(Bloomberg) -- When producer Naia Cucukov was in the sixth grade, “The Baby-Sitters Club” book series about preteen girls and their adventures in entrepreneurship helped her survive an awkward stretch of adolescence. Now, decades later, Cucukov is helping “The Baby-Sitters Club” get through an uncomfortable time in the entertainment industry.
On Friday, a new TV series based on the original stories by Ann M. Martin arrives on Netflix. Cucukov hopes the adaptation will resonate with a new generation of youthful, streaming-minded consumers who are stuck at home at a time when the school year is over yet many summer activities have been disrupted by the coronavirus pandemic.
The series is being made by Walden Media, where Cucukov oversees development and production. Not long ago, the production house, which is owned by billionaire Philip Anschutz, was primarily known for turning popular children’s books like “The Chronicles of Narnia” and “Charlotte’s Web” into major theatrical releases for the big screen. In recent years, however, Walden has been remaking its business model to capitalize on the rise of Netflix Inc. and other streamers.
“For Netflix and especially for Ann M. Martin, the creator of the series, we really wanted to maintain the integrity of what was in the books,” Cucukov said in an interview. “The strong female friendships, the feeling of inclusion for everyone, the idea that being a boss and an entrepreneur is something that is worthy of doing — all of those things, combined with the fact that we wanted to modernize it, was something that Netflix really encouraged.”
In recent years, many of Hollywood’s production houses have been rethinking their die-hard devotion to the big screen, becoming increasingly attracted to the television sets and laptops that are the domain of streaming services. Now, with most cinemas across the U.S. dark, the trend is gaining momentum. “We’re in an environment now where the consumer is telling the major players, ‘This is how, where, and when I will consume your product,’” said Darrell D. Miller, founding chair of the entertainment and sports law department at Fox Rothschild LLP. “It’s forced major companies to reevaluate all their business practices as a whole.”
Walden is a case in point. For years, the company approached each of its projects the same way, maintaining a 50 percent ownership stake while teaming up with a major studio to split all the costs down the middle, including marketing. Each side would then receive half of the movie’s earnings.
The approach yielded mixed results. Walden’s initial film based on the C.S. Lewis fantasy novels, “The Chronicles of Narnia: The Lion, the Witch and the Wardrobe,” was a box-office smash, generating almost $750 million in global ticket sales. But other films with more modest budgets, such as “City of Ember” and “How to Eat Fried Worms,” failed to break even.
In the early 2010s, Walden’s then-chief operating officer Frank Smith, a veteran of New Line Cinema, began advocating for a shift in strategy. With the financial crisis squeezing the box office, studios were releasing fewer movies, resulting in less opportunity for Walden and everybody else.
By 2015, when Smith was elevated to chief executive officer, streaming video services were taking off. Young viewers and their parents, Walden’s core demographic, were connecting with a new wave of animated movies and TV series. Smith decided that in addition to live-action movies, Walden would expand into animation and begin to make TV series. In particular, he aspired to start working with Netflix.
At the time, Netflix didn’t have a department dedicated to family films and had only recently started pouring money into original series. “A lot of the time it was us talking to executives who were maybe making more adult content and trying to figure out how to wedge our way in there,” Cucukov said. “Luckily, at a certain point, people realized that this is a very viable way for kids and families to watch content.”
In addition to Netflix, Walden now has projects in development with Apple Inc, Amazon.com Inc. and Walt Disney Co.’s Hulu. Working with streaming companies has forced Walden executives to rethink the company’s way of doing business. Netflix favors upfront payments for content while minimizing the kind of ancillary financial rewards, such as licensing deals, that are the lifeblood of the traditional moviemaking business. These days, while Walden owns some of its projects, it has also begun working as a producer-for-hire on others.
“We’re much more nimble, and you have to be to stay competitive in this business,” Smith said. “Because if I insist only on some 50-50 ownership, or something, that model isn’t going to work for the streamers.”
The shift in strategy is paying off in unexpected ways. When the coronavirus took hold of the U.S. in March, Hollywood productions came to a halt. Theaters across the country closed. Walden was just finishing filming “The Baby-Sitters Club,” its first series for Netflix. The show suffered some delays in post production because of the virus but ultimately was able to move forward. It will debut at a time when many movies scheduled for theatrical release this summer are still in limbo.
Walden’s move into animation has been well-timed. The company is creating its second animated movie, “Rumble” with Paramount Pictures, due for release in 2021. “Rumble” and other animated projects have been able to carry on production because much of the work can be done remotely at a safe social distance.
As the coronavirus continues to shake up Hollywood, Smith sees Walden’s old model fading quickly in the rearview mirror. The production company doesn’t plan to abandon the big screen, but will probably never hold up big-budget, live-action theatrical releases as the gold standard again. “It was changing before,” said Smith. “Now post-Covid, we’re in a completely different landscape. What’s going to motivate people to go into the theater, and wear a mask and sit through a movie right now?”
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