What’s Next?

Amid drastic changes in the kids’ media landscape, several leading IP owners offer insights on navigating the year ahead.

It can’t be ignored: children’s programming executives are starting this year with a heightened sense of anxiety, not unlike how they began 2023. Indeed, the warning signs for the sector emerged in 2022, but it was last year that almost everyone in the ecosystem started to feel the pinch. You can blame YouTube or gaming, the ad crunch, the cost-of-living crisis or the streamers shifting their priorities. Or perhaps the post-Covid bubble just had to burst eventually. And it did. In October, Ampere Analysis released some sobering data about the kids’ sector: global commissions of kids’ shows were down 48 percent since February 2022.

“Last year was certainly challenging for the industry, with margins being squeezed across the board,” says Delphine Dumont, chief commercial officer at Banijay Kids & Family. “It’s a tough economic climate, but content demand is still high, and I believe our creativity and talent will prevail. As budgets tighten, broadcasters and streamers can become more risk-averse, which often leads to a slowdown in commissioning, particularly of original kids’ IP, as brands with established audiences can be seen as a safer investment. And fragmenting audiences makes reaching target viewers more challenging.”

Oliver Grundel, Director Junior at ZDF Studios, also highlights the slowdown in content expenditures as a challenge the sector is working hard to overcome. “Falling advertising and subscription revenues for private broadcasters and streamers, as well as acceptance and funding problems for public broadcasters in Europe, led some of our customers to freeze their budgets or to invest very cautiously.”

There are other factors at play, Grundel notes. “The distribution market went through a period of upheaval and consolidation, characterized by streaming providers reducing their investment in content, layoffs and restructuring among business partners. As a result, we had to review the financing of certain programs due to the withdrawal of partners. We have also seen a noticeable decline in sales of our programs to streamers.”

Katharina Pietzsch, VP of content sales at BBC Studios Kids & Family, adds: “Rising costs and shrinking budgets continued to have a major impact on the business last year. There was less willingness to be adventurous or take risks, so we saw buyers and commissioners leaning toward well-established IP and big brands. The impact of the writers’ strike was also felt with a slowdown in new content, and there was a stop to, or at least caution around, big spending commitments. We saw fewer full commissions and a rise in co-productions.”

Funding models are evolving, notes Sophie “Kido” Prigent, head of distribution at HARI. “In some ways, it’s a choice; in other ways, it’s inevitable because of market disruption. We invest more and use our own capital because pre-financing investments account for less than they used to. Some solutions are easily identifiable, such as the reduction of costs. However, because we produce premium content, we must invest to retain high quality and generate other revenue streams to compensate and mitigate business risk.”

Given the market disruption, being adept at the co-production model—knowing how to cobble together the financing from multiple sources—is beneficial.

“Broadcasters, studios and production companies are forming strategic partnerships to share the financial burden and risk,” says Grundel at ZDF Studios. “Forming alliances with like-minded partners is becoming increasingly important. At the same time, there is a growing willingness to rethink existing financing models and rights distribution strategies to ease budget constraints. Rights-splitting, co-exclusivity, shortening holdbacks and windowing are being explored as viable alternatives.”

Pietzsch observes, “We know the different levers to pull and can draw on our skills to enable projects to get off the ground. It has been more challenging and has perhaps taken longer than usual, but it hasn’t been completely impossible, so we are happy to say we have a few new projects in the pipeline.”

At Banijay, Dumont says that traditional financing models are still in play for linear commissions, “but each show is different, and it feels like the whole industry is open to creative and new financing solutions to get a brilliant project to fruition. We are seeing greater flexibility and collaboration between international broadcast partners.”

Indeed, the single global commission is few and far between these days, Pietzsch notes, “so funding models are more complex. The new trend is ‘patchwork funding,’ which is becoming more significant in enabling you to kick-start a project. Finding the right partners, though, is crucial. You have to be aligned editorially and be open and transparent from the beginning about what you want and expect. There are always challenges, but having a partner with the same creative vision makes it easier to find a middle ground when you hit any bumps in the road. Having international partners on board can also help to enrich the content with diverse cultural perspectives. This can make it more editorially appealing because it can travel, so it is more attractive to buyers.”

Being appealing to a content buyer is one matter—striking a chord with a young viewer who has a million other options at their disposal is another entirely, leaving the whole industry trying to come to grips with the discoverability conundrum.

“We are taking a holistic approach to our content strategies, building audiences through a multiplatform approach across digital platforms and consumer products,” says Dumont. “The trick as an IP owner is to balance each commissioning platform’s needs for exclusivity while retaining control over the digital and commercial rights. It can be a juggling act, but we are confident that finding the right platform mix for the IP and its target audience is hugely beneficial for all our partners.”

For Pietzsch, the key to discoverability is to “follow your audience, ensuring that your content is across multiple touchpoints. You need great visuals that instantly grab attention, which is slightly easier for animation than it perhaps is for live action, and the content has to be distinctive. For existing IP, it’s about taking a systematic approach. It used to be that you would create linear content and subsequently put it on YouTube. But that is too simplistic now. You need different tactics for different platforms, media and territories, and for your content to be consistently visible. And because kids are the vanguards of change, this ‘always-on’ approach needs to evolve with them.”

At ZDF Studios, Grundel says that the approach to the discoverability challenge has been “comprehensive and dynamic. To ensure broad visibility, content is strategically distributed across a variety of channels, including our platforms such as ZDFmediathek, the ZDFtivi-App and KiKA- Player, as well as partnerships with third-party platforms, VOD services, streaming platforms and technology providers. This approach accommodates different media consumption habits and captures children’s attention across platforms. Personalization algorithms enhance the discovery experience by tailoring content recommendations based on individual viewing habits and preferences. Crucially, our stars are the programs themselves. Rigorous maintenance of rich metadata and strategic SEO marketing ensure that our content is effectively discoverable. Collaborations with popular platforms and streaming services extend our reach and place our content where kids are actively engaged. Cross-promotional strategies within our content portfolio effectively promote new releases or lesser-known shows within our established programs. Active engagement on various social media platforms builds community and excitement around our content. Innovative marketing campaigns, such as teaser trailers and exclusive sneak peeks, aim to capture the attention of our target audience. Establishing feedback loops allows users to provide insight into their preferences, enabling us to adapt our content strategy to evolving tastes.”

HARI’s Grizzy & the Lemmings has established a significant presence on YouTube, and the leading video platform for kids remains at the heart of the company’s brand-building strategies. “A new partner will be announced that will enhance our YouTube exposure and strategy,” Prigent says. “We will continue to grow our distribution channels, still relying on traditional pan and local linear broadcasters that provide guarantees in terms of reach.”

Building brands and “amplifying our IP across multiple platforms and sectors” are among the mantras at Banijay for navigating the year ahead, Dumont says. “With budgets squeezed, we are more focused than ever on leveraging our portfolio in other areas such as digital and licensing.”

Pietzsch at BBC Studios is encouraged by the sustained interest in high-quality content and the ability for compelling IP to still resonate with commissioners. “The effects of the strikes on the global content lineup could provide new opportunities. We are looking to explore unscripted, game shows and entertainment, which have a faster turnaround time than animation and live action,” she adds. “We are also dipping our toe in FAST and AVOD with recent sales of Hey Duggee in the U.S.”

ZDF Studios’ Grundel, too, is feeling cautiously optimistic. “We are pleased that we have been able to maintain our revenue and the number of projects in development during the past few difficult years. We do not know how long the difficult economic situation will last. However, we hope that the streaming platforms, in particular, with whom we have successfully implemented major projects in recent years, will soon complete their consolidation phase and once again make significant financial contributions to our international co-productions. Our positioning allows us to respond flexibly to market conditions. Recent months have shown that we are well-rooted in alliances with traditional broadcasters and can withstand challenging periods. We will continue strengthening and maintaining our alliances, especially with European public broadcasters.”

Direct-to-consumer is a key focus, Grundel notes, via the Pash brand, and ZDF Studios is closely monitoring the FAST space. “So far, we have been cautious because the monetization models have not convinced us. In addition to the framework agreement between ZDF Studios and Samsung TV Plus, which will also be filled with children’s content, we are in promising discussions and could consider becoming more actively involved. We are also keeping an eye on new social platforms such as Roblox. With our brand H2O—Just Add Water, we have a promising pilot project underway, which we will analyze throughout the year and possibly expand with additional themes.”

Prigent notes that HARI remains focused on the long-term view as it navigates the current market disruption. “Because of our long-term editorial strategy, we are doubling the size of our studio, producing twice as many shows and increasing our talent pool. Our IPs are crafted with a 360-degree exploitation in mind. Admittedly, the traditional linear market has slowed down, but we’re also counting on the diversification of incomes with the growth opportunity in licensing and merchandising, for example.”

And while everyone is always looking to champion breakthrough new ideas, an emphasis on known IP and finding new ways to cut through the clutter will be top of mind as executives look for the best ways to ride the waves of the shifts in the landscape, both the blips and the more enduring ones.

“I think highly recognizable IP will continue to flourish,” says Dumont. “Nostalgia and the familiar help shows stand out in a crowded market. They can be hugely valuable marketing assets for our partners, bringing large audiences to their linear and on-demand services. However, where that IP originates continues to evolve, with strong kids’ brands emerging from publishing, gaming and social platforms. I hope our industry continues to drive positive change in 2024 through the shows we create. We must keep striving to tell and produce stories responsibly, with a cross-section of representation both on- and off-screen, and multifaceted stories that reflect modern society.”