As streaming services chase profitability, kids’ content is king

In the conflict among streaming services to seizure and support subscribers, kids' shows similar "CoComelon" and "Bluey" are becoming almighty tools to assistance triumph the war.

Retaining customers has proven to beryllium 1 of the biggest hurdles successful the build-out of streaming. When Netflix reported subscriber losses successful 2022, it sent a ripple effect done the manufacture and media companies began leaning into advertizing and different concern models to absorption connected profitability.

Meanwhile, companies similar Warner Bros. Discovery and Disney person been vocal astir the request for prime contented to thrust subscriber growth. Children's programming offers a unsocial worth proposition for the streaming equation: it's little costly and has much longevity than different forms of content.

"Kids' contented drives a immense magnitude of engagement due to the fact that kids ticker it implicit and implicit and implicit and over. They ne'er tyre of it," said Kevin Mayer, co-CEO of Candle Media, which owns Moonbug, the distributor of deed kids' shows specified arsenic "CoComelon" and "Blippi."

Mayer said reducing churn — manufacture jargon for lawsuit losses — is the astir important origin successful improving streaming services' economics, adjacent much truthful than gaining caller subscribers oregon generating gross from those customers.

"If you churn, you suffer subscribers, your apical enactment diminishes. You person to walk selling dollars to replenish, either to re-market to mislaid subscribers oregon to find caller ones," said Mayer.

Kids thin to repetition watching shows and movies, and it shows successful the data. When determination was initially lone 1 play of "CoComelon" connected Netflix, kids watched the aforesaid episodes aggregate times, said Brian Fuhrer, elder vice president of merchandise strategy and thought enactment astatine Nielsen.

The 154 episodes of animated Australian deed bid "Bluey," which streams connected Disney+, had much than 25 cardinal minutes viewed successful the archetypal fractional of 2025, according to a Nielsen report released successful July.

Kids' films successful wide person been driving some the container bureau and person been galore of the apical streamed titles this year, according to Nielsen. Disney's "Moana" is the astir streamed movie successful past and the sequel, "Moana 2," had 7.2 cardinal viewing minutes since it was released connected Disney+ successful March, per Nielsen.

Live sports and deed TV bid are often credited with drafting the biggest audiences and driving short-term subscriber additions for streamers, but services that diagnostic beardown portfolios of children's contented connection parents a crushed to instrumentality with subscriptions longer term, manufacture analysts and experts told CNBC.

A fourth-quarter video trends study from TiVo recovered that of astir 4,500 survey respondents successful the U.S. and Canada, those with children usage 13.6 services compared with 8.2 for those without. Overall, the study from the 4th fourth of 2024 recovered that respondents had connected mean 9.9 services, down from 11.1 successful the anterior year. TiVo's study recovered that radical were dropping streaming apps owed to deficiency of usage alternatively than higher pricing.

Meanwhile, kids being location from schoolhouse during the summertime has helped to spike some streaming and TV usage successful June, according to a caller Nielsen report. Total TV usage among 6- to 17-year-olds was up 27% compared with the anterior month, and streaming accounted for 66% of their full clip spent with TV successful June.

The strategy for media companies varies erstwhile it comes to utilizing children's contented arsenic a retention tool. Disney, Paramount Global and Netflix are among the streaming services with heavy libraries of kids content. WBD, however, has stepped backmost from the genre, astir notably with its determination to relinquish the streaming rights to "Sesame Street."

The caller play of the iconic children's amusement volition beryllium released connected Netflix aboriginal this year, with 2 much seasons to follow. Meanwhile, caller "Sesame Street" episodes volition besides beryllium disposable connected PBS KIDS and its YouTube channel.

Netflix has reported kids' and household contented represents 15% of the company's full viewing.

Part of the broader media strategy has besides travel to mean joining forces with the accepted media industry's biggest rival — Alphabet's YouTube.

Even Netflix, the streaming juggernaut that upended the media industry, is faced with the world that societal media level YouTube is dominating streaming connected the TV screen.

YouTube consistently pulls the highest TV viewership among each streaming platforms, according to Nielsen. As of June, YouTube accounted for 12.8% of wide streaming connected the TV, surpassing Netflix and Disney+, Nielsen reported. In total, streaming viewership surpassed broadcast and cablegram TV.

"I would accidental YouTube is portion of everybody's media strategy," said Andy Heyward, a longtime media enforcement successful the kids' tv manufacture and CEO of Kartoon Studios. "More kids are consuming YouTube than thing else. But there's truthful overmuch worldly connected determination that you person beryllium very, precise unsocial to emergence above." 

YouTube strategy utilized to beryllium an afterthought for galore media companies, but that's since changed, according to Alexia Raven, who spearheaded generational probe arsenic a erstwhile enforcement astatine Warner Bros. Discovery and has since co-founded the probe and strategy steadfast Maverix Insights.

"If you're not connected YouTube, it's similar you don't beryllium for kids," Raven said. "That's wherever the eyeballs are."

In response, accepted media companies are progressively moving "as adjacent partners" with YouTube -- creating and curating YouTube channels with clips from circumstantial contented and TV networks, and adjacent creating shows conscionable for the platform, said Katie Kurtz, the planetary caput of younker and learning astatine YouTube.

"I deliberation we surely cognize that immoderate partners deliberation of YouTube arsenic the motor of discoverability. They privation to marque definite they're gathering users wherever they are, and truthful they are connected YouTube arsenic a mode of connecting with audiences," said Kurtz.

The contented Disney produces for YouTube serves to complement its long-form bid connected Disney+ and substance deeper engagement with its characters and stories, a Disney spokesperson told CNBC.

Paramount credits its room of kids programming arsenic helping to found Paramount+ arsenic 1 of the fastest-growing streaming services, according to a spokesperson — overmuch of which comes from cablegram TV web Nickelodeon. Franchises similar "Paw Patrol," "SpongeBob SquarePants" and "Dora the Explorer" person been peculiarly successful.

Still adjacent with that extent successful kids' programming, Paramount earlier this twelvemonth released the archetypal animated series, "Kid Cowboy," exclusively connected YouTube.

"We besides cognize that a batch of our partners are not truly conscionable gathering ample YouTube channels. They are besides reasoning astir gathering a truly large adjacent procreation of characters, and immoderate of that involves being YouTube first," said Kurtz, calling retired "Kid Cowboy" arsenic an example.

Meanwhile, accepted media companies are besides looking to YouTube for caller forms of contented to adhd to their platform. In caller years, contented makers who started retired connected YouTube person signed licensing deals with apical streaming services.

"We privation to beryllium successful concern with the champion creatives connected the planet, careless wherever they travel from," said Netflix co-CEO Ted Sarandos during Thursday's net telephone with investors.

"CoComelon" successful peculiar stands out.

The animated bid originated connected YouTube and inactive reaches overmuch of its viewers there, but erstwhile Netflix acquired a subset of its contented successful 2020, it was a boost for Netflix's viewership.

It has appeared successful Nielsen's apical 10 database of acquired titles a full of 179 times, with 155 consecutive appearances connected the rankings. However, it was past featured connected the database successful September 2024.

Despite its slowdown successful viewership, "CoComelon" managed to nab a caller subscription streaming location with Disney+ this year, according to radical acquainted with the substance who declined to talk publically connected the backstage negotiations. Disney outbid Netflix for the rights to the programme opening successful 2027 and Netflix refrained from submitting a higher bid, the radical said. Netflix declined to renew its "CoComelon" licence owed to a diminution successful viewership, 1 of the radical said.

Netflix saw the hours spent viewing "CoComelon" diminution astir 60% from aboriginal 2023 — erstwhile it started releasing engagement information — to precocious 2024.

A Disney spokesperson said that "CoComelon" continues to beryllium a apical destination for preschool-aged children, adding the amusement fits seamlessly into its preschool ecosystem and supports engagement and retention with its young audiences, which is simply a cardinal operator of level health.

Despite letting spell of "CoComelon," Netflix is inactive investing successful kids content. Earlier this year, Netflix added "Ms. Rachel" content, which is programming from a YouTube creator of toddler and preschooler contented of the aforesaid sanction whose transmission has astir 16 cardinal subscribers.

The bid has been successful Netflix's apical 10 astir watched "shows" globally for 17 weeks, according to the company.

"There are immoderate creators connected YouTube similar Ms. Rachel that are a large fit," Sarandos said connected Thursday's call. "If you conscionable saw connected the engagement report, she's had 53 cardinal views successful the archetypal fractional of 2025 connected Netflix. So she intelligibly works connected Netflix."