Children’s programming might have just become the new front line in the subscription battle between Netflix, Amazon.com and other major streaming services to boost subscriber numbers.
The services have gotten the most publicity from critically acclaimed original content aimed at adults such as “Orange Is the New Black” and “Transparent.” Their strategy aimed at attracting younger viewers, though, is now getting more awareness.
The newfound attention is largely the result of HBO’s recent announcement that it has struck a deal to be the first-run home of “Sesame Street” on its streaming and cable services. The deal helped underscore the importance of cementing a grip in children’s programming in a universe being disrupted by changing viewing habits and cable TV cord-cutting.
It’s no wonder: U.S. digital video penetration among children ages 11 and under is expected to jump to 74 percent by 2019 from 68 percent in 2013, according to research firm EMarketer. At stake will be millions of dollars in subscription fees for streaming services that have the best offerings.
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“As a single person or a couple, you might be more willing to drop your streaming subscription for a while until you see more content you’re interested in,” said Piper Jaffray analyst Mike Olson. “But if you have kids who are watching a lot of content, there’s no way you’re going to drop it. And in effect, children’s content reduces churn, which ultimately positively impacts revenue.”
One reason why children are a target audience is because they are natural binge-watchers, prone to viewing the same episode over and over. Parents, who once sat their kids down in front of DVDs, are discovering that streaming services offer more varied programming.
About 20 percent of TV content on Netflix and Amazon is aimed at children, according to SNL Kagan data from October 2014. Hulu, which has only dipped a toe in creating originals for kids, has a smaller slice of the pie with just 5 percent of its library consisting of licensed children’s shows.
Netflix takes lead
Netflix jumped headfirst into children’s programming in 2011, and it has since proved to be a popular destination for kids – at least anecdotally. About half its U.S. audience, or about 20 million subscribers, is watching children’s TV shows and movies on a regular basis every week, said Erik Barmack, Netflix’s vice president of global independent content.
He said 30 shows out of its slate of kids’ programming were viewed by at least 5 million people in 2014, though Barmack wouldn’t name the specific shows. The service expanded its lineup of original children’s shows in June with the addition of four new animated series, including a co-production from Saban Brands and Cirque du Soleil Media about a character named Luna Petunia.
A portion of Netflix’s robust $3.2 billion programming budget for 2014 went to licensing movies and TV series from Walt Disney, Scholastic Media and other companies. Netflix also spent money on original content such as tween spy series “Project Mc2.”
Beginning next year, it will have rights to Disney’s live-action and animated movies after they leave the theaters, and in 2018, will launch the animated series based on Dr. Seuss’ “Green Eggs and Ham.” It also inked a deal with DreamWorks Animation for 300 hours of new shows based on past and recent franchises and characters.
Amazon ups ante
Amazon also is trying to lure young viewers. It struck a deal in 2014 with Viacom to license rights to Nickelodeon’s preschool shows. The deal, estimated to be worth several hundred million dollars, will make Amazon home to such shows as “Dora the Explorer” and “Go, Diego, Go!”
Amazon also utilizes the same pilot approach as it does with its original content aimed at adults – crowdsourcing pitches and using viewer input for what gets picked up to series. It entered the children’s programming sector last year with four series and last month released six pilots for new children’s show.
Amazon works with an educational consultant to embed curriculum into its shows that encourages right- and left-brain-thinking, said Tara Sorensen, who heads the kids’ content division at Amazon Studios.