Once the gatekeepers of the worldwide animation business, Canadian toon producers have, of late, been rather quiet on the international TV distribution scene. It's not that they are not producing, but rather that they are not distributing. "It's part of the Netflix factor," said Bill Brioux, VideoAge's Canadian contributor, when called upon to investigate.
Take DHX Media, for example. After losing money for two consecutive years, DHX, a Canadian animation powerhouse, changed its name to WildBrain last September, and sold a building it owned in Toronto for C$12 million.
Eric Ellenbogen, the former president of Marvel who now serves as WildBrain's CEO, said that it's not news that the company has faced "some considerable challenges" in recent years, and announced a reorganization of the business to have a more simplified structure as it works to grow its audience while also managing a large corporate debt.
"Netflix now employs more Canadian animators than any other media company in Canada. They will have released 37 new animated children's shows just in 2019," wrote Brioux. And "Nelvana doesn't appear to be in slowdown mode; it's at capacity according to company president Pam Westman, although probably not as profitable [as it used to be]."
Brioux quoted Westman as saying: "A few years ago we realized that producing and financing by ourselves and then going out into the marketplace and hoping to see and earn your money back was becoming increasingly difficult. We decided to partner with some of the blue-chip broadcasters." Those partnerships for Nelvana include Nickelodeon in the U.S. and Sumitomo in Japan.
One reason for that was a sharp shift in the market. While Nelvana is operating near capacity with between 600 and 700 animators, traditional broadcasters aren't buying like they used to.
"Every broadcaster is feeling the pinch of cord-cutters and TV ad revenues going down," said Westman. "Broadcasters have less money, but they still need to fill schedules." New generations of consumers are also finding ways to spend less. "People are consuming more content but they're not paying for it the way they used to."
Companies such as Nelvana have kept busy servicing OTT providers. As previously mentioned, Netflix is now the number one employer of Canadian animators--a fact confirmed by Netflix CCO Ted Sarandos. The Canadian animation houses have also shifted their focus to create more short-form fare.
"We are now embarking on a series of digital...