nScreenMedia OTT multiscreen media analysis

Disney, BBC struggle as children online viewing increases

Weekly time spent watching TV Q4 2013 Q4 2016

Kid-oriented television channels are beginning to feel the pinch as children move their viewing online. Disney and BBC move to realign to the new reality, while Netflix continues its investment.

Children are watching a lot less TV

Though there has been a decline in live television for every age group over the last three years, the trend has been most sharply felt in the young. There was a 21% decline in live viewing between Q4 2013 and Q4 2016 among 2-to-11-year-olds, and a 34% drop in the 12-to-17-year-olds.

At the same time, weekly OTT consumption has been booming over the same period. For example, connected TV usage has increased from 51 minutes a week to 2 hours and 28 mins, a 170% increase, for 2-to-11-year-olds. The 12-to-17-year-olds increased usage over 200%, to 1 hour and 35 minutes per week.*

Disney struggles to adapt

It’s not just ESPN that is losing audience at Disney. Disney Channel, which targets young children, and Freeform, which focuses on teens, each have lost 4M viewers over the last three years. The company points to a pair of reasons for the decline. Neither channel has produced any big hit shows recently. At the same, streaming services such as Netflix and YouTube have acquired a lot of very compelling children’s content.

Disney is even contributing to the problem. The Disney Channel on YouTube has over 1M subscribers. Kids can find many of their favorite characters there and even some web-exclusive content. In 2014, Disney signed a distribution agreement with Netflix which started bringing many of its best movies to the streaming service in 2016.

The company has taken steps in the UK to recapture children as they flee online. It launched a standalone SVOD service, called DisneyLife, in 2015 for £9.99 ($13) a month. It is likely time for the company to do the same thing in the U.S.

The BBC to invest more in kid content

The BBC has been the beneficiary of new rules on the commercials that broadcasters can air during kids shows. This limited the revenue potential of such shows and commercial broadcasters scaled back production. The BBC was unaffected by the rules since it is advertising-free.

However, services like Netflix, YouTube, and Amazon are adversely impacting viewership of the corporation’s flagship kid’s channels, Cbeebies and CBBC.

To combat the problem the BBC is diverting £34 million ($44 million) from other areas of the corporation to fund “new forms of content and interactivity” in children’s programming. The money will be made available over the next three years and amounts to a 25% increase in the children’s programming budget.

This content will benefit Cbeebies and CBBC and also the BBC’s own online Kids iPlayer, which was launched last year.

Netflix continues to invest in kids

Netflix recognized that kids content provided a unique opportunity early on. It launched a kid’s portal in 2011 that made it easy for children to navigate, and safe for parents to let them play in. It has continued to invest in children’s content as a key priority. Aside from creating and licensing the best content, the company has invested in new forms of entertainment. For example, last month it delivered its first interactive story, called “Puss in Book: Trapped in an Epic Tale.” Children can choose what happens next in the story.Shift in Netflix content by genreAccording to Ampere Analysis, Netflix is investing heavily in children and family originals and exclusive content. Netflix added 100 hours of original production content, and 40 hours of exclusive licensed content in 2016, second only to the drama category. Children and family increased its contribution to the Netflix catalog by 27% between June 2015 and February 2017. The category now makes up 9% of the entire library.

The BBC and Disney will have to work hard to keep pace with Netflix, and other online video providers.

Why it matters

The fall in television viewing is highest among children, as they transfer viewing online.

Disney is acutely aware of the problem, as it sees channel audiences decline by millions of viewers.

The BBC is also aware of the problem and is increasing spending on children’s content.

Netflix, and other online providers continue to invest heavily in children’s video.

Expect the battle for children’s attention to intensify online.

*Data in this section comes from various Nielsen Total Audience reports.


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