Disney+ started the week off with a social media bang! A massive Twitter scroll of every film coming to their platform organized chronologically. This became the topic of the week for the Screengrab crew and led exhaustive articles like Julia Alexander’s at The Verge. I’d been mulling doing an update on kids because the last few months have had a lof of news. This is an unscientific sampling of recent moves in the “streaming war for kids” (SWfK):
– Sesame Street is going to HBO Max. (Along with Studio Ghibli films.)
– Viacom bought the rights to Garfield.
– Apple has a deal with Sesame Workshop.
– Walmart is focusing on “family friendly” with its Vudu service.
– Netflix is going HUGE into kids movies.
And then the news story that did not get enough coverage at the time
– Amazon Prime/Video/Studios is pulling back from making original kids series.
Huh. At the same time that Netflix, Disney, Apple and HBOMax are about to go heavy into originals, Amazon is saying, “Naw, we’re good.” In a way, this difference in strategy is refreshing. When it comes to the streaming war for adults, well everyone has essentially the same strategy: make big expensive genre series (GoT prequel, LoTR prequel, Star Wars/Marvel series, See/Foundation), award bait (Succession, Marvelous Mrs. Maisel, Handmaid’s Tale, Dickinson/The Morning Show) and grab a movie catalogue (if you own one).
With kids, on the other hand, it seems like there is either a difference of opinion on how to compete for kid’s attention. Let’s bucket all this news as…
The Most Important Story of the Week – In the SWfK, Buy, Own or Rent?
The thing about the difference in opinion is that in a lot of cases, I could agree with both sides of the argument. What I’ll do is go by streaming service, highlighting along the way the two big issues I see. First, what to do about content: license (rent), library (own) or produce originals (buy). Second, is the UX good or bad?
Disney+: Mostly Library Content
When you think about it, kids have a very limited view of the world. My 4 year old, for example, watches what I turn on. And sometimes that is 80 year old films like The Wizard of Oz and sometimes it is band new movies like Frozen. While some new shows will definitely be a part of the Disney+ launch, overall this is a bet on library content. Especially the movies.
For Disney, this isn’t a terrible idea. If you had to have anyone’s library content, the list would look like this:
- Cartoon Network
Still, there are risks. Mainly, that old kids content looks old. If Disney Junior could have simply rerun old episodes of Jake and the Neverland Pirates, wouldn’t they have done that and never spent the money on Tots? It turns out you probably need some new kids content, even if it doesn’t give you the sizzle that it does for adults. The question is how much? Which brings us to…
Netflix: Mostly Original Content
Netflix is making original content because they don’t have Disney’s luxury of already owning a library. And when it comes to renting or buying, buying makes more sense for cost efficiency reasons. If Viacom went “content arms dealer” and offered them everything from Nickelodeon for the right price–meaning very low cost per episodes–Netflix would say yes—but Viacom wants more money than that.
Thus, Netflix wants to own the content so that they don’t have to keep paying the Viacom/Dreamworks etc deal tax in perpetuity. This should save them money. In the long run. But crucially it won’t save them as much money as Disney or Nickelodeon or even Cartoon Network who already have thousands of hours of kids content to give to themselves for free.
Worse, there is less upside in original kids content than original adult content. I mean, if you have a show win an Emmy, presumably a lot of adults hear about that. I doubt kids know that The Loud House won a Daytime Emmy. Meanwhile, it’s cheaper to own a library than build one because you already know how many hits you have. Indeed, like most things, we don’t know Netflix’s failure rate on kids content.
Still, if owning a library is the cheapest option, then building one is the next cheapest. The most expensive option is to keep licensing, which brings us to…
Amazon Studios: No library content or original content
Here’s a headline I missed at the time:
“Amazon Pulls Back from Original Kids Programming”
Amazon Studios doesn’t have a library like Disney meanwhile they aren’t making originals. Which means they are totally dependent on licensing for the near future.
Here’s the thing: I don’t hate this as much as I thought I would. To go even more negative on originals for kids, using my toddler again, if I put on Muppet Babies from the 1980s or Muppet Babies from 2010s (repeat with Duck Tales), if she’s never seen the newer version she doesn’t really care. Meanwhile, she’s not on Twitter so it’s not like she can tell me that “baby film Twitter”—if it existed, and now I want it to—is in love with the latest season of PJ Mask. So again, why make kids originals?
To immediately contradict myself, while I don’t hate this strategy as much as I thought I would, I will say it does seem to bring the whole “Amazon Prime brings people in to spend more on Amazon” theory into question, though, doesn’t it? Parents with kids DON’T spend enough on Amazon? Aren’t they the most valuable segment Amazon has?
Clearly, there is some limit to bringing people into the Amazon ecosystem. Because even cheaper than expensive licensing deals (like Netflix did with Dreamworks) are cheap licensing deals (just whatever is available and very old). Of which there is more out there than you would guess. The problem is this doesn’t really make you competitive with kids. Meaning even the “cheap licensing” plan could still lose money in the long run.
If I had to guess, the problem with Amazon Studios previous forays into kids content is two fold: first, it’s just a crowded field and hence even tougher to generate a return (even with parents buying diapers); second, the experience for kids (and especially parents) isn’t great. (Amazon still doesn’t offer a “kids only” app, which means kids can surf adult shows, which is “sup-optimal”.) Which brings us to…
Vudu (Walmart): Licensing content and some originals, but great UX
Vudu—from what I can tell—will have some of episodes of old TV that you can watch with ads. From Paw Patrol to Blues Clues. That’s the “cheap licensing” approach. Meanwhile, Mr. Mom is their first original, so they see value in original productions.
Unlike Amazon, Vudu/Walmart is leaning into parent/family friendly features. Presumably because if parents use Vudu, they will buy more on Walmart. In other words, the exact opposite logic of Amazon? Whereas Amazon doesn’t see the need for originals, Walmart does? See, the kids space is complicated.
The challenge for me with newer kids competitors is one of volume. Is two shows enough to hook a family? A dozen shows? More? It’s not clear Walmart has that volume. (Though again I need to surf more to find out how much is available ad-supported versus for purchase.) Which brings us to…
HBOMax – Sesame Street and…that’s it
It turns out there is a fourth expense option: license (rent) one TV series…and that’s it?
Seriously, the HBO family programming slate is fairly sparse, speaking from personal experience. And Sesame Street skews so young nowadays that even five year olds have aged out of it.
The question is how HBO Max will incorporate all the Cartoon Network and Warner Bros/Looney Tunes IP they own, or whether they eventually launch their own kids platform. (Since launching two kids platforms is the most confusing option for customers, bank on AT&T doing that.) It’s safest to say HBO right now is sparse; in the future, it will leverage library content. In other words, a little bit of everything because everyone has a different strategy in the SWfK.
Quick hits on the rest:
– Youtube: It has the library content because anyone can upload to it from anywhere in the world. Little kids aren’t that discerning. As certain shark videos prove. Essentially, though, Youtube has the opposite UX of Walmart. It has about the worst reputation possible, which will be the big challenge for the them.
– Nickelodeon (Viacom): We don’t know their plans yet. If they don’t become a content arms dealer, they may be too late to get a foothold in the kids universe. Meanwhile, they keep buying rights for IP, so are worth monitoring.
– PBS: Most likely it will become a staple on vMVPDs and FASTs, the question is how long does that take? Meanwhile, their app secretly does really well because of good UX and parent approval. They even beat Disney when it comes to discerning parents. Also, they have both library and originals.
– Universal Kids (Peacock?): Similar to HBO/Warners, Universal has a lot of kids movies and the question is “what do they do with them?” Universal Kids nee Sprout has been fifth in kids viewing for a long time and this space is crowded. If they asked me, I’d say they get out of the kids business, they’re too far behind.
Data of the Week
Meanwhile, this week was filled with lots of fresh data points. And I don’t just mean from Netflix, which I covered extensively yesterday.
First, I stumbled across this graph by IHS Markit on the potential device penetration by upcoming streamer. Disney+ is close behind market leader Netflix, whereas Apple TV faces the toughest go.
Second, here’s another look at views of content on Netflix and how library shows dominate. This is driven by the amount of hours available for the big series. And while that may be the case, it doesn’t explain why The Grand Tour beats Marvelous Mrs. Maisel on Amazon (and Game of Thrones beats both because it has hours and was the most popular series on TV). And yes, you can see the logarithmic returns.
Third, this article looks at sentiment of Netflix searches. What I found fascinating is the idea that Netflix has so much content there is a paralysis of choice, which leads to negative consumer sentiment. In other words a “more curated” experience may benefit customers. That would seem to be to Disney+ and HBO/HBO Max’s advantages.
Other Contenders for Most Important Story
We’re long so quick hits to finish.
– AMC (theaters) is getting into VOD. Specifically, not “subscription” streaming as some headlines suggested. I agree with the complaint that this is a few years late, but it feels disingenuous to complain AMC isn’t innovative enough, then when they try something new insult them for it.
– Netflix is cutting back on stand up specials. Hmm. Will have more to say on this, but it seems like the marginal benefits of certain content buckets have caught up to the marginal costs.
– Disney is airing High School Musical: The Musical: The Series’ first episode everywhere. Meaning ABC, Disney Channel and Freeform. Along with the live Little Mermaid, That’s the cross-promotional juggernaut we expected to see.
– Apple Launches In-House Production. My main take away from this last Friday news is that Apple realized much more quickly than Netflix that owning shows will make more sense than licensing or co-producing them.