the latitude to either design their own packaging or use what you have provided. They should have the best grasp on what will work in their market.
IF YOU’VE ENJOYED THIS PROGRAM…
While many foresee the impending fall of home video due to the ravages of the digital age, the rules for video apply equally to DVD, or any other home entertainment property. It comes down to finding partners you can trust.
Doug Jones preaches the gospel of pragmatism. ‘When you’re Warner Bros., you can be arrogant. You can simply say: `This is the deal. Take it or leave it.’ When you’re a smaller producer, you can’t afford to be arrogant. You have to work with people, and you have to swallow your pride. You’ve got to be realistic about the price in the way that a Warner Bros. doesn’t have to be. The smaller producer can’t expect the buyer and the marketplace to treat them in the same way that they would Warner.
‘One of the biggest mistakes you can make, I think, is to protect yourself into poverty. You can be so careful about making sure you’re so protected on every level that you’ll never make a deal. If you want to make deals, you have to take risks. You’re never going to have total control. Take some risks and take the money – and yes, you’re going to get ripped off occasionally. Someone is going to do more with it than they were supposed to. It’s part of the territory.’
The East Coast Video Show (October 6 – 8 at the Atlantic City Convention Centre) offers attendees a chance to meet with almost 200 studio executives, suppliers and retailers. Besides product and retail conferences, the event also features chat rooms devoted to discussions on industry topics.
THINGS TO THINK ABOUT…
Pay particular attention to content when dealing with Muslim countries. There are a long list of dont’s: Don’t show women in shorts or bathing suits. Don’t show houses of worship. Do your homework or expect to have problems with the censors.
In other territories, censors may want to see a copy of the film before they allow the master to be imported. Generalizations don’t apply. Canadian censorship laws can be strict, for example, compared to those of the U.S. Even travel films may have to go through censors before they are shown.
Spanish Language Rights
The Spanish market is the second largest in the world after English. Pay close attention to the deals you make in Latin America. Once the dub is made, your video can be sold to many markets easily, and it’s difficult to trace if a buyer sells masters to other territories.
Why it’s good to have international partners: In the U.K. market, video in the traditional cardboard sleeves are reserved for discount bins. Don’t expect to have your product treated as high-end unless it’s in a plastic box.
Home taping is actually not considered a serious threat to the home video market. As IVN’s Jenny Manocchio explains, ‘Most people buy videos in the same way they buy books. They want it to look nice on their shelves.’ Most collectors will pay for the packaging. Discovery has even found that when they broadcast programming which they allow educators to record, many will still ask about purchasing the video.