Kids and family programming deals are surging as streaming companies look to double down on content that serves a highly-engaged cohort of younger users.
Why it matters: Kids content used to be perceived as a tool to stop users from cancelling streaming accounts. Now it's a key driver for new user growth.
"I think the big thing they (streamers) have realized is that the value of kids and family content goes beyond retention," said Chris Williams, founder and CEO of Pocketwatch Inc., a kids content firm.
ViacomCBS CEO Bob Bakish told investors on an earnings call last week that kids and family content "was the top genre on Paramount+ for both acquisition and engagement in the quarter." Bakish cited titles like SpongeBob Squarepants and PAW Patrol as being "a key attraction to the service."
Driving the news: Pocketwatch has hired financial advisory firm Lazard as it explores potential new investments or a possible sale.
The firm, which has exclusive licensing and production deals with major kids YouTube franchises, has received inbound interest about a possible sale as well as new investment, according to two sources familiar with the company's business. The Wall Street Journal reported about the effort last week.
Recent activity in the space has prompted more investors to eye kids content companies, particularly ones focused on children's franchises on YouTube.
In September, Pocketwatch brought on Xavier Kochhar, a former strategy executive AT&T and HBO Max, to help it navigate next steps for growth.
The company, which launched only five years ago, has raised just $21 million to-date. It last raised $15 million in 2018, in a series B round led by Viacom.
Be smart: Pocketwatch's digital franchises are considered some of the most lucrative intellectual property for kids on the internet.
Merchandise from the Ryan's World franchise, formerly called Ryan's ToysReview, generated more than $250 million in sales in 2020. With 30.8 million subscribers, Ryan's World is one of the most popular kids YouTube Channels in the world.
Last year, Pocketwatch inked a deal with Diana, the seven-year-old Ukrainian YouTube sensation whose series, "Kids Diana Show," is one of the most subscribed-to YouTube channels in the world. With the deal, Pocketwatch launched a new series called "Love, Diana," and product slate.
The big picture: The streaming arms-race has put a premium on digital content studios, particularly those that cater to kids programming.
Moonbug Entertainment, the UK-based digital content company that's home to the YouTube streaming hit "Cocomelon," sold for roughly $3 billion last week to an unnamed media company backed by Blackstone and led by former Disney executives Tom Staggs and Kevin Mayer, Deadline reported on Monday.
Roald Dahl Story Company (RDSC), the UK-based firm that owns and manages the rights of the storied works from the late British author Roald Dahl, was acquired by Netflix in September.
Alvin and the Chipmunks owner Bagdasarian Productions has engaged in sale talks, per CNBC, including with big streamers like ViacomCBS.
What to watch: YouTube has proven a breeding ground for streamers looking to adopt franchises that can easily sell toys and other products.
Moonbug acquired kids YouTube sensations Cocomelon and Blippi in 2020 and raised $120 million to fuel more likeminded acquisitions.
Williams noted that the recent Moonbug sale "strikes to the thesis of a lot of parts of our enterprise as well."
By the numbers: In the last month, three of the top 15 shows across all streaming platforms have been children's series, according to Parrot Analytics, a company that measures demand for video content.
SOURCE : Axios
