How toys took over kids' TV

The Zingzillas ... Peppa Pig ... Ben & Holly ... did you really think they were just cuddly TV characters loved by your two-year-old? Gerard Gilbert investigates the ruthless – and fearsomely lucrative – world of brand licensing

As befits one of the most powerful men in British children's television, Richard Hollis is seated in a tent-like structure in the middle of the London Olympia Exhibition Centre – all diaphanous ribbon curtains and pristine white seating – so that visiting him is a bit like dropping in on Colonel Gaddafi in the desert, or the Sultan of Somewhere or Other. As Head of UK Licensing for BBC Worldwide, the profit-making arm of the public service broadcaster, Hollis is responsible for overseeing the torrent of products that will bear the imprimatur of BBC children's programmes – whether a Dr Who console game, Teletubbies Beanie Bags, a Dirtgirlworld t-shirt or Lunar Jim DVD. "It's a big part of the toy industry – something like a fifth of all toys sold are connected to a licensed character", he says.

The BBC Worldwide stand has a prime location in Olympia's Grand Hall, near the entrance and on the main drag – close, but not too close, to other major players in the children's market. These include Hit Entertainment (licenser for Thomas the Tank Engine, Bob the Builder and Fireman Sam), Entertainment One (Peppa Pig, Ben & Holly's Little Kingdom and the Twilight franchise) and Classic Media, owner of the Postman Pat brand. The name of this enormous three-day shindig is Brand Licensing Europe 2010, a trade fair bringing together the property owners of cherished kids' TV, film and comic-book characters and those hoping to use these properties to sell their wares.

I have a vested interest in all this, especially nearing Christmas. During her four-and-a-half years' existence, my daughter has amassed an inflatable Peppa Pig bed, a Peppa Pig plastic classroom set, a Charlie & Lola suitcase and pencil case, a Dora the Explorer rucksack and Miffy face flannel, not to mention countless branded books, DVDs and assorted knick-knacks – and believe you me, this is a modest trawl by the standards of most pre-schoolers. Boys are similarly fixated with Bob the Builder, Fireman Sam and Handy Manny – a bilingual Tex-Mex handyman with a box full of talking tools (available as a plastic toy, naturally).

"Star Wars in the Seventies was the real turning point," says Hollis. "The first time that a movie started to make more from the merchandising than the ticket sales, but the big turning point for us was Teletubbies in the late Nineties. That was the first time we'd had a TV brand where the licensing was truly global. It went to

about 120 different countries and we were setting up licensing and merchandising deals across the whole range of territories."

Ah, yes, Teletubbies – the one kids' show that even child-phobic adults know about. Tinky Winky, Dipsy, Laa-Laa and Po and their television tummies and gurgling baby language caused a moral panic in the late Nineties. Did they retard language skills? Did the purple, handbag-carrying Tinky Winky promote homosexuality? Pre-schoolers didn't give a hoot, they just connected with the show – and the merchandising flowed.

As it happens, the co-creator of Teletubbies, and the sole creator of the subsequent BBC hit, In the Night Garden (don't ask me to even start describing that), is also at Olympia this day. Andrew Davenport – the JK Rowling of the under-fives – is due to give the keynote speech. A packed room of jaded-looking delegates takes time out from deal-making to hear about Davenport's childhood in Kent, how a piece of music written in 1894, Faure's The Dolly Suite, and subsequently used on the BBC's Listen with Mother, had such a profound effect on him. Davenport's theme is the importance of connecting with the child, but what I want to know, when I catch up with him later, is how crucial he thinks the whole toy-and-spinoff business is to making children's television programmes in the first place.

"It's more and more important," he says. "Commissions are harder to come by – certainly the money is harder to come by. Particularly in the young children's market it's kind of become part of the whole thing. It would be hard to imagine a young children's show that didn't now have merchandising alongside it."

Indeed, the contemporary broadcasting landscape is unrecognisable from when a young Davenport tuned into Listen with Mother. Today there are 31 digital children's TV channels and the related merchandise is big business. However the regulator Ofcom's 2006 decision to ban junk food advertising around children's programmes marked the beginning of a squeeze in funding, a tightening that continued when ITV decided to banish such shows to its digital offshoot, CITV, and replace them with ad-friendly Midsomer Murders repeats.

"Increasingly, children's programmes are tougher to sell internationally", says Richard Hollis. "A lot of commercial broadcasters have lost their pre-school TV slots due to restrictions on advertising."

There is, in effect, a funding shortfall, and pre-selling the merchandising agreements is one obvious way to fill it. "We'll look at a show from the very beginning and evaluate the merchandising potential," says Hollis. "We ask how children are going to take this programme into their daily lives and play. So with Doctor Who it's about collectability... with the Teletubbies it's about nurture, it's about dolls, and having characters you can cuddle."

It's also going to be about dolls for Zingzillas – the BBC's new pre-school show about a bunch of musical primates. This is Zingzillas' first Christmas – and a range of talking dolls (£16.99 each) has become one of this year's must-haves for the under-fives, along with last year's chart-topper, Princess Peppa's Castle (£39.99), Ben & Holly's Magical Castle Playset (£29.99 ) and the Fireman Sam Deluxe Fire Station (£29.99).

"With Zingzillas, we invited a number of toy manufacturers to see the show as it was being filmed, to see the project at a very early stage", says Hollis, adding that there are certain criteria that manufacturers need to fulfil. "Child labour? We're very tough on that. There's a whole department working on factory audits – every one of our licensees has to have a very high standard. But the main objective of anybody in licensing is to avoid 'label-slapped' product, where it's simply a picture of the character stuck on an existing matchbox, or printed on a pair of pyjamas."

But license they must, and as Hollis admits, "It would be impossible to make shows like In the Night Garden and Zingzillas purely from the licence fee, and merchandising is an important part of the investment that goes into each programme budget."

One licensor who preferred to remain anonymous told me that some programme-makers were actually giving their shows away – a sort of loss-leader. "They're more interested by what they'll get from their licensing," she says. "It depends on the programme. If it's sold in 130 territories you can make your money back, but the real money comes from the licensing."

In the UK, the first stop for a programme-maker is almost inevitably the biggest broadcaster left in the game – the BBC. "Most programme producers see the BBC as their holy grail," says Richard Hollis. "So we tend to get the first programme ideas brought to us first." Most, but not all. The biggest success to elude the BBC – not so much the one that got away as the one that was deliberately withheld from them – is Peppa Pig, a porcine cash-cow.

Peppa, as the parent of any pre-schooler will tell you, lives with her mummy and daddy and brother George on top of a comically steep hill. It's deceptively simple 2-D stuff, belying the wealth of experience of its creators, the animation trio of Phil Davies, Neville Astley and Mark Baker. Having seen a former BBC commission, The Big Knights, so haphazardly scheduled that it never stood a chance, they vowed that they'd avoid Auntie this time round. It wasn't an easy route to take, as Phil Davies says: "You are not in the real world if you don't believe the BBC runs kids' TV in his country."

Having filled the funding shortfall in the £1.3m it cost to make the first 52-episode series from their own pockets and those of their friends and relatives, the trio now find themselves owning a property that has been sold to 180 countries, annually generates £150m (that's excluding the million DVDS that have been sold to date) in the UK alone, and is preparing to open its first funfair experience – Peppa Pig World at Poulton's Family Theme Park in the New Forest. Meanwhile, there are 84 individual Peppa Pig products listed on the Toys R Us website, and Davies is considering buying himself an aeroplane with the proceeds. "I will get an aeroplane one day, but not yet," he says, contradicting newspaper reports that he is already the proud owner of a Cirrus.

"We realised very early on when we set out to work outside the BBC that we'd have get involved with this, which is branding", he says, waving a hand around Olympia. "Without branding you're not going to make your show.

"Almost all of the licencees come fairly regularly to see us ... they sit around in a cinema and watch episodes of Peppa Pig. I always show them episodes of the series because, when we were pitching, it became quite apparent that a lot of the people who were selling licensed products had never seen an episode, or were not particularly interested in the stuff they were licensing, which is quite incredible.

"We have a full-time girl who looks at all the stuff that goes out. With Peppa where we would object is anything to do with any kind of play fighting – we go right away from that. It's for two- to four-year-olds and we like to think we concentrate on what we would leave a two-year-old alone with. It's quite an intuitive thing – we've all got kids and we don't employ a child psychologist or advisers ... a lot of companies do. There are companies who play their series to a bank of child psychologists. It's ridiculous. Our job is to entertain people."

So is the tail now wagging the dog? Is merchandising more important than content? Andrew Davenport certainly felt the influence of the marketeers when he was making Teletubbies and In the Night Garden. "We came under a lot of pressure.... 'Can't we have a fifth Teletubby? Can't we have something new?' New, new, new ... "

One novelty Davenport has embraced, however, is the stage show. Touring theatrical events featuring children's TV shows are the new big growth area, and In the Night Garden Live! completed a highly-regarded sell-out tour this summer, following on the heels of Peppa Pig and Charlie & Lola stage shows.

"I think it's fantastic. Live theatre is growing for little children," says industry veteran Anne Brogan of Kindle, makers of the Lenny Henry-Imelda Staunton voiced Big and Small. "Parents worry that they won't sit still without wriggling. In order to get people out of their house and into the theatre you have to have that recognition factor – they know they will enjoy a theatre show".

Those having to constantly surrender to pester power might think otherwise, as toys, clothes, theatre shows and endless other products become an increasing part of what was once an arguably innocuous way of keeping the children occupied – watching television. Although the figure for children's merchandising is not split out, the global TV brand licensing industry is now worth a staggering $191bn and growing.

"It would be unrealistic of me to say that you can just create and then think about licensing afterwards," says Brogan, "but the most important thing is that you create characters and story that are rich and complex." In other words, if your creativity can't engage the kids in the first place, they're not going to buy the rucksack or the DVD. And perhaps it's no coincidence that kids' TV is a lot more imaginative and with far higher production standards than in, say, the 1980s. Think of that next time a hot little hand is leading you round Mothercare or Hamleys.

Blockbusters in toyland

By Holly Williams

1978 Star Wars action figures

British company Palitoy began producing the tie-in figures in January 1978, shortly after the release of the first Star Wars film. By November, Palitoy's sales had topped £20 million. Today, rare figurines can fetch thousands.

1990 Teenage Mutant Ninja Turtles action figures

The pizza-loving, crime-fighting reptiles proved a huge hit in figurine form. By 1990, the plastic turtle toys accounted for more than 60 per cent of action figure sales, and it was estimated that 90 per cent of American boys under ten owned at least one. The makers, Playmates, made more than $100m.

1992 Tracy Island, as seen on Thunderbirds

A hugely popular – and unexpected – Christmas toy hit, the Tracy Island was so difficult to come by in Christmas 1992 that Anthea Turner showed viewers how to make their own on Blue Peter.

1996 Buzz Lightyear

The massive success of the first Toy Story film sent sales of Buzz Lightyear toys to infinity and beyond. The toy made £9m in the UK, and £100m worldwide. However, the manufacturers Thinkway struggled to meet demand, meaning an estimated £300m was lost in potential sales – and a lot of children were left without their Buzz come Christmas morning.

1997 Teletubbies

Parents lined up outside toyshops to get their hands on the colourful dolls from the pre-schoolers TV series – one unlucky shopper in Dundee even had to be admitted to hospital with pneumonia after a dedicated wait in the cold. A million Teletubbies were sold in the run up to Christmas; maker Golden Bear reckoned it could have shifted three times that if supplies had been available.

2007 In The Night Garden

Merchandise from the supremely surreal show made almost £18m in total toy sales. Particularly popular was the blue Iggle Piggle doll (£34.99).

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