How YouTube and Netflix are changing the business of kids’ shows

It’s 7 a.m. Do you know what your kids are streaming?

Although the splashiest shows of the direct-to-consumer video era tend to target grownups, children — indeed, very young children — are an important market for entertainment and media companies trying to build their online services.

The biggest player in that space, in terms of pure eyeballs, is YouTube. A U.S. survey of kids and parents earlier this year found that YouTube was the most popular platform for kids, with 83% of youngsters ages 2 to 12 having watched content there recently. Among subscription-based offerings, Netflix was No. 1, with 34%, followed by the more overtly youth-focused Disney+ at 31%, according to data from Precise TV.

Having a robust library for kids is a key tool to help streaming services retain subscribers and boost engagement. Young kids are more apt to watch the same shows and movies repeatedly, and they’re less likely to care about the latest flashy Emmy contender or worry about the newest episode of their favorite show.

At the same time, however, companies may underestimate how important kids can be when it comes to getting new subscribers, especially with special episodes and movies. Emily Horgan, a Dublin-based media consultant who specializes in children’s content, points to this year’s “The Sign,” a special long episode of the acclaimed Australian series “Bluey,” which streams on Disney+.

“Preventing churn is one of the things we know happens for kids’ content,” Horgan said. “But I do think it is under-considered how much kids’ opinions play into purchase decisions.”

Horgan has spent years studying how kids’ content performs online. In a recent report, she did a deep dive into children’s shows and movies on Netflix, drawing on the Los Gatos, Calif., giant’s six-month data drops. She spoke with The Wide Shot this week about her findings and insights.

YouTube’s preschool shows dominate on Netflix

Many of the kids’ series that generate huge viewership on Netflix didn’t start off on the leading subscription streaming service. Instead, they originated on YouTube. This is certainly true of material made for very young children. Preschool shows accounted for the top nine programs across Netflix’s kids catalog in the second half of 2023, according to Horgan’s analysis of company data. Of those nine, four came directly from YouTube.

The biggest example is “CoComelon,” the ubiquitous animated music-heavy program owned by Moonbug Entertainment (which was acquired in 2021 by ex-Disney executives Kevin Mayer and Thomas Staggs’ Candle Media).

As my colleague Samantha Masunaga recently wrote, “CoComelon” has become a children’s media fixture, spawning spin-offs, video games, toys, a live tour and a story-time podcast while also raising questions about screen time and what kind of content 2-year-olds should be watching, if any. For that reason, “CoComelon” and its ilk are considered contraband in some households with little kids. In general, though, parents tend to consider Netflix a safer digital space than YouTube, Horgan says.

“Preschool being at the top isn’t necessarily a surprise, but I will say, the amount of the top 10 that it takes is very significant,” Horgan said. “We also know that when preschool shows hit hard, it can just be so massive.”

It’s not just “CoComelon” and its Netflix original spinoff, “CoComelon Lane,” which amassed around 200 million combined views in the second half of last year. Other popular choices for the toddler set included the Brazilian series “Lottie Dottie Chicken” and the nursery rhyme show “Little Angel,” both of which have their roots in YouTube. But preschool content still isn’t immune to the recent struggles in the media business. Moonbug recently laid off about 5% of its staff.

Kids’ shows go global

Netflix has shown how adult-oriented productions from outside the U.S. can become huge hits here, even if they’re not in English. The same is true of kids programming that, especially for early ages, often features minimal or no speaking, which helps such shows travel abroad. These shows, which Horgan categorizes as “dialogue-free” or “low-dialogue” comedy, account for a significant portion of Netflix’s biggest kids series.

Purely physical comedy in children’s shows isn’t new. It’s a tradition going back to “Tom and Jerry” and beyond. But with streaming, these shows can become popular regardless of their country of origin. The “Larva” series, produced by Tuba Animation Studios in South Korea, generated 25 million views in the six-month period Horgan’s report analyzed. Fart jokes work in pretty much every country, it turns out.

Still, Horgan cautions that kids’ shows tend to build their audiences more slowly on streaming, compared to tent-poles targeted at adults, which benefit from big marketing and publicity campaigns. It can take months or years, instead of weeks, for newer kids’ franchises to become cultural phenomena.

“It can travel, but it’s not necessarily going to travel like ‘Squid Game’ did,” Horgan said. “It’s not going to pop worldwide in 28 days.”

Challenges and AI-threats ahead

One of the challenges in kids’ content is that it’s difficult to launch a new franchise on streaming without pre-sold intellectual property attached.

Programming that takes advantage of the familiar and nostalgic, including series based on “Sonic the Hedgehog,” “Jurassic World,” “Barbie” and “My Little Pony,” has done well, helped by kids co-viewing with their parents and siblings. In contrast, Horgan notes, the well-reviewed original sci-fi adventure cartoon “My Dad the Bounty Hunter” was canceled this summer after two seasons.

Looming changes in kids programming include the rise of artificial intelligence, which has the potential to displace and disrupt jobs throughout the animation industry. Studios are already developing ways to use AI as a tool to assist in the production of kids’ content.

Like many analysts, Horgan says AI is better thought of as a tool to enhance human creativity rather than supplant it. Neither ChatGPT nor the text-to-video model Sora is about to come up with the next “Bluey,” a show that achieved crossover status with adults because of its humanity, heart and emotional intelligence.

“There’s a definite opportunity of it being a tool to help balance the books in terms of revenue generation and to try stuff quicker,” Horgan said. “But yeah, we need to make sure that the kids content that’s coming out there is quality and that we maintain a great pipeline of high quality kids content.”

Stuff we wrote

TikTok lost a major legal bid to avoid getting banned. Now what? A federal appeals court ruled against TikTok’s request to strike down a law banning the app or forcing its divestiture. Legal experts expect TikTok to appeal to the Supreme Court.

OpenAI’s controversial Sora is finally launching today. Will it truly disrupt Hollywood? OpenAI on Monday said it would release its controversial text-to-video tool to the public with different subscription tiers.

‘I want you to be my agent.’ What to know about Trump’s ties with Ari Emanuel. While Hollywood attempts to navigate the new Trump administration, Emanuel appears to be well positioned to maneuver through the next four years.

‘Squid Game’ tracksuits, sneakers and whisky: Behind Netflix’s latest retail pitch. Netflix has been ramping up its efforts in retail, with plans to open two physical stores. It’s also partnering with many brands to sell merchandise based on its shows and movies.

ESPN on Disney+ launches as Disney looks to increase streaming subscribers. Like its integration of Hulu earlier this year, Disney has added an ESPN tile to its Disney+ homepage to encourage more bundle subscriptions and reduce churn.

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Finally ...

Call me a shameless homer, but I thoroughly enjoyed R.J. Cutler’s documentary “Martha,” about Martha Stewart, which prominently features voice-over commentary from my colleague Meg James.