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business newsHow Children's TV Programming Can Affect Your Portfolio
By
Stephanie Taylor Christensen
Aug 05, 2011 8:10 am
Children have become a powerful buyer segment, so retail and video-game investors would be wise to get hip to what kids are watching.
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Once viewed only as future consumers, children have become a powerful buyer segment, responsible for the creation of billions of consumer dollars spent each year, through the indirect (and sometimes direct) impact their preferences have on parents. While marketing to children is nothing new, kids’ exposure to media has grown considerably. As our culture transforms into one that offers programming on demand and TV-equipped minivans, children are deeply immersed in the world and characters that children’s programming presents.
It’s only natural that kids want to see their favorite characters evolve out of the television, and into other aspects of their lives. From your childhood, you may recall shows like Sesame Street, or Mister Rogers' Neighborhood. The landscape of children’s network programing has changed considerably since then, and it’s now a billion-dollar business that is growing right along with young fans.
These days, Nickelodeon, the cable network owned by Viacom (VIA), and distributor of all the titles mentioned above, is the “number-one basic cable net with kids 2-11, and persons 2+ in total day,” and just had "its biggest ever total viewer audience for a July,” according to a recent press release. In the preschool segment, Nickelodeon (often called “Nick”) owns three of the top five preschool shows on commercial television, led by Dora the Explorer and Bubble Guppies. This summer, the channel debuted Family BrainSurge, drawing “2.4 million viewers, since its July 18 launch, making it the top co-viewed program (involving parents and kids) in primetime on both broadcast and basic cable.”
As a channel, Nickelodeon doesn’t offer a direct source of revenue or investment opportunity; its programming is commercial-free. The real opportunity lies in how the brand is continually weaving kids’ favorite characters into aspects of life that extend well beyond the television. (It bears mentioning that Viacom recently announced a 67% increase in its quarterly dividend payout).
Kids are now growing up in an era of unprecedented technology, graphics, and instant gratification; it’s no wonder that their Nick friends would go high-tech, too. D3Publisher, a leading video game maker for various Nintendo, Sony (SNE) PlayStation, and Xbox 360 by Microsoft (MSFT) systems, recently announced a worldwide publishing agreement with Nickelodeon for video games based on Victorious, the network’s hit comedy series.
In June, Jakks Pacific Inc (JAKK), which has long produced licensed Nickelodeon properties, announced a multi-territory master toy license agreement in which the company will manufacture, distribute, and market products based on Nick’s Winx Club series. Launching in Fall 2012 to coincide with the premiere of new episodes, the line will include dolls, play sets, dress-up and Halloween costumes.
Not to be left out of the action, Walmart (WMT) announced an exclusive licensing agreement to sell “more than 250 'Victorious'-themed products during a special back-to-school window from July to September 2011,” according to a release. But not to worry, mass retailers aren’t left out in the cold by the deal. Pacific Cycle (a division of Dorel Industries) expanded its relationship with Nickelodeon in March 2011, with an agreement to produce bicycles and tricycles featuring popular Nick characters like Dora and Diego. (The relationship was previously limited to accessories like helmets and protective gear). In addition to Walmart, Dorel’s US distribution channels include Target (TGT), Kmart (SHLD), Toys "R" Us, and Dick's Sporting Goods (DKS).
Of course, kids not only want to have their favorite characters alongside them on merchandise and toys, they want to hear and read their stories. Meeting that demand is Barnes & Noble (BKS), which debuted Nickelodeon's first offering of digital children’s books by adding popular Nickelodeon character titles to its Nook selection, via the Nook Color reader and a free Nook Kids for iPad (AAPL) application.
Twitter: @stephietc0919
No positions in stocks mentioned.
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