As telecoms and cablers muddy the line between voice and data – as well as the PC and the TV set – content makers such as Nelvana are increasingly finding themselves in the pole position in the race for household digital integration.

Last month, the children’s entertainment producer inked a licensing deal with British Telecom to provide top-rated shows for video-on-demand, including The Fairly OddParents and Max & Ruby. The agreement follows Nelvana’s similar forays into the cable VOD arena with Rogers in Canada and Comcast (Vortex on Demand) in the U.S.

BT’s forward-thinking chairman Sir Christopher Bland had intimated several years ago that it would be worth the investment for telecoms to become broadcasters if broadband availability increased and made telecoms a triple threat for delivery of VOD, Internet and voice. Bland has earmarked BT’s VOD launch for next fall.

‘What’s encouraging is that, for content producers, there’s a real business out there selling our goods to nonlinear distribution partners,’ says Doug Murphy, Nelvana’s executive VP of business development. ‘The one that we’re looking at most aggressively is cable VOD, and then IPTV [Internet protocol TV – essentially TV through your phone line]. We have a whole list of other deals that are in the works to fill out the market across the world.’

Early predictions have analysts proclaiming 2006 the year that ‘digital entertainment servers’ move into the living room to manage all digital media from your TV, including music, movies, voice and Internet. The business model is a little murky – it’s unclear whether content will be available through a combination of satellite and broadband, and purchased as pay-per-view, rental, or straight digital sell-through – but the list of emerging Fortune 500 alliances, technological advances and rollouts grows daily. A partial who’s who includes Sony, Google, Yahoo, Microsoft and Apple – and, of course, the telecoms.

‘Telecom is realizing that they can end-run the networks,’ says Murphy. ‘For content producers such as ourselves, it’s a very dynamic time, because we now have an alternative. We don’t have to be beholden to just the broadcasters. They’re still the largest way to reach the biggest audience. I don’t expect they’ll ever go away, but I do think that, in five years, half of the media we consume will be on-demand, and the other half will be linear.’

In fact, the ink isn’t even dry on the BT deal and Nelvana has already lined up yet another partner – to be announced at MIPTV in April – that will likely launch a next-gen online ‘video store.’ Geared toward making content more portable, the advent of the online storefront could also allow a brand like Nelvana’s Berenstain Bears – which has sold 240 million books but can’t find shelf space in Wal-Mart – to better reach its audience.

‘Our approach, frankly, is to be everywhere,’ declares Murphy, adding that Nelvana’s content is especially well-suited to a family lifestyle, whether shows are viewed on handheld video devices, in-car on DVD players or in the home as on-demand 24/7 content.

‘By next Christmas, the digital download will become like the iPod was three years ago. But the uptake will be faster – if you can believe it.’

www.nelvana.com