Reduce the size of the content team and focus on cultivating quality IP.

Editor’s note: This article is from WeChat public account “Three Cultural Entertainment” (ID: hi3wyu) , By Dkphhh.

Note: WildBrain is a Canadian listed company, and its currency unit is Canadian dollar. According to the exchange rate on March 17, 2020, 1 Canadian dollar = 5 yuan.

Wildbrain, also called DHX Media, has not been doing well in the past two years.

Although there are two world-renowned children’s IPs in the hands of Snoopy and Teletubbies, they still cannot withstand successive losses. According to the company’s financial report, the company lost $ 6.75 million in fiscal 2018 and $ 78.2 million in fiscal 2019. Adding up to two years lost almost 425 million yuan.

DHX Media’s business model is very traditional. They started with children’s animation production, and then got involved in TV stations and content distribution. As the company gradually expanded, large companies such as Disney and DreamWorks also appeared among his partners.

While holding large IPs such as Snoopy and Teletubbies, they have been losing money for years, and WildBrain will be transformed

For details: Cooperated with Tencent Ali and acquired Snoopy IP for $ 345 million: Why is this children ’s content media with Teletubbies not favored? | Sanwen Entertainment

However, as the company grows bigger, the market is also changing quietly. Children ’s content consumption has gradually shifted from TV to streaming media, so the distribution and TV business of DHX Media has been hit by the shock and entered a downhill channel.

At the same time, the value of the two big IPs, Snoopy and TeleBob, have also been questioned by the market. These twoIP was acquired by DHX Media. The former was acquired in 2017 and the latter was acquired in 2013. But after the acquisition, DHX Media has not brought any new changes to IP itself, apart from selling content to more countries and selling IP to more commercial licenses.

While holding large IPs such as Snoopy and Teletubbies, they have been losing money for years, and WildBrain will be transformed

DHX Media’s response was a half-slow, and it wasn’t until 2018 that it realized its problems. But they turned the bow very quickly. From 2018 to the end of 2019, they moved frequently for more than a year. First sold 39% of Snoopy’s ownership for $ 185 million, and then sold its Halifax animation studio to raise enough funds for the transformation. At the same time, the company’s management is also undergoing a major adjustment, with former Marvel Entertainment CEO Eric Ellenbogen becoming the new CEO of DHX Media.

By 2020, the company’s name was officially changed from DHX Media to WildBrain. Company executive Josh Scherba, when explaining the name change, called “WildBrain” synonymous with creativity, imagination and innovation.

Wildbrain, who is lightly loaded, focuses on two places, one is digital media and the other is cultivating its high-quality IP. “Snoopy in Space”, which was launched on Apple TV + at the end of 2019, is the biggest result of their efforts in these two directions.

While holding large IPs such as Snoopy and Teletubbies, they have been losing money for years, and WildBrain will be transformed

Snoopy in Space

Another place they secretly worked for was their MCN organization, WildBrain Spark. Established in 2016, WildBrain Spark plays its children’s animations on YouTube, Amazon, ROKU and other video platforms. As the business transformed, this MCN became one of the company’s most important divisions. It is worth mentioning that this department is also the source of the new company name.

The initial results of the transformation areFrom the financial report of Q2 for fiscal year 2020 on December 31, 2019:

  1. Revenue for the quarter was CAD 122 million, an increase of 4% year-on-year, and net profit was CAD 5.82 million, compared with a loss of CAD 11.78 million for the same period last year. This is WildBrain’s first profit in 4 quarters.

  2. Content business revenue was CAD 106 million, a year-on-year increase of 6.8%, and operating profit was CAD 31.98 million, a year-on-year increase of 12%. Content services include all content-related services such as distribution, production, and IP licensing.

  3. Television business revenue was CAD 12.36 million, down 10% year-on-year, and operating profit was CAD 6.19 million, down 5% year-on-year. The TV business refers to the 4 TV stations currently operated by the company.

  4. CPLG’s revenue was CAD 4.16 million, down 5% year-on-year, and operating profit was CAD 730,000, down 18% year-on-year. CPLG is the company’s brand management business, mainly helping customers with brand management and authorization management.

    While holding large IPs such as Snoopy and Teletubbies, they have been losing money for years, and WildBrain is going to transform. Not only has the content business grown significantly, it also has extremely high profit margins. In comparison, the declining TV business and CPLG business are no longer important.

    Long and short videos go hand in hand, focusing on training high-quality IPs

    Turn to digital media and tap the value of core IP. This is the transformation strategy that WildBrain has set for himself. Specifically, the connotation is as follows:

    1. For short videos (animated short videos within 10 minutes), they will be delivered to platforms such as YouTube through WildBrain Spark and rely on advertising for profit.

    2. For long content with IP premium, WildBrain will be sold to streaming platforms and big TV stations.

      The first focus of the WildBrain layout is WildBrain Spark. After more than 3 years of growth, WildBrain Spark’s Q2 revenue in 2020 reached C $ 24.2 million, an increase of 21% year-on-year. WildBrain Spark now has more than 20 from 650 children’s brands10,000 videos, 145 million subscribers worldwide, and more than 3.5 billion views per month.

      While holding large IPs such as Snoopy and Teletubbies, they have been losing money for years, and WildBrain is going to transform WildBrain Spark is simply a children’s animation channel that users can watch on streaming media and various video platforms. There are IPs built by WildBrain itself, as well as works by other companies distributed by WildBrain. In addition to regular animations, WildBrain is also responding to the trend of children’s content, and has launched contents such as toy unboxing and children’s songs animation.

      However, WildBrain Spark’s reliance on the nature of advertising profits has recently encountered policy shocks in the United States, because the new child privacy protection law COPPA requires that video platforms cannot place accurate advertisements for children. The CEO of WildBrain stated that this change will affect short-term advertising revenue, but it will not cause much problems in the long run. They have now actively engaged with the brand to pull ads.

      See: Microsoft Google Netflix has added weight, children’s content usher in a new year New Year

      In addition to WildBrain Spark, WildBrain has a traditional content distribution business that helps small animation companies bring their work to the world. WildBrain’s distribution team also has branches in China.

      WildBrain, as an established animation production company, has very rich experience in content production. There are more than 40 animations produced by its WildBrain Studios. In addition to the Snoopy animations for Apple TV +, they also produced “New Car Steal” for Netflix.

      While holding large IPs such as Snoopy and Teletubbies, they have been losing money for years, and WildBrain is going to transform

      The New God Steal Carmen

      The content produced for various platforms also brings a certain amount of income to WildBrain, but this revenue is far less than the content distribution. According to the financial report, in Q2 of 2020, production revenue was only 7.23 million Canadian dollars, which also fell by about 10% year-on-year, while distribution revenue was 38.8 million Canadian dollars, an increase of 15% year-on-year.

      While holding large IPs such as Snoopy and Teletubbies, they have been losing money for years, and WildBrain will be transformed

      So WildBrain has been reducing the size of its content team in recent years, and they want to focus their production resources on a few high-quality IPs.

      While holding large IPs such as Snoopy and Teletubbies, they have been losing money for years, and WildBrain is about to transform

      The picture above is the animation and children’s program currently being produced by WildBrain. These shows are produced for some major customers, in addition to Netflix and Apple, as well as Nikkor Children’s Channel, BBC, Mattel and so on.

      Snoopy derivatives sell for $ 1.6 billion a year

      Like other big IP owners, WildBrain’s largest source of revenue is derived from licensed business.

      According to the financial report for fiscal year 2020 of Q2, the revenue from its derivative licensing business was C $ 47.3 million, a year-on-year increase of 9%.

      While holding large IPs such as Snoopy and Teletubbies, they have been losing money for years, and WildBrain has to transform.

      In addition to Snoopy and Teletubbies, WildBrain also has IPs for children, such as Strawberry Sweetheart, Caillou, and Detective Gajet. According to License Globa