Moonbug Entertainment Ltd. is building a kids media empire for the YouTube generation.
The London-based company has acquired two of the most popular kids brands on YouTube: Cocomelon, an animated show that is the most-viewed channel on the entire site, and Blippi, a program hosted by entertainer Stevin John. Moonbug didn’t disclose the terms of the deals. According to Rene Rechtman, Moonbug’s co-founder and chief executive officer, the acquisitions were funded by raising $120 million from a group of investors, which included Goldman Sachs Group Inc., Felix Capital Partners LLP., Fertitta Capital Inc. and the Raine Group LLC. Moonbug plans to use some of the money to make additional acquisitions.
Moonbug will now operate the largest network of kids channels on YouTube, encompassing 235 million subscribers and generating more than 7 billion views a month. In addition to Cocomelon and Blippi, Moonbug owns Little Baby Bum, which makes videos set to nursery rhymes.
Cocomelon, Little Baby Bum and Blippi are household names for kids around the world, but are not billion-dollar franchises like “SpongeBob SquarePants” or “Dora the Explorer.” Moonbug aims to grow the brands by adapting songs, videos and characters from the YouTube channels into toys, TV shows and albums.
“I have this dream of creating the biggest company in the kids space,” Rechtman said in an interview.
In 2018, Rechtman founded Moonbug, along with Alfred Chubb and John Robson, inspired by the belief that YouTube, part of Alphabet Inc.’s Google, had replaced TV networks such as Nickelodeon and Disney Channel as the destination of choice for millions of kids. Some 80% of parents say their children watch YouTube, according to a recent study by the Pew Research Center. In any given month, half of the most-watched channels on YouTube are for youngsters.
Owners of major YouTube channels have started to leverage their large audiences on the video site into other business opportunities. Toy companies have noticed the ability of YouTube channels to drive sales, and several streaming services, including Netflix, Hulu and Amazon have started to acquire the rights to shows based on popular YouTube channels for children.
Rechtman said he is planning for Blippi to introduce more characters and expand its output from 12 episodes a year in English and Spanish to weekly videos in several additional languages.
Moonbug plans to translate Cocomelon’s programming — which generates about 3.5 billion views a month on YouTube — into several other languages, to license it to additional video services and to create merchandise based on its characters. “Cocomelon has the potential to be the biggest property in the world when it comes to kids,” he said. “In terms of viewership, it already is.”
(Updates second paragraph with additional fundraising details)