Saturday morning cartoons, streaming anytime: Why kids content is vital to subscriber growth

“Tinky Winky. Dipsy. Laa-Laa. Po!”

Those four names, the iconic sing-song intro to the “The Teletubbies,” have graced household TVs for nearly 30 years. While the library of episodes hasn’t changed in decades, their role in American media has taken on new meaning in the age of streaming.

“Back in the day TV was a little simpler,” said Dean Koocher a television expert, who spent years bringing international kids shows, including “Teletubbies” and “The Wiggles,” to the Americas.

“Back then there were less gatekeepers, you know, there was PBS, Disney and Nickelodeon was kind of an upstart coming up,” Koocher told CNBC. “The good thing was, if you ever could get their eyeballs, you had a much bigger piece of the market, because there weren’t that many choices for kids.”

Now, shows aren’t just on traditional TV and there are far more places for parents and kids to find content. From YouTube and TikTok to dozens of streaming options, audiences don’t need to wait to watch their favorite shows. Saturday morning cartoons are now everyday-anytime cartoons.

And that’s good for streamers, too, especially as Wall Street profitability pressures mount.

Kids represent a unique demographic for the entertainment industry. Age-specific advertising laws mean companies can’t market directly to them in many cases, but their viewing habits — often favoring repetition of content — makes them exceptionally loyal consumers.

At a time when streaming services are eager to lure in new subscribers and decrease churn, having a hub for family-friendly content is one way to ensure paying members (i.e. parents) stick around.

“Kids and family-friendly content is critically important to both streaming acquisition and retention,” said Peter Csathy, founder and chair of advisory firm Creative Media. “Franchise family-friendly brands are welcomed by exhausted parents looking for some down time as their kids get their screen time.

“Once those kids are hooked on a show, they never leave and will not let their parents even think of leaving,” he added.

That’s vitally important for streaming services, especially as consumers grow more cost-conscious and weigh which services to keep month after month and which services to ditch before the next billing cycle.

In recent years, legacy media companies — like Disney, Warner Bros. Discovery, Universal and Paramount — have scrambled to compete with Netflix in the streaming realm. For a while, Wall Street was satisfied with high subscriber growth and the promise of profitability in the future. However, as ad revenue from linear TV continued to decline significantly, investors quickly reversed course, demanding more immediate earnings growth.

The unique thing about kids content is that streamers don’t need a lot of it to keep kids occupied, said Koocher, who now runs Kidstream, a streaming service focused on providing kids aged 2 to 9 with appropriate, enriching content.

“Young kids don’t mind repetition,” he said, noting that while adults will watch a new season of a show and then largely move on to another, kids aren’t opposed to repeat viewings in a short span of time.

“Kids are notoriously obsessed with the franchise movies, shows and characters they love, and will watch them over and over and over again,” Csathy echoed.

This means streamers don’t need to license or create as much content to keep these viewers coming back each month.

Currently, adult-only original entertainment on streaming services outnumbers TV-G or TV-PG rated content by nearly 270%, according to a study from the Parents Television and Media Council published in October.

“Seeing that less than 15% of titles on the major streamers is reportedly family-friendly, seems to me that most major streamers don’t fully embrace this reality,” said Csathy. “Franchise content is something that would be smart to prioritize. Very smart.”

A number of major streaming services have kid-centric sections of their platforms for their proprietary kids TV productions, but many have also looked outside of Hollywood to license content from international production companies for U.S. audiences.

“A child in the U.K. or a child in France or a child in Australia or the U.S. have similar wants and needs at that young age,” said Koocher. It’s only as they mature that their taste in content begins to differ.

That’s why shows like “Bluey,” an Australian production, “Peppa Pig,” a British production, “Masha and the Bear,” a Russian production and “Miraculous: Tales of Lady Bug and Cat Noir,” a French production, have managed to perform well in their native countries as well as in America.

Meanwhile, Koocher has found that kids today are still interested in old classics like “Barney,” “Thomas the Tank Engine,” “Madeline” and “Wallace and Gromit,” all of which are available on Kidstream.

Koocher’s platform, which costs $4.99 a month, is also home to newer programming like “Dot” from Randi Zuckerberg, sister of Meta founder Mark Zuckerberg; the animated problem-solving duo of “Bitz & Bob;” and the live-action animal show “Gudrun: The Viking Princess.”

Amid a desire from parents for more content and educational options, there’s an opportunity for artificial intelligence to help speed up the animation process.

AI not only has the potential to hasten the animation process, but it also democratizes entry into the animation space.

“Generative AI will enable the streamers to generate new kid programming much faster and cheaper, which they absolutely will do,” Csathy said. “Originality and quality is sure to suffer, but the streamers will bank on the hope that kids won’t notice.”

For Kidstream, the focus remains on quality over quantity, Koocher said.

“We’re motivated by the parent or the caregiver, whoever’s buying the services, just to be happy,” he said.

The platform, which has been around since 2017, has more than 25,000 subscribers, a fraction of the major streaming platforms. But the company can get away with fewer viewers in part because it doesn’t need to spend exponentially on new content.

Koocher, who has three decades of experience in the kids TV space, has seen the transition away from linear programming and says that audiences don’t want to return to a time-based schedule in order to watch their favorite programs, with the exception of sports.

“I can see more niche channels developing where you can really super serve your customers, whether it’s, in our case, for parents of young children or for European crime dramas,” he said, alluding to established services like BritBox and horror streamer Shudder.

“On-demand streaming, I think, is definitely the way to go.”

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.