Phil Davies' children said his company's new animated character, Peppa Pig, was "OK". Other children have been more enthusiastic the eponymous show is now aired in 180 countries.
Phil Davies met Neville Astley and Mark Baker while running Middlesex Polytechnic's animation department in the late 1980s. "It might sound odd, but the poly was a hotbed of animation talent." By the late 1990s the UK animation scene was changing. Channel 4, which in its earlier days had been a vital source of work for the fledgling industry, closed its animation department.
"It's ironic that the UK has managed to produce internationally renowned animators yet they are barely known in their own country." Davies, Astley and Baker, who had kept in touch since their Middlesex Poly days, were all "looking for the same thing". They wanted to make a children's show, "as that was the most obvious animation market in Britain".
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In late 2001 Astley and Baker showed Davies some sketches for Peppa Pig. Davies was convinced it would succeed. His next step was to seek funding, but the TV world was changing. "The old school idea was to sign a deal with a broadcaster and stick with them, but the success of Bob The Builder showed us that it was possible to make all sorts of deals."
The trio wanted to keep their creative freedom. "If you work exclusively with a broadcaster, you are stuck with them. Some programmes don't fit and never see the light of day." So Davies went on a roadshow with Peppa Pig.
He signed contracts with Channel 5, with children's satellite channel Nic Jr and a merchandise distribution company. But there was a problem. "Animation is incredibly expensive, and even a shoe-string budget costs around £5,000 per second of animation." The proposed 52-week series would cost £1.5m and, notwithstanding his various deals, they were still £375,000 shy of their target.
The team faced a difficult decision. Most animators cut costs by outsourcing work to Asia, but all three were convinced that they could make a better programme in London. "In the end we decided to take the plunge and fund the shortfall ourselves. A lot of animation is poor quality because production has been shipped off to other parts of the world." They relied on their own technical knowledge to keep costs down. "We know when we have to spend and when we don't." The programme took two "painstaking" years to make, finally airing on Channel 5 in late 2004.
The show was an instant success with critics and was nominated for a children's BAFTA in its first year. That year it also made £1m in merchandise sales. "As the show went from strength to strength we started to appreciate the benefits of not taking the 'easy' route of a more secure deal with a big broadcaster." Peppa Pig is now an international hit and took £100m of merchandise sales in 2009.
Davies says the studio has plans for more shows. But he has a warning for wannabe rivals. "People see headline figures like the £100m and think it's easy money they don't know about the eight difficult years leading up to this."
James graduated from Keele University with a BA (Hons) in English literature and history, and has a NCTJ certificate in journalism.
After working as a freelance journalist in various Latin American countries, and a spell at ITV, James wrote for Television Business International and covered the European equity markets for the Forbes.com London bureau.
James has travelled extensively in emerging markets, reporting for international energy magazines such as Oil and Gas Investor, and institutional publications such as the Commonwealth Business Environment Report.
He is currently the managing editor of LatAm INVESTOR, the UK's only Latin American finance magazine.
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