Movies, Motors and Mermaids Make Waves in Netflix Kids
Kids Headlines: Netflix Q3 2024 Earnings
Happy MIPCOM kickoff! No rest for the wicked as Netflix earnings hit alongside a massive thunderstorm on the Croisette last night. Here are the key headlines that impact kids content as you go into the market.
But first some shameless plugging:
For those of you headed to Cannes, please start your MIPJUNIOR by coming to a panel I’m hosting titled The Next Frontier: Adapting to Digital Shifts in Kids' TV and Entertainment. We have:
· Marcus Holmström from The Gang who knows the art of building for Roblox and Fortnite.
· Gregory Dray from Animaj who acquires iconic IPs and reinvents the way they are produced, distributed and monetized.
· And my podcast co-host, Jo Redfern, a specialist in how young audiences consume media, who has a transmedia view across it all.
If you’re not Croisette bound there’s still a way to enjoy a snippet of the conversation. Myself, Jo and Andy spoke with Marcus, alongside Bill Kispert from Universal Pictures, about servicing evergreen DreamWorks franchises in Roblox on the latest episode of the Kids Media Club Podcast. The main topic of discussion was two recently launched Experiences supporting Shrek and Kung Fu Panda.
And now the key headlines from earnings:
All is coming up roses financially for Netflix. Per Lucas Shaw at Bloomberg the streamer:
“eclipsed Wall Street’s expectations on every major financial metric despite a new programming slate constrained by last year’s strikes in Hollywood.”
Also per Lucas, bringing the clinical context:
“The company has yet to see material financial returns from its investment in advertising or video games”
Netflix are excited about global titles and live programming. Growing advertising is a core focus, though all metrics disclosed on this front were as woolly as the Christmas jumper your nan is currently knitting you.
One notable development on the kids front that happened ahead of earnings is the launch of Netflix kids playlists. Covered in detail by Kasey Moore from What’s on Netflix, the new playlists target under sevens and are available to certain users across the US, France, Brazil and South Korea. From a subject matter point of view these look at routine moments like bedtime, learning through ABCs, math and STEM, and known favorite content themes such as vehicles, animals and Christmas.
The move reads as a further step in the direction of Netflix dabbling in linear feeds or FAST channels. This makes a lot of sense to me, particularly for kids, though Netflix are not leading the way by any stretch. Disney, BBC, Sky (h/t Julia Reip) were first, and Paramount+ has since followed.
This should help with one major issue in streaming that I like to bang on about: discovery. This remains really challenging when you’re not a major marquee show. IPs in certain genres, including preschool, need to build audiences from the ground up. We know that young viewers are neophobic; they usually need to sample something (a food, a TV show) many times before it becomes a favorite. This requirement fundamentally jars with the must-be-hot-within-28-days-of-launch benchmarks that are notorious at Netflix.
Providing opportunities that enable content sampling is tricky when you’re dealing with a flat-image homepage. It was much easier with the linear feeds of yesteryear where you could trial slot times and lead-ins quite easily; with a bit of luck the audience would flow where you sent it. This playlist activation somewhat delivers that ability to strategically push viewers into other shows. It will be interesting to see whether Netflix feel the benefit and opt to roll these out globally.
Movies
Paramount’s masochistic streaming strategy continues as Netflix took the latest SpongeBob SquarePants film globally. I remain a bit perturbed as to why Paramount would hoard older series for Paramount+, but give a new shiny movie based on valuable IP to a competitor. Saving Bikini Bottom: The Sandy Cheeks Movie wasn’t a major event on Netflix. It performed very much in line with other standard direct-to-streaming global animated movies.
If you’d asked me to place money beforehand, I would have said SpongeBob would hit over Woody Woodpecker, but here we are. Bikini Bottom saw the same middle of the road performance from a US perspective through Nielsen Streaming Content Ratings.
In addition to this we continue to see how much engagement is driven on Netflix for licensed theatrical films. I know, I say it every earnings but there always seems to be a new way of demonstrating the drum beat on this strategy. This time around it’s a new-from-the-cinema trio. Migration (launched in theaters October 2023 from Illumination), Trolls Band Together (launched in theaters November 2023 from DreamWorks), and The Garfield Movie (launched in theaters May 2024 from Sony) all landed on Netflix US, driving enough viewership to hit the Global Top 10s. I’ll do a follow-up post on these titles once I have more US-specific data in from Nielsen.
Series
In TV, Hot Wheels stayed pretty hot. This new show, based on the toy line from Mattel, launched in March. We can see from the H1 2024 six-month Netflix Engagement Report that it drove fairly hard on viewership from the get-go. Season 2 hit in September and would see it back in the Global Top 10 for a week.
Another one to watch is Mermaid Magic, from the creator of Winx Club, based out of Italy. It is a lavishly rainbowed, girltastic world where unicorns mermaids meet high school meet magical dark forces. That sentence might sound familiar. The show is guaranteed to pair perfectly with Unicorn Academy, which launched from Spin Master on Netflix last year.
Mermaid Magic did just over half the business on launch performance that Unicorn Academy did, but did it have half of the marketing budget? From what I can see there’s no notable Roblox activity pushing the show, and no major profile or full episodes on the Netflix After School YouTube. Unicorn Academy had the benefit of both of these.
On the other hand Mermaid Magic is harnessing some interesting currents on its own YouTube channel though, where it’s somehow sitting pretty at 1.7M subscribers. That’s eyebrow raising for an IP that launched six weeks ago. I’d hazard a guess that a previously established channel has been flipped to service the new IP, a canny tactic that worked out well for Gabby’s Dollhouse back in its early days.
Another place Mermaid Magic seems to be excelling is social. It’s on par with Unicorn Academy on TikTok and outstripping on Instagram. Again, that’s undeniably impressive for an audience that’s six weeks, rather than 10 months, in the making. We’ll need to track how it builds.
Moving Forward
As noted previously in this newsletter, one of the most notable things happening for Netflix in the next few months is the launch of Spellbound. Significant because this is the inaugural film from the output deal with Skydance Animation, under disgraced former Pixar exec John Lasseter. It was referenced multiple times in earnings by co-CEO Ted Sarandos. Spellbound is the first movie from Skydance that will fully have Lasseter’s stamp too. He’s brought in big industry muscle including Alan Menken for original songs.
Hanging over this output deal more broadly is the forging merger of Skydance and Paramount. Does it still make sense for the animation division to be feeding its best content to Netflix, a streaming competitor? There’s no doubt that Netflix offer a bigger audience than Paramount+, but are they inclined to roll out the same red carpet? Or will they view these 3rd party, direct-to-streaming movies as more disposable? See the SpongeBob example above.
The other question is whether there is better business to be had in cinemas when you suddenly have access to an experienced, in-built Paramount theatrical team. As mused by analyst Rich Greenfield, could Netflix take the free marketing of a theatrical release and settle for 30/45-day Pay 1 window? The data suggests that this could be the ultimate win-win.
Despite this, Netflix’s view on the “perennial question of theatrical” is that they remain a streaming-focused business. They reiterated this again (and noted that it was “again-again”) at earnings. But if they happenstanced into a theatrical situation with Skydance due to external forces, that wouldn’t be a capitulation to a cinema first approach. Right?