Streaming is a tough business. Some services were off to a roaring start with the help of the COVID-19 pandemic, but things have cooled significantly recently. As the streaming business hit a plateau this year, many have mentioned sports as the next major battleground and opportunity to get ahead in the space. While the bull case surrounding sports remains intact, there’s another opportunity being underappreciated: kids content.
We’re not saying kids content is some secret no one knows about; ad-supported platforms from TikTok to YouTube know it all too well — moreso that kids content is a great asset where companies with SVOD products should put more focus.
Perhaps the biggest reason children’s content should be a critical part of streaming strategies is that kids are fiercely loyal; establishing brand affinity with them at an early age leads to long-term subscriber retention.
According to an exclusive survey provided to VIP+ by KidsKnowBest, over three in four parents say children influence their decision to retain a streaming service. The survey was conducted in August among 2,000 American parents with children 16 and under.
In an environment in which streaming subscriber growth is slowing, lowering churn and focusing on retention is key. It’s one thing to attract adults to a platform, but if you can lure in the kids, you’ve likely secured that household’s loyalty for the long run. Keeping adults engaged is far more difficult than children. While adults require a constant release cycle, children often stick to their favorite shows for longer periods.
According to United Talent Agency’s “The Kids’ Entertainment Evolution” report from August, recent data from Nielsen revealed that between 2019 and 2021, viewing hours for kids TV series surged 43% across Netflix, Hulu, Disney+ and Amazon Prime Video.
When Disney+ launched in November 2019, many said it wouldn’t catch up to Netflix quickly because it didn’t have a diverse enough library. Having too much kid-centric content was actually cited as a bear case for the streaming service.
But the opposite occurred. Disney released a lot more adult content on Disney+ to supplement its existing kids content, but its mostly family-friendly library catapulted it to over 152 million global paid subscribers as of the end of its fiscal Q3.
According to KidsKnowBest, Disney+ has the strongest viewership among children younger than 1 to 7. On the other hand, Netflix’s popularity grows with older children and is the most popular streaming service among 8 to 16-year-olds.
In addition to Disney, Paramount Global is another major media giant that understands the importance of kids content. CEO Bob Bakish previously said following Q3 2021 earnings that “Paw Patrol: The Movie” and other kids and family content was the biggest driver of both growth and engagement for Paramount+.
But it’s not only about creating popular kids content. It’s also about how you license out that content as well. Disney stopped licensing its content when it launched Disney+ to create exclusivity for its subscribers. At the time, it was a controversial move because Disney took about a $150 million hit when it took its content off Netflix. The strategic move caused short-term pain for long-term gain, and it’s a strategy others are following.
Paramount’s “Paw Patrol” is insanely popular among children and was often included on Netflix’s Top 10 list for kids in numerous regions, but both “SpongeBob SquarePants,” “Paw Patrol” — and its various spinoffs — officially left Netflix in the U.S. as of the end of September and will exclusively be available on Paramount+ going forward. It’s a strategy that will surely pay off for Paramount in the coming quarters.
The overall value of hot children’s content has been increasing rapidly in recent years. Back in November 2021, Moonbug sold kids sensation “Cocomelon” to Candle Media for a whopping $3 billion. In September 2021, Netflix acquired rights to Roald Dahl’s entire catalog. And “Alvin and the Chipmunks” parent Bagdasarian Productions is still reportedly up for sale for around $300 million.
Despite the recent surge in kids content consumption, not everyone is jumping at the opportunity to invest more. Following the completion of its merger earlier this year, Warner Bros. Discovery is going through a bit of an identity crisis, as CEO David Zaslav attempts to restructure and rebrand. Streamlining the business and cutting costs is Zaslav’s top priority, and he previously told Variety in July that he would be focusing more on quality as opposed to quantity.
As part of the plan, HBO Max slashed a slew of kids content, including the older episodes of the popular “Sesame Street” series in August. Zaslav’s message seems to be that Warner Bros. Discovery would focus on keeping its older audiences happy and leave the kids stuff to its rivals.
There is no one-size-fits-all streaming strategy, but capitalizing on kids content could be the key that unlocks additional success in the competitive space. Like we saw during the pandemic, supporting families with entertainment for every member of the household during good and bad times is a valuable service that streamers can provide.