Free for All

Mansha Daswani checks in with a range of distributors and platforms about the booming kids’ AVOD opportunity.

This summer, Sensical, a new AVOD streaming platform, launched in the U.S. with an array of licensed content from some of the biggest names in the business, including Mattel, WildBrain, ZDF Enterprises, Zodiak Kids, Cyber Group Studios and CAKE. It is the latest entrant in a market that was growing well before Covid-19 hit, but that kicked into high gear as distraught parents looked for new ways to entertain their kids amid an abundance of home time.

WildBrain Spark—which runs a network of more than 800 channels across YouTube and other major platforms—commissioned a study earlier this year on the “streaming generation” and found that AVOD is holding strong when it comes to viewing choices. YouTube and YouTube Kids ranked second among kids’ most-watched streaming services (66 percent), just behind Netflix at 69 percent. In addition, approximately one quarter of parents say it’s not very, or not at all likely, they’ll be watching linear TV services in the next 12 months, while around seven in ten parents are expecting time spent watching both SVOD and AVOD services in the next 12 months to remain the same or increase.

WildBrain Spark “is the most rapidly growing part of the company, frankly outpacing the amount of on-demand viewing across all of AVOD,” Eric Ellenbogen, CEO and vice chair of parent company WildBrain, told delegates at the TV Kids Festival.

Granted, the money that distributors can make from selling content to AVOD services is still a fraction of the fees they’d secure from their traditional broadcast platforms or the SVOD services, but it is emerging as a key revenue contributor.

Among the companies faring particularly well in the AVOD space is, whose Ryan’s World brand is huge on YouTube and a slew of other platforms. “We’re the leading company transforming kid YouTube stars into global franchises with premium original content, global distribution partnerships and massive consumer-products business, made possible through’s unique positioning in the industry,” says Chris M. Williams, founder and CEO. “Demand for kids’ and family content has accelerated over this past year, and we’ve met that demand in a big way, supplying our premium and long-tail content to more than 41 platforms in 80-plus territories to deliver Generation Alpha even more of what they love.”

“AVOD has become a significant revenue stream over the last ten years,” says Robin Gladman, senior distribution and acquisitions manager at Aardman. “There was a market-wide blip early last year with drops in ad rates across the kids’ content category, but we have recovered very well.”

“AVOD is starting to be a significant revenue source for us and is certainly an area we are focusing on and expect to grow exponentially,” adds Kate Sanagan, head of sales and distribution at Sinking Ship Entertainment.

It’s a similar situation for Jetpack Distribution, according to CEO Dominic Gardiner. “AVOD for us has been growing quite dramatically over the last two to three years. One might argue we’ve been a little slow to get into the game. We’re taking a much more proactive approach now. We plan on it being a much bigger piece. We’re getting much more involved in YouTube than we were previously. We foresee growth in the ad revenues, and more platforms will spring up. We’ll see growth in other languages [outside of English]. It’s not the central part of our business, because the premium TV networks, if you will, will still generate the most [revenues], but as shows get older and our library gets bigger, we can exploit the library better. Those revenues will be important, no doubt.”

The value of AVOD goes well beyond delivering incremental revenues for library titles—these free platforms are critical when building awareness for new and returning brands.

“It’s exciting to see our AVOD efforts become a promotional tool,” says Sanagan. “Our own Dino Kids YouTube channel, for example, has more than 750 million views and 667,000 subscribers. It has become a massive tool for us in our brand extensions of Dino Dana, and we have integrated it into our marketing, consumer-product and publishing strategies.”

“You cannot ignore the vast audiences using AVOD platforms,” agrees Aardman’s Gladman. “It’s a great opportunity for you to build awareness and drive deeper engagement around an IP.”

All of that means some ingenious windowing strategies and making well-thought-out decisions about where you want your brand to be featured—and how much money you’ll earn from that opportunity.

“Particularly with new platforms, you’re never quite sure what their performance is going to be,” Jetpack’s Gardiner explains. “As much promise and hope that any new platform has, what they’re actually going to deliver in terms of reach, you’re never guaranteed. And what they’re going to deliver in terms of revenue, you never know until the reports start coming in. We always like to say, let’s get on there first, let’s make sure we’re not committing forever, let’s make sure that if things don’t go the way we hope that we can get out of these deals as well. We spend quite a bit of time negotiating that just in case. Being able to be flexible is helpful for both parties. But, of course, there’s a minimum amount of time they need. This world has always been non-exclusive, so people are not asking for your best show; they’re not asking for your best show forever. But what you want from them is some commitment. How easy is it going to be for your content to be discovered? We look at how complicated it is to work with them if they are in multiple territories. And because we’re generally talking about deals that are low-ish in value, complication is the killer. If you have to spend a lot of time and effort once you’ve delivered [the content], you’ve got to make sure you’re still profitable. We take all of that into consideration.”

“We look at each series and try to figure out its unique path to viewers,” Sinking Ship’s Sanagan says. “Some series will sit almost exclusively on one platform, either on SVOD or AVOD, and other series will be seen on public and private linear channels, on SVOD and AVOD as well as TVOD. Odd Squad is a good example of this broader approach, with four or five platforms in some territories. We always consider how we can best get the most eyeballs on a series and have also lately put more marketing efforts behind TVOD to help promote shows.”

“There are new models as more AVOD players enter the market,” Aardman’s Gladman adds. “We work in a variety of ways with these new platforms, including requesting minimum guarantees when we feel that is appropriate.”

Sinking Ship, too, is looking at minimum guarantees from AVOD players, “and sometimes a hybrid of license fee and rev share,” Sanagan says.

“It is always nice to have cash upfront or an MG,” says Jetpack’s Gardiner. “It’s a preference, but we appreciate that a lot of these new platforms are taking a lot of risk in their investment in technology and they are often growing audiences from zero. It’s important for us as content providers to be good partners and be understanding that they don’t have budgets for license fees. We do see that users are growing, the views are growing and digital marketing is growing quite dramatically. As the ad dollars start going up and the users migrate to these platforms, I think we’ll see an increasing return on the revenue side.”

Ad dollars and usage are rising across the board in AVOD in multiple markets.

In the U.S., the Kids & Family destination on The Roku Channel reached more than 28 million people last year, according to Ashley Hovey, director of AVOD. “Content partners we work with are looking for broad scale,” Hovey says. “They are looking for reach that they can’t get just with their standalone apps or apps they have on all of these platforms. This is an incremental way to get more audience. They’re looking for not only how do you get that content in front of the audience but how do you monetize it in a way that is brand-safe for advertisers? And they can go back and invest in additional content opportunities, grow that audience and be a trusted source for content creation. That’s what we focus on: How do we continue to be even more effective in monetizing for these partners? And by driving scale for them, [they can] go back and do more. And we work across the board. Creators that are bringing things like Ryan’s World and CoComelon. We’re working with creators like the Mattels and the Hasbros that continue to evolve for today’s audiences. Post-Covid, there’s a lot of viewing in the house, a lot of co-viewing in the same room, a lot more family time. We’re seeing it on platforms like Roku. Being the number one TV streaming platform in the U.S., we’re seeing tons of that viewing coming in. We’re trying to keep that flywheel going for all of our content partners.”

Kidoodle.TV has carved out its own niche under the Safe Streaming banner. “The important work we have been doing here at Kidoodle.TV since 2012 has proven incredibly valuable and desired in the post-Covid-19 era we are all living in,” says Brenda Bisner, chief content officer. “With our growth last year, we have made [Kidoodle.TV] a household name and have become a trusted go-to destination for millions of kids who deserve a safe viewing experience—and for their parents who insist on having one. Our commitment to children and the work we are doing to take care of families is only getting bigger.”

The platform has amassed a slate of more than 30,000 episodes from a range of key partners. “We’re a safe alternative to anything else out there, and we are an additional revenue stream to any existing AVOD business you have,” Bisner says. “We’re looking at partners that have great content that people care about, that we care about, and that care about the important work we’re doing. It’s not just a one-way street for us. The homework around the work we do, how that partner can contribute and be part of this movement, is something we do look at. Knowing people are making money with our channel and lots of it, the strategy is around monitoring the needs of kids. The unicorns—the PAW Patrols, the Peppa Pigs—we’ll always have those brands, but we can also uncover those gems in the marketplace. Some of these content providers and brand owners are struggling to get traditional broadcast deals struck. We’re able to offer that and get them monetizing and great awareness in a meaningful place because families know they can trust us.”

Bisner adds, “When you’re making content for children, there’s a moral obligation to keep kids safe. Where we’re placing our content should be considered. We pay a competitive CPM, we’re non-exclusive, we’re a meaningful place to put content and have revenue come in and understand that it’s reaching a certain number of children every month.”

In Europe, Playground TV has positioned itself as a new home for kids’ fare from the less traditional markets. Launched as an AVOD platform, the service is also adding a subscription tier as it gears up for expansion.

“We believe the world is growing into a more and more diverse place,” says Daniel Nordberg, CEO and founder of the new service. “We want to mimic with our portfolio the diverse world we live in. We have cartoons animated in India, China, Iran and Brazil to complement those shows from the bigger studios in the States and Europe. We believe that many amazing productions across the world don’t get their fair amount of exposure on the bigger streaming platforms. As the world is getting more diverse, we want Playground to reflect that in the productions we serve.”

Sensical, too—which has the backing of Common Sense Media—has taken a highly curated approach to its selection. “A lot of the creators from whom we’ve licensed love the brand association because you have to be selected,” says Eric Berger, CEO of Common Sense Networks, Common Sense Media’s for-profit arm. “It’s not a normal licensing deal; it goes both ways. You may want to get in, but you might not pass our criteria. If you went through the whole ratings process—and we watched every frame of every video, through human review, we tag all of it and capture the metadata—it’s a little bit of a badge of honor. At the same time, it’s incremental revenue for them. We’re putting them out onto other platforms they may not be on already—the Rokus, the Amazon Fires, other devices—so it’s a win for everybody.”

Like almost all other kids’ AVOD services, Sensical’s deals are currently non-exclusive. That may change as the market evolves, Berger says.

“For us, the charm of Sensical is the curation. It would be very hard, if not impossible, for anyone else, and certainly a parent, to figure out the appropriate content by age across the breadth of what we’re licensing. That said, as we look at all the data that we’re getting and where people are aggregating, we’ll be able to make informed decisions about where we need exclusivities and original content and other initiatives down the line.”

At Playground, however, Nordberg is committed to the non-exclusive model. “We don’t believe in exclusivity at Playground,” he explains. “It slows down competition, and it’s not beneficial to the producers. Often exclusive deals give a short-term win for both parties, while the production gets lost in the long run. There is an initial boost, and then once that is capitalized on, the productions sometimes disappear within the service. I prefer a time to market or a windowing where within a given period, typically three months, both parties agree to do something and promote the title, and then after that, the parties are free to do whatever they want. I just don’t believe in two years of exclusivity. [Producers] feel it’s a good deal initially. Then one, one and a half years down the line, they want to sell the property, but it’s locked in and not being used. We also want to be the partner that our producers prefer to work with because we’re doing a great job, not because we’re locking them into a contract. We could look in the future at possibly doing windowing or time to market, but we’re not there yet. Currently, all our contracts are non-exclusive.”

On exclusivity in rights deals, Roku’s Hovey explains, “AVOD is special.” Unlike SVOD, where new and exclusive content is key to driving and maintaining subs, “in the ad-supported world, there’s much more of a need for comfort viewing and broad distribution, for kids especially. They want the characters they know and love to be where they are. And they want to be able to find them and immerse themselves in these experiences and this world. We focus much more on an ad-supported, economic-friendly type of model, rather than feeling like exclusive content is the only way.”

Outside of YouTube, AVOD services are not yet committing considerable sums to exclusivity and originals. But that could be on the horizon as the market matures. “They have the data, more than anyone, to know what works on their platform,” says Sinking Ship’s Sanagan.

WildBrain’s Ellenbogen echoed that view at the TV Kids Festival this year, noting, “One of the things that we love about working with some of these platforms like Samsung and Comcast Xfinity is the availability of data. We get numbers back. We know who’s watching our shows, and that informs our development process as well as our distribution strategy.”

“There’s not been the influx of AVOD commissions that some expected, but there is no shortage of AVOD content arriving on the big platforms,” adds Aardman’s Gladman. “That said, original content deals still do happen in the AVOD space. If the market competition rises, we will probably see more exclusive/original deals, as we have seen with SVOD over the years.”

“I think it’s an ambition,” says Jetpack’s Gardiner. “Many of these platforms are often app-delivered or IPTV-delivered. How do they distinguish themselves? If you’re not YouTube or Roku, how do you distinguish yourself if everyone is showing the same content? Long term, it’s a margin business. If they want to be successful, they’re going to have to have a point of difference. It takes a long time to mature a business to that size, to be able to invest in content.”

And while the landscape is already quite crowded, Playground’s Nordberg believes that for AVOD to become a serious revenue contributor for kids’ companies, the market needs to get even bigger. “Many of the producers we talk to, their AVOD revenues are coming from very few partners. With that in mind, it’s important to favor more players coming into the market.”