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Kabillion-dollar business.

Having their own broadband video-on-demand service is changing the way execs at LA's Mike Young Productions and Taffy Entertainment think. Ed Waller reports.

Bill Schultz is a changed man. The joint CEO of LA toon studio Mike Young Productions (MYP) and its distribution arm Taffy Entertainment, for years steeped in animation development and production, has transformed into a network executive, according to his long-standing business partner Mike Young (left).

"He's a poacher-turned-gamekeeper," says Young, the Welshman who created 1980s hit SuperTed, set up Siriol Animation, subsequently moved to LA to launch MYP in 1989 and is currently eyeing his business partner in mock suspicion.

Schultz acknowledges his new perspective and blames it on the fact he now runs Taffy's new kids VoD joint venture Kabillion. "I'm now more sympathetic to network execs and now understand all the times they said no to our projects. Producers think networks are just slots for good shows but schedulers actually want very specific things to put in those slots. Kabillion is helping us understand what networks need and making our development more focused."

In fact, he sees things like broadband bringing about a wider blurring of the traditional broadcaster/producer roles. "It used to be black hats and white hats but now we all wear grey. Networks increasingly wear producer hats to retain rights, and producers have to find opportunities for distribution that can't be supplied by the handful of networks out there."

Kabillion is certainly that. A joint venture between Taffy, its French parent Moonscoop, New York's Remix Entertainment and EM.Entertainment of Germany, the free-to-view VoD service launched on US cable giant Comcast in January and is also available via broadband. Since then it has launched a preschool service, Kabillion Jr, and rolled out on to other US digital cable platforms such as Bresnan Communications.

Schultz is unequivocal about the promise of VoD. "It's the most successful new distribution technology since the internet," he says. "In the US it had 1.6 billion views in 2005, 2.4 billion in 2006 and looks like having up to 3.5 billion in 2007. The acceptance of VoD as a new home entertainment platform is staggering."

Out of the 113 million TV homes in the US, cable reaches about 90 million (79%) and digital cable - where Kabillion and its rivals like Sprout play - reaches 32 million (28%). Of these, Kabillion, courtesy of Comcast, reaches around 14 million homes. "But by 2011 we're forecast to be in about 50 million," says Schultz. Even now Kabillion can boast a 32% growth in average weekly views from its launch in Q1 to Q3 of this year, driven largely by preschoolers and fans of Aussie toon I Got a Rocket.

For Schultz and Young, so long subject to the changing whims of networks, which will happily switch an MYP show for one of their own if it's delivering in its slot, Kabillion offers a more solid foundation to build their retail business upon. "We're so used to reaching consumers through other people's platforms, so to have a slice of that pie is exciting," says Schultz.

Having its own route to market is also allowing Taffy to do deals with its network clients that weren't possible before. "We can now cross-promote shows on linear TV," says Young. "We're currently running the first season of our series Code Lyoko (left) in exchange for telling viewers they can see the fourth season on Cartoon Network."

Despite Kabillion's growth story, nobody at Taffy believes that it will eclipse the major kidcaster channels. "It's a great real-world opportunity to expose our brands and nobody at a network can now say our show won't work as we've got feedback from 50,000 kids," says Young. "Kabillion is a hell of a big focus group!"

As for expanding Kabillion beyond digital cable, Schultz is cautious. "The whole Moonscoop group is trying to transform itself to step into all those new platforms," Schultz begins, pointing to European mobile moves by Taffy Kids and sister company Queen Bee's broadband and online gaming moves. The LA team is also creating role-playing games based on new Korean acquisition MixMaster, which it has sold to Nickelodeon.

But as for rolling Kabillion on to other platforms, he says: "EM.Entertainment is investigating opportunities in Germany but we recognise that the US is the biggest single market and we're square in the middle of it. We don't want to take our eyes of the digital cable ball for the sake of migrating Kabillion elsewhere."

But looking further ahead, he does see Kabillion evolving beyond VoD, perhaps as a linear service on French DTT. "We're talking to all the usual people. I read about (Sparrowhawk channel) KidsCo and it wouldn't shock me if we saw something like that for Kabillion in a year or two. Today it's broadband, tomorrow it'll be Vulcan mind transfer."