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Netflix-Disney Deal Renews Children’s TV Ratings Slump Debate

11 Dec, 2012 By: Erik Gruenwedel

While much of the analysis of Netflix’s landmark pay-TV distribution deal with The Walt Disney Co. focused on movies (and Starz LLC’s pending loss), both companies’ devotion to the children’s market renews concerns regarding subscription video-on-demand’s impact on kids’ linear TV programming.

Since its launch in August 2011, Netflix’s “Just for Kids” portal has exploded in popularity as a video safe-house parents can allow their kids to navigate on their own finding age-appropriate content with no advertising.

Netflix this year updated “Just for Kids” with apps specific to PlayStation 3 and the iPad — the latter a popular user-interface for children of tech-savvy parents.

Research firm Sanford Bernstein, using TiVo data, said cable ratings for children’s programming were up 8.5% year-over-year in the first quarter among those who didn't stream content and only 0.4% among those who did, according to a story in The Wall Street Journal. Disney ratings grew 11% for non-streaming users and 6% for streaming users, while Viacom ratings grew 6% for non-streaming users and only 2% for streaming users.

From the end of 2011 through August 2012, ratings at Nickelodeon were up 11% among non-streamers, compared with only 3% among streamers.

To Jenn Burns, a Newport Beach, Calif., single mom with four girls, including twin 12-year-olds, Netflix’s “Just for Kids” is a godsend. Her younger girls share a laptop in their bedroom or at the kitchen table watching content through a Netflix account paid for by their father. This frees up the television for the older teens — and mom.

“It’s so easy,” she said.

Indeed, Netflix currently offers seven seasons of “Sesame Street,” with 35% of the series’ viewers accessing the show on devices other than the television. In fact, 85% of “Sesame Street's” digital audience reportedly is former viewers of the TV show.

And it bears repeating that Netflix will have exclusive access to DreamWorks Animation’s new and catalog titles beginning in 2013.

Netflix COO Ted Sarandos in May downplayed the SVOD service’s impact on children’s TV viewing.

"People's tastes are so diverse that no specific program or network has such high viewing concentration that you'd see that cause and effect on ratings," Sarandos told the National Cable & Telecommunications Association's annual Cable Show in Boston.

Disney CEO Bob Iger agrees, telling AllThingsD.com following Disney acquisition of Lucasfilm in June that he isn’t in the camp that believes Netflix is going to take over the world.

"Technology makes it impossible to have a monopoly," Iger said.

BTIG Research analyst Richard Greenfield isn’t so sure.

“Subscription streaming is not just replacing DVD buying; it is negatively impacting movie rentals, as well as traditional kids TV viewing,” Greenfield wrote in a post earlier this year.

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