Television

Television, cable, satellite and home video sales of animated programs produced in the United States....

The majority of today's animation programming is directed toward children in the age brackets of two to five (pre-school) or six to ten years old (tweens). However, a third age bracket is evolving of sixteen years old and older. This third category views programs such as: "The Simpson's" and "King of the Hill," and “Family Guy” We have recognized the value of these viewers. This target group gains increased financial independence beginning at age 13, at which time they typically go unsupervised to the movies or malls, shop on their own, and make their own purchasing decisions. Young adults have an average of $500 per month in disposable income. They typically influence 20% of family spending which represents more than 20% of the total dollar amount spent on CD's, Electronics, and Video games. “Tylian Tales,” "The Martians,” and “ICU” were created and designed to attract the appetite of this market and stimulate purchases of ancillary products that include lines of merchandise that are designed for the young adult market. Examples of these products are clothing, accessories, compact discs, stationery items, fitness Items, cosmetics, jewelry, watches, cell-phones, home furnishing, bank accounts, limited access credit cards, video games, and computers.

 

Soft Spot Entertainment , LLC plans on utilizing the following media outlets for the exploitation of its products: The United States network television market is the most valuable market to producers of animated programming. In the past, networks have generally reached the largest audiences and paid the highest license fees, enabling a producer to finance a more significant portion of its production costs through network license fees than licensing the same program to cable networks or first-run syndicates. Weekend morning children's programming currently broadcasts on ABC, CBS, FOX, UPN and WB (the "Networks"). In addition, FOX and WB broadcast animated programming for young audiences during weekday mornings and afternoons. NBC has not broadcasted children's programming, including animation, since 1992.

 

Syndication provides an important first-run, as well as repeat broadcast market for animated programs. Traditionally, syndication has been populated by programs that support merchandise and whose characters are featured in toy lines, apparel and other consumer products.

 

Cable and Direct Broadcast Satellite ("DBS"). Cable and DBS are becoming more popular with children. The growth in the number of cable channels and the development of DBS provides additional outlets for animated programming. The cable channels which currently broadcast animated programs include Nickelodeon, USA Network, The Disney Channel, The Cartoon Network, The Comedy Channel, The Family Channel, HBO, Showtime and MTV. Recent increases in the penetration and viewership for Turner-Warner’s Cartoon Network may indicate that this avenue of distribution/exhibition will continue to grow as an important outlet for animated programming.

 

The growth in the number national television outlets has created additional demand for animated programming. The commercialization of the television industry has encouraged a ratings/revenue-oriented focus among broadcasters, thereby increasing the demand for higher quality television entertainment. Animated programs produced in the United States have enjoyed wide acceptance nationally. In addition, the national market has experienced an increase in the number of cable and satellite programming services. These added programming services have created an opportunity for distributors, including Soft Spot Entertainment, LLC to license simultaneously both traditional broadcast and satellite programming rights within the same territory. Television, cable, satellite and home video sales of animated programs produced in the United States can account for the majority of the revenue for a given program. Because the global demand has grown, it has created a need for and an opportunity to produce internationally created animated programs. U.S. producers work collaboratively with their international peers to develop and produce programs for initial releases simultaneously throughout the world.

The home video distribution business involves the promotion and sale of DVDs to local, regional and national video retailers (i.e. video specially stores, convenience stores, record stores and other outlets), which then rent or sell such DVDs to consumers primarily for private viewing. When DVDs are sold directly to the public they are priced significantly lower than the prices charged to wholesalers who will rent the video. This direct sale to consumers is commonly referred to as the "sell-through market.” DVD distribution would be based on a partnership with a distribution company and we would only be able to gain a percentage of 8% to 26% of sales after cost. Blockbuster Video will produce no less than 5 copies per store and can produce all or part of they’re 8,300 locations in 23 countries. The manufacture will receive an up front payment of $6.00 to $9.00 per unit. On the low side that would be $249,000.00 per project before any residuals from rentals.