Q2 2020 revenue rose 4 percent to C$122.1 million ($92.2 million) at WildBrain, led by non-WildBrain Spark distribution, WildBrain Spark AVOD and consumer products-owned businesses.
Eric Ellenbogen, WildBrain’s CEO, said: “With double-digit growth in viewership this quarter, WildBrain Spark continues to be a valuable platform for our own IP and partner brands. We’re committed to growing views and building WildBrain Spark as an integral part of the overall WildBrain offering of content production, distribution and licensing. We’re also capitalizing on the demand for original kids’ shows with more Peanuts content for Apple TV+ and a global exclusive for a second season of the preschool series Chip & Potato for Netflix. Our improving financial position allows us to execute on our plans, focusing on creative development, our AVOD business and IP and brands, all of which will contribute to long-term growth.”
In January 2020, YouTube introduced new rules and policies regarding targeted advertising on kids’ content. Absent WildBrain’s own initiatives in direct advertising sales and any mitigating actions by YouTube, the company expects there would be a negative impact on revenue at WildBrain Spark in the back half of fiscal 2020. Initially, in the first few weeks following the change, WildBrain Spark experienced a revenue decline of approximately 40 percent, compared with the same period last year.
Ellenbogen added, “We’re taking actions to address the changes made by YouTube and continue to see significant value in our large and growing user base. We believe these changes will result in a more positive and curated environment for kids, and ultimately, improved monetization that will reward quality content. We’re ideally positioned to benefit from this move over the long term.”
In Q2 2020, non-WildBrain Spark distribution revenue rose 7 percent to C$14.6 million ($11 million), benefiting from several large library deals. WildBrain Spark revenue grew 21 percent to C$24.2 million ($18.3 million), fueled by growing viewership on the AVOD network. Consumer products-owned revenue rose by 9 percent to C$47.3 million ($35.7 million), reflecting the enduring appeal of the Peanuts franchise and the launch on Apple TV+ of new content produced in the Vancouver studio.
The second quarter saw a net loss of C$2.3 million ($1.7 million), which narrowed from a net loss of C$17.9 million ($13.5 million) in the same quarter last year. The improvement was partly due to a net positive impact of non-cash, unrealized foreign exchange gain and higher gross margins in the current quarter.