TBI Kids: How Moonbug CEO created a $3bn kids behemoth

CoComelon

Moonbug CEO Rene Rechtman tells Mark Layton about the firm’s expanding ambitions following its $3bn takeover by Candle Media and the rights strategy that lets them engage with kids on any platform

Having launched just four years ago, London and LA-based Moonbug Entertainment has established itself quickly – to the extent that its shows now claim 8.5 billion average monthly views on YouTube alone.

Led by CEO Rene Rechtman, a former Disney exec who co-founded the firm in 2018 alongside COO and WildBrain alum John Robson, its stated aim is nothing less than to become “the leading digital-first kids’ entertainment company in the world”.

It faces serious competition, of course, but with a portfolio now standing at 29 IPs in 32 languages, including Little Baby Bum, My Magic Pet Morphle, Supa Strikas and Playtime With Twinkle, the strategy seems to be working.

It was the savvy acquisition of kids IPs CoComelon and Blippi in 2020, however, that put Moonbug on the map, with CoComelon growing to become the second-most subscribed YouTube channel in the world, with more than 152 million subs and 4.3 billion average monthly views.

One of Moonbug’s greatest success stories, CoComelon now streams globally on Netflix, and is shown on a litany of local players worldwide, as well as its original YouTube home.

“One of the key reasons why we’ve been so successful in such short a time is the multi-platform approach that we are taking,” Rechtman tells TBI. “Very early on, we said we need to be where all the kids and families are – full stop.”

He explains: “The behaviour of the audience has changed forever, and we need to adapt to that – it’s silly not to – and that gave us the opportunity, because a lot of great IPs out there had limited exposure. They were behind local or regional paywalls where kids are not spending as much screen time as they used to.”

Rene Rechtman

Hold on to your IP

Moonbug’s strategy sounds straight-forward enough – seek out brands with “great awareness and engagement with kids” that have yet to become global hits, buy them and make sure to hold onto rights. Then distribute as widely as possible to build global franchises, with spin-off shows, L&M deals and all that entails.

“That’s one of the things I learned spending four years at Disney,” says Rechtman, “the power of owning your IP and controlling your IP’s destiny, because that’s how the money falls into your pocket in the end and not somebody else’s.”

Rechtman describes Moonbug’s approach as “a little bit of an upside-down” model. “We are financing our own shows, so therefore we can have that bold approach that our content needs to be on every platform where kids are engaging,” he says.

Highlighting again the importance of placing content across digital, streaming and linear, Rechtman says that in the US “it’s very clear that if you are on, let’s say YouTube and Netflix, you’re covering 90-something percent of your demographic group,” whereas outside the US where Netflix does not reach the audience to the same extent, “we need to be on several platforms locally.”

Rechtman suggests: “When content is popular and you have created a huge audience already, you should definitely go for a multi-platform approach – you’d be crazy not to.

“I’m not saying if somebody goes and invests heavily in an original with you that you can have the same approach, because you have somebody who is financing it, but if you have the privilege to finance partly or fully your own shows, that’s the approach you should have.”

Blippi Wonders

Seeking synergies

This is a strategy that certainly seems to be working for Moonbug, with the company receiving recognition and some solid backing last year when it was acquired by Kevin Mayer and Tom Staggs’ Blackstone Group-backed investment outfit, Candle Media, in a deal valued at $3bn.

Rechtman says that the two companies share the same “thesis” of building franchises from existing IP, with Candle and Blackstone simply doing the same thing in a “broader space.”

For Moonbug, the deal means it is now able to chase its ambitions “faster and bolder” and pursue “the most interesting and potentially biggest IPs out there”. Rechtman notes that “with the deep pockets of Blackstone, there’s nothing we cannot do.”

The Moonbug boss adds that being able to speak with Mayer and Staggs on a daily basis is “phenomenal”. He adds: “I mean, we’re talking about two of the brains behind many years of success at Disney and acquisitions like Pixar, Marvel and Lucasfilm.

“Kevin was a big part of that and a big part of our business model is acquisitions, so having that day-to-day strategic interaction is just phenomenal.”

Joining the Candle stable also opens the doors to collaborations with sibling labels, such as Reese Witherspoon’s Hello Sunshine, which is developing a new children’s project with Moonbug that Rechtman says is still at an early stage, but will allow the firms to engage with families together.

Moonbug’s portfolio is expected to continue to expand over the next 12 months, with Rechtman revealing the firm is on the lookout for opportunities similar to its recent acquisitions of Singapore’s Oddbods prodco One Animation and Canadian YouTube network Little Angel.

“[We] hopefully will do a big acquisition or two – if we’re lucky both this year, at least one of them this year,” he says.

The firm also has its eye on shows “that historically have done really well but maybe have been sleeping or hidden away behind paywalls here and there, but which still have huge relevant libraries but less awareness with young kids.”

For now, Moonbug is mainly focused on creating and acquiring content for its target demographic of 0-8-year-olds, but Rechtman tells TBI that the firm is open to expanding its audience – so long as the right opportunity comes along.

“We are interested in a little bit older. It’s a slightly more difficult game, so if we do something it needs to be bold, it needs to be one of the top three IPs in the world, to have complete recognition both on awareness and affinity, from, let’s say 8–12-year-olds.

“But if we don’t find anything like that then we won’t really go into that area. It’s because that area is driven by trends, it’s driven by localised content much more than the younger demos – kids are taking their own decisions rather than parents being involved.”

Oddbods

Taking the shortest route

It’s a fascinating point, because while Rechtman’s company is making millions out of kids shows, parents are the gatekeepers. On top of that, the way that shows are being consumed and the types of series being watched evolve rapidly, so awareness and nimbleness are key.

“We are recruiting quite a lot of young people out of universities and creative schools all around the world,” he says. “We were showing our content to the last bunch of young people who came into us and one of them asked: ‘What are you doing in short form?’”

Rechtman shares his surprise: “We are the short form company, right? Our content is typically four minutes and everything under 11 minutes is considered short form. But no, in their world everything under one minute is short form – so that’s an interesting space to watch.”

He explains: “If you have young people who are soon to become parents talking about short form being 60 seconds or less, we have to start thinking what can be done there, how can you tell stories to our audience?”

“Something is definitely happening there and it’s definitely driven by Instagram and TikTok in particular, which are two platforms our kids are not on yet – so that’s something that I’m very interested in.”

Looking further ahead, Rechtman predicts that children’s shows will be taken more seriously than they have been before. “Kid’s content for many years has been neglected, that’s why we have been so successful in such short time.”

He notes: “You don’t win big awards and Oscars and stuff like that with kids’ content – not the kind of kids content that kids want to watch, at least – so it’s kept a lot of very creative people and very innovative people away.”

However, as the gap between technology and kids content closes, Rechtman believes “a lot of talented people” will come back to it.

The exec adds that he is also interested in how younger children are increasingly spending more time playing video games, with Moonbug having now moved in this space too.

October saw the launch of CoComelon: Play With JJ on Nintendo Switch, which for Rechtman and his multi-platform thesis, represents a whole new avenue to interact “with as many kids and families as possible.” And a whole new place to build on those 8.5 billion monthly views.