The Wild Rise of Moonbug—YouTube’s Magic Money Machine

In the last month alone, videos from Cocomelon, Little Baby Bum, and Blippi have been viewed more than 2.37 billion times. These three YouTube channels—which are among the biggest on the platform—have, collectively, racked up 157 billion views in the few short years they’ve been online. And now they’re worth $3 billion.

You may not know them, but anyone with young children will. Cocomelon alone is the second-most-viewed channel on all of YouTube. And, after a series of acquisitions, all three are now owned by a single company: Moonbug Entertainment.

Their origin stories are varied. Blippi—real name Stevin John and a Mr. Rogers-like entertainer—is well known to toddlers the world over since starting his YouTube channel in 2014, as well as to those who knew him as Steezy Grossman, the man who once defecated on the exposed genitals of a friend in an early viral video. Little Baby Bum was started in 2011 by husband and wife team Derek and Cannis Holder. The pair correctly believed there was a niche in the market for garishly animated versions of nursery rhymes. A similar hunch by a Californian couple working in the worlds of children’s book illustrations and filmmaking resulted in Cocomelon.

Having swallowed up three of YouTube’s most popular childrens’ channels, London-based Moonbug has been devoured itself. The rumored price tag? A cool $3 billion, or around half of what Disney bought Pixar for in 2006.

The buyer is a group led by former Walt Disney executive and short-lived TikTok US CEO Kevin Mayer, and backed by The Blackstone Group, a New York private equity firm. It’s an astronomical rise in value for Moonbug, and proof—if it were ever needed—that children’s entertainment is big business. “It shows that kids content is a huge and very valuable market, and that digitally native companies again have valuations that rival or even better traditional media companies,” says Bastian Manintveld, executive chairman of Spanish entertainment company 2btube, which has a large children’s content arm.

“Children represent a key target for monetization strategies on YouTube,” says Alexandra Ruiz-Gomez, a social media lecturer specializing in kidfluencers at Curtin University in Perth, Australia. And Moonbug’s intellectual properties, which include Cocomelon and Little Baby Bum, are beloved by millions—so beloved that Moonbug raked in $53 million in revenue in 2020, according to financial results filed in the UK.

The interest in Moonbug and the range of other similar mergers and acquisitions over the past 24 months—from Epic’s acquisition of kidtech platform SuperAwesome in September 2020 to the $500 million purchase of reading and learning platform Epic (confusingly, this is another Epic) by the Indian educational services firm Byju in July 2021—is testament to the increasing legitimization of kids’ content on platforms like YouTube. It’s buoyed by big tech platforms’ willingness to invest in kidtech and moderation. Recognizing that the internet was never designed for kids but has been adopted by them in huge numbers, platforms and companies producing content for them are now trying to design with kids in mind. And the result is big-money deals that were previously unattractive to investors.

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