GeoFreakZ characters
Charles Falzon's business was the type of operation that most entrepreneurs dream of building – a steady, predictable company that's been making money for nearly 30 years.
But five years ago, the co-chairman of CCI Entertainment Ltd., a Toronto-based TV production and distribution company, noticed his industry was changing. Competitors which, like CCI, used to only create and then sell TV programming to networks, began making products for digital mediums, like the web, mobile phones and video game consoles.
Mr. Falzon knew he had to adapt in order to keep his business alive.
So in 2006, Mr. Falzon opened a new digital division, which develops online interactive games for its products. As well, he turned the company's marketing and licensing operations – which develop toys, games and other products – into a brand-development division. This part of the company still merchandises its shows' characters on items like toys and clothing, but it's now also branding digital products, such as mobile apps.
Its latest venture – its new GeoFreakZ brand – brings together all of the component parts, tackling TV, online, live shows and merchandising simultaneously.
"The broadcast model is no longer the same as it was," says Mr. Falzon, who expects CCI's digital operations, which now account for 10 per cent of activity, to grow significantly over the next few years.
"We needed to look at different ways of commercializing various products right from the start."
CCI Entertainment is just one of many companies having to take its traditional business in whole new directions to keep up with technological change – and competitors.
David Wilton, director of small business banking at Bank of Nova Scotia, says he sees a growing trend in companies being forced to morph.
"Our bankers tell us that the business owners they deal with daily are increasingly asking for advice on how to change," he says. "They want to know how to adapt to new technology and keep their business going."
Making that change isn't easy. Mr. Falzon continues to be nervous about where his industry is headed and how his company can keep up.
His biggest challenge, he says, is balancing being too cautious with staying ahead of his competitors while not doing anything to harm his company.
"I fear being in denial," he says. "It's easy to say no or yes to things, but it's not always easy to think it through and do things fast and intelligently enough."
Adding new lines of business or entirely changing a company rarely goes totally smoothly, Mr. Wilton says. It takes carefully planning and prudent decision-making to make sure the new business doesn't destroy the old.
Mr. Wilton suggests putting "a big toe in the water" to start.
"Test an idea and learn more about it by trying it out," he suggests. That offers the advantage of gaining some experience in a new field without putting operations that have already been making money at risk.
It also helps get a better idea of what to include in a new business plan, something Shane Lawrence, assistant vice-president of business banking at TD Canada Trust, says companies should create.
"It all comes down to having a plan," he says. "Really understand what the margin of the new business is, and ask your self why you want to do this."
Figure out if you'll need to hire staff, if the demand for new services from your company is really there, what a new business will do to cash flow and how you can leverage your existing company, he says. "This forces you to answer the tough questions."
Mr. Falzon didn't develop a new business plan, but he did crunch numbers to make sure he could afford new hires. His initial investment was in two senior development people, who, he says, aren't doers but thinkers. "They're people pushing the envelope," he says.
They helped Mr. Falzon and Arnie Zipurski, the company's chief executive officer, determine where their industry was headed and how they should take advantage of new opportunities.
CCI makes most of its money from children's programming, though it creates adult shows, too. It's best known for producing and distributing Thomas & Friends – a famous program about a talking train – and also created Sharon Lois and Bram's popular program The Elephant Show.
The company's major focus now is on GeoFreakZ, a fantasy adventure show where characters called GeoFreakZ have to save the universe by looking for crystal stars around the world.
It cost the CCI "well into the seven figures" and took three years to create, says Mr. Falzon. The project, which will launch closer to the summer, is the first one that's brought together CCI's different divisions all at once.
In the past, a show would be produced and distributed, then merchandising and interactive online games would come later. This time the company is taking on TV, online, live shows and merchandising all at the same time.
There are three main components: a television show, an online game and live events. Mr. Falzon says people can participate in just one and still get a lot out of the programming, but each part is connected. Clues hidden in the television show and at live events will help further people in the game.
"In effect you're using different lenses too look at the same brand, which enhances it in different ways," he says.
It's bringing together digital, production, distribution and licensing at the same time where Mr. Falzon sees his company's future.
It's a big job to push out a show across various platforms, which is why CCI is getting help from other businesses, such as children's book publisher Scholastic Canada Ltd., television network Teletoon Canada Inc. and location-based technology company Groundspeak Inc., to develop the myriad products that come with a production these days.
"We're mitigating our risk and sharing the upside with our strategic partners," Mr. Falzon says. "Our role is it to be the lead promoter and brand developer."
For many businesses, the connection between an old business and a new one isn't as obvious. Scott Wilson started Burlington, Ont.-based eMotion Picture Studios, a TV production company, in 2001, but these days the majority of his revenues come from his other company, RankHigher.ca, a search engine optimization business.
Mr. Wilson fell into the SEO business almost by accident. He wanted to get his company's name higher on Google, so he paid a company to help him. The company couldn't produce the right results, so Mr. Wilson decided to research SEO strategies himself.
He managed to get eMotion's name on top of search results. Soon his clients began asking how he did it, then companies started to hire him to be their SEO guru. It wasn't long before he had two full-time businesses.
At first, they seemed pretty different, but Mr. Wilson found a way to sell both companies to his clients. He discovered that videos can boost search engine rankings. As well, the companies that come to him for SEO help – corporate clients like Home Depot and Gatorade – also want multimedia solutions.
"The video business became hugely more profitable because of it," he says. "A lot of companies benefit with internet marketing, so there's a lot of cross work."
While RankHigher accounts for 75 per cent of Mr. Wilson's revenues these days, it was eMotion's foundation that helped his new businesses get off the ground.
That's not unusual, Mr. Wilton says.
In many cases, the original business provides stability, and a predictable cash flow and customer base, even if profits may be in decline.
"When you're moving into a new area that doesn't have that predictability, it's often nice to maintain that element of stability in the previous business," he says.
Keeping employees in the loop is an integral part of a transition. Many might worry about losing their jobs if a business takes on a new focus but , in reality, people may have a lot more work to do, Mr. Lawrence says.
Mr. Falzon's made sure to keep an open dialogue with his staff. "We tell them that all we're trying to do is stay two or three steps ahead of the game," he says. "People have actually been inspired to participate, rather than fear change."
Like any good entrepreneur, Mr. Falzon thinks the new direction will work out for the better.
"I've got a lot more exciting opportunities these days, and of them could be a big mega-success."
Special to The Globe and Mail