Playing in the Stream

Children’s TV may have a problem on its hands: to a large slice of its target demo, a television is just a dumb iPad. Consider these stats: Cable viewership among kids 6-11 was down 13 percent in the first quarter, following a 6 percent decline in Q4 2011. Meanwhile, some 70 percent of children under 12 in homes with tablets use them regularly, and 51 percent of kids between 5 and 8 across all households are on the computer several times a week. That means trouble for kids’ networks in particular. Though children today are largely platform agnostic, linear cable channels remain married to a single delivery device, and cable provides more or less all kids’ TV programming now that Saturday morning shows on broadcast are all but dead. (Broadcast stations are required to carry a certain amount of kid-centric programming. Of course, children are in no way required to watch it—which might be the only way one could get them to tune in to Aqua Kids). Felicia Thomas of ID Media—and mother of a 4-year-old boy—doesn’t think the pint-sized digital revolution will happen immediately, simply because of the range in kids’ ages. But it’s undeniable, she says, that kids are gravitating toward digital media. “[Kids] can’t just get on the Internet with the iPad, which is why parents are so comfortable with it,” she says. “Younger children are going to watch television, but children in their teens and tweens know how to get onto the Internet and play video games and watch YouTube, so you’re definitely going to see a shift with the older kids.” And her own son? “He definitely loves the iPad,” she reports. Nickelodeon has been especially hard hit by the downturn in kids' viewership. The network took a significant ratings dive in the fourth quarter of last year, suffering a 17 percent year-over-year drop among kids 2-11, the network’s target demo. This quarter, the hole deepened with a 25 percent falloff. Philippe Dauman, president and CEO of the channel’s parent company, Viacom, even blamed his firm’s decline in earnings on the “inexplicable” ratings slide and during a conference call had to field questions from analysts about whether streaming services like Netflix were hurting TV viewership. After all, several seasons of SpongeBob SquarePants are available at any given time online, and the network runs the program as often as nine times per day. With hit franchise iCarly also aging, the network is looking to Big Time Rush and several other music-oriented programs to win viewers. Nick’s ratings woes didn’t exactly cast a pall over its recent, upbeat upfront presentation—still, the network knew it needed to impress. “Nickelodeon has no intention of letting the recent ratings slip slow down our creative momentum,” Cyma Zarghami, president of Nick and MTV Networks’ Kids & Family Group, told the crowd at New York’s Lincoln Center before a teeth-rattling reel from Michael Bay and a speech from Bay himself, who is producing the new Ninja Turtles flick for Paramount and Nick. A source close to Nick, who asked not to be named, blames new Nielsen research practices for the drop-off, but adds that the channel is committed to staying on top no matter what. “We’re not sitting still,” the source says. “If this is the hand we’ve been dealt with the sample, we’re still committed to keeping our standing.” For their part, agencies say they are not about to abandon Nick—if anything, they’re looking forward to more leverage than usual in negotiations over ad rates with what has traditionally been the top ratings draw by far in the kids category. “I don’t think we were ever worried,” says one ad buyer. “You don’t ever want to see a massive ratings drop, [but] our GRPs are guaranteed.” And that is important, since Nick controls some 75 percent of all GRPs in the kids market, or at least did as recently as a year ago. Rival networks smell blood, naturally. Competition between Nick and the Disney Channel is more intense than ever, with Disney regularly outpacing Nick in the ratings. Meantime, Disney is spinning off its Disney Junior programming block, which focuses on the 2-5 demo, into a full-blown network (see sidebar). “We’re pretty much neck and neck with Nick’s [preschool block],” says Gary Marsh, president and CCO of Disney Channels Worldwide. “Neck and neck” might be pushing it. The numbers illustrate how the gap between the two networks has narrowed, and dramatically. Year-to-date since Dec. 26, Nick’s preschool block beats Disney Junior programming by 12 percent in the 2-5 demo; in the same period a year ago, Nick had a 48 percent lead. Upfront season is traditionally a time for networks to make noise, and this year Disney did not disappoint. The net, which usually hosts a simple breakfast presentation, pulled out all the stops this time around with a full-blown party at the Hard Rock Cafe in New York. The Mouse House is upping the ante, with more musical programming on its flagship network (where High School Musical once reigned) and new product in the boys’ action category on spin-off net Disney XD, including plenty of Marvel Comics-branded material to dovetail with Marvel’s big summer films. While kids' viewership would seem to be struggling among all age groups—according to Nielsen, total viewership among those under 12 was down 2.9 percent last year versus 2010—programming executives and media buyers alike contend that Nielsen’s numbers don’t jibe with their own. They also point out that kids' viewership is no longer exclusive to the large cable nets but, rather, is fragmented across an ever-growing number of channels, with relative newcomers like The Hub, Disney XD and Sprout all gaining traction. “Television has by far the highest-share viewing among kids,” says Darcy Bowe, associate media director at Starcom. “There’s no evidence that they have decreased their share in viewing. The TV is still king in their world. I don’t think it fragments as much for them.” But ultimately Nielsen numbers are currency, accurate or not. And while cable executives are loathe to admit it, their business may become less about fighting for a slice of a shrinking TV pie than about amortizing lost viewership via other uses of valuable intellectual property. Cartoon Network continues to push for multiplatform penetration, but without putting any TV shows online. The Turner kids net is firmly opposed to subscription-based streaming services that cut out either the MSO or the advertiser, and with good reason. “We have shows up through VOD, through our MSOs and so forth,” says Stu Snyder, president and COO of Cartoon Network. When asked about the possibility of streaming on Netflix or Hulu, he replies, “We have no plans to do that, no.” Cartoon’s policy more or less mirrors that of parent Time Warner, which is leading the charge for the cable-authenticated streaming TV Everywhere initiative. The basic idea seems sound—provide streaming to cable subscribers only—but it requires complicated authentication protocols that even grown-ups struggle to understand. It’s also worth noting that, though ad-supported, Cartoon does not deliver the 2-11 demo nearly as reliably as Nick—roughly half as much, in fact. Nick pulled down some $1.15 billion in net ad sales last year, while Cartoon came in at under $400 million. Still, of the big three —Disney, Nick and Cartoon—only Cartoon grew year-on-year in total day viewers this quarter. It’s one thing to try to habituate NCAA fans or viewers of TNT’s The Closer via the authentication process, and quite another to cut off your brand from young—and on-demand nativist—kids on the Web. Credit Disney for at least trying to branch out. It is one of some 100 brands launching new channels on YouTube, where it will feature original content based on Where’s My Water?, a breakout app. It will be interesting to see whether Disney’s YouTube channel catches fire. Despite anecdotal evidence that kids are heavy YouTube viewers, neither Nick nor Cartoon seem interested in the platform. Nick, at least, has obvious reasons for resisting: parent company Viacom is suing YouTube owner Google for copyright infringement. Most surprisingly, kids nets have virtually no presence on Hulu, which would seem ideal for long-form children’s content. And for all the hype, there’s not much innovation on the iPad, and networks are approaching the device cautiously. Nick, for instance, features several educational apps tied to shows like Dora the Explorer, as well as SpongeBob games, but there’s no full-fledged Nick app for watching full-length series. Cartoon does have a viewing app, but requires users to authenticate—and Time Warner Cable subscribers are out of luck. Disney, as noted, has several popular iPad and iPhone games, as well as a comics app. And while it’s possible to buy Disney movies for the iPad, when it comes to watching shows, no such luck. Still, brand extensions don’t always hit. Cartoon’s 28 branded games based on Ben 10, one of its most successful franchises, moved a total of 10.26 million units—compare that to Activision’s Call of Duty games, selling upwards of 131 million units. Disney’s much-hyped Epic Mickey, which was exclusive to the Wii, sold just 2.5 million copies. But there are successes, too. Last August, the Disney Channel’s TV movie Phineas and Ferb: Across the Second Dimension impressively scored an average of 7.6 million viewers. When Disney included seven-day DVR in its numbers, the audience grew to 10.7 million, evidence of what every parent already knows: When a kid likes something on TV, he or she watches it over and over—and over and over. In that is a lesson for the whole industry: Multiplatform entertainment is increasingly what not just kids but all consumers want. If they can’t get it from the networks, they will get it elsewhere. Illustration: Yasmeen Ismail Click here to view more content from The Kids Issue.

Convergent TV

Playing in the Stream

As video becomes more platform-agnostic, it's transforming the children's TV market—and what it means to be a kid

Sam Thielman

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Sam Thielman