Commentary

How Deals For Kids' Online Content Are Telling Us The Future

There’s really nothing very surprising about content platforms that pay millions of dollars for kids programs. Walt Disney kind of proved providing kids programming can give you a very nice living, starting in 1928 when the first Mickey Mouse cartoon came out.

But there’s something cagier about deals by DreamWorks in May to acquire the YouTube franchise, Awesomeness, and to make a big deal a couple weeks ago to supply 300 hours of new programming to Netflix.  They’ve surely seen the stories about a current generation of cord-cutters and cord-nevers and have come to figure out that pretty soon, that group will start breeding. And their kids, unlike kids in the distant past, recent past or even two or three years ago, won’t even think about Nickelodeon or PBS.

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Because their parents never did.

When I see those content deals being made it’s clear to me that without really saying so, content creators and distributors are already making huge investments in a content future in which traditional media—that’s fancy for “television”—have a severely diminished role.

A year ago, Bernstein Research studied Netflix homes and found, not surprisingly, viewership of all kinds of kids’ linear channels got whacked. That research corresponded with Nickelodeon experiencing a sharp viewership decline, a slip that Nick in part attributed to its carriage problems with DirecTV.

But historically, content creators and distributors grew because inquiring, impatient little minds went looking to find them. When, in the '60s, dialing in a UHF channels like channels 25 or 64 on an old TV was as hard as it is to do as cracking a bank safe, kids had the curiosity to do it. Those youngsters discovered those little independent stations that were airing old episodes of “Zorro” and showing Little Rascals films and Bugs Bunny cartoons. Cool beans! Indies hung on to those young viewers and the ones that followed.

By the late '80s, when those kids were young adults, those stations were now Fox or WB or UPN affiliates, which in part is why Fox and the CW inherited a much younger audience, thank you very much.

I doubt DreamWorks CEO Jeffrey Katzenberg or Netflix’s Reed Hastings are studying that playbook, but clearly both are buying the present and planning the future. The market works in the same way. Young adults are discovering and creating the new media future; their kids are already watching or going to increasingly watch kids programs from new sources. Katzenberg told the media the Netflix deal will add $100 million in revenue the first year, and $200 million the year after. Obviously, Netflix must be projecting a tidy little windfall all its own. But the bonanza comes later, when Netflix cultivates what I would think is its first full generation of young viewers and makes them, more or less, subscribers for life.

Netflix also made a deal with Disney a month ago and Amazon took the Nickelodeon product Netflix gave up. Amazon, apparently less concerned than Netflix about having new product (kids don’t seem to care), is buying a library of shows from PBS. It probably won’t stop there, with other pay online services still angling their own kids’ plans, and everybody tacitly understanding their kids’ futures are on the Internet, in just about every way.

pj@mediapost.com

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