Moonbug - Entertainment company distributing on digital platforms

Founded in 2018, Moonbug has built a $3B company creating and distributing digital content for children globally.

Feb 24, 2022

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Snapshot

Moonbug is a global kids entertainment company that creates and distributes educational and age-appropriate content for children. It aims to encourage healthy values such as compassion, empathy, and resilience, while teaching fundamental life skills. As stated on its website, Moonbug’s mission is simple: to create shows that both children and parents love. It owns and creates digital IP brands and characters, which generate billions of views.

Moonbug currently operates with employees based in London, Camden and LA along with partners, agents and representatives in other locations.

It has a subsidiary named El Bebe Productions Limited. In November 2021, Moonbug entered into a definitive agreement to be acquired by The Media Company, recently formed and run by entertainment executives Kevin Mayer and Tom Staggs. According to a source, the deal has been closed at $3B.

About Moonbug: Website, LinkedIn

Business Overview and Products

Launched in 2018, Moonbug has quickly grown through acquisitions and its “360-degree” goal, which aims to reach children all over the world. The content available on its platform caters to children aged 8 and younger.

Currently, Moonbug owns 18 individual IPs (i.e., intellectual properties), and offers over 550 hours of creative content in about 26 languages. It distributes on over 100 platforms worldwide including Amazon, Netflix, YouTube and many more. It is also producing original series for Netflix, Amazon and others. All of these metrics make Moonbug one of the biggest creators of kids’ content.

Its brand partnerships include Mattel Inc., Nickelodeon, Procter & Gamble and LEGO. The Moonbug Consumer Products segment is a global business with teams in London, LA and Seoul. It is responsible for creating the company’s content in the form of physical and digital products. These are then made available across hardlines, softlines, FMCG and publishing.

How It Works

Moonbug’s digital platform produces and publishes video and audio content every month to teach children compassion, empathy and resilience. The content is particularly built keeping child development in mind. A Life Skills Chart is used, which is an indicator of psychosocial skills a child needs to become a well-functioning part of society. All of Moonbugs educational choices are based around this in-house Life Skills chart. In the words of Ditte Lucas, Head of Brand at Moonbug, “We don’t just look at the ABCs and the 123s; we break our educational offerings down into cognitive, emotional, and physical skills by age level”. Moonbug even differentiates between the content created for infants and that created for toddlers, because it is based on children’s developing skills year by year.

However, the focus on child psychology isn’t the only card that Moonbug uses. The platform is also unique in its approach of blending educational psychology with data insights, which helps it succeed in a way that videos based only on theory, or only on data, lack. Moonbug utilizes deep data insights mined by its tools to create its content. These insights are carefully woven into every story the company creates. For example, Moonbug learned from Tubular data that yellow buses are particularly popular with children. So in one of its cartoons, the company made a data-informed decision to create a bus character called Buster in the color yellow.

Another unique approach taken by Moonbug deserves being highlighted. In its bid to make its content accessible, many of Moonbug’s shows are presented in ASL (American Sign Language). One such show is “My Magic Ambulance”. This ASL component allows the shows to be viewed by children with disabilities, a factor which is usually not taken into account very commonly.

Business Model and Pricing

The Moonbug model is based on acquiring, scaling and finally distributing content for kids across various platforms. It does this by first acquiring IPs that seem to have a global appeal or potential, then growing those brands through its insightful tools to produce even better quality content. Then it distributes this content through its vast network of streaming platforms. That isn’t all - Moonbug also licenses this content, creates its own original productions, and establishes brand partnerships.

It follows a “360-degree” strategy, where it licenses everything from content, toys to merchandising and more. As explained by Moonbug EMEA Head Nicholas Eglau, “With regards to associations and the content licensing system, the company takes a strategic, agnostic approach and syndicates its content through numerous channels, OTT platforms, and on-demand services.”

Currently, the company does not disclose any information regarding how it prices its licensing agreements or brand partnerships.

Traction

Moonbug’s revenues grew by 71.1% in 2020 to £39.6M (around $53.8M) - £29.3M of revenue came from YouTube channels, £5.5M from originals and brand productions, and £4.8M from licensing and merch.
According to a source, the acquisition of Cocomelon and Blippi in 2020 caused Moon Bug's monthly subscribers to grow to 235M globally, with average monthly views amounting to 7B on Youtube alone. This content continues to be viewed across +230 territories.
In August 2021, Moonbug landed a distribution, publishing and licensing deal with Universal Music Group.
According to an article, Moonbug generated about $100M in EBITDA in 2021. This figure is expected to double by 2022.
According to founder Rene Rechtman, Moonbug has been branching into the music business and has continued to scale up its merchandise-licensing business. The next opportunity it plans to tap into is video games.

Founder(s)

René Rechtman: CEO and Co-Founder. René has successfully been part of the media, entertainment and tech start up environment since 1998. Recently, Rene was an investor and president at Maker Studios that was acquired by Disney.

John Robson: COO and Co-Founder. John is an experienced commercial executive, with strong local and global digital and entertainment relationships. He has worked in senior roles in sales, marketing and business development across the entertainment and digital environment.

History and Evolution

Founded in 2018 and headquartered in London, Moonbug was originally created under the name of Project ABC Holdings. The company has rapidly grown both organically and via acquisitions. It acquired Little Baby Bum in 2018, followed by My Magic Pet Morphle and Supa Strikas in 2019. In 2020, the company further acquired ARPO in February, followed by CocoMelon and Blippi in July. Most recently, in February 2022, Moonbug acquired Little Angel.

Over time, Moonbug has built a global family audience through its shows such as “CoComelon,” “Blippi” and “Little Baby Bum” among others. According to the founders, they built the company on strong values with a focus on digital platforms. In its short history, Moonbug has also managed to rapidly expand across the Indian, Chinese and French markets in the span of a few years.

After 3 years of successful operations, founder and CEO Rene Rechtman was gearing to launch an IPO for Moonbug when he received a lucrative acquisition offer that was difficult to refuse. In November 2021, Moonbug accepted an acquisition deal worth $3B in cash and stock, by Disney executives Tom Staggs and Kevin Mayer. Moonbug would become part of their new media company. According to the agreement, Moonbug founders René and John, the existing management team and shareholders will all retain equity stakes in the media company. After the acquisition, this media company plans to expand Moonbug’s portfolio of titles and further extend its franchises across digital platforms and key licensing and merchandising channels.

Additional Learnings

Moonbug recorded an operating loss of £1.4M for 2021. It had £6.8M of costs relating to a legal dispute – a copyright infringement lawsuit that the company filed against a Chinese rival to its Cocomelon YouTube channel in September.
The 2020 acquisition of CocoMelon, YouTube’s third-largest channel in terms of subscribers, by Moonbug has played a major role in its extraordinary financial results.
In May 2020, Tubular Labs named Moonbug one of the leading digital kids’ entertainment companies in the world based on the total number of minutes watched worldwide.
In March 2021, Moonbug Entertainment announced major expansion across China by bringing CoComelon to China’s leading streaming platforms IQIYI and ByteDance.
A source reveals that Moonbug’s representatives often engage with people across its social media handles, allowing it to collect invaluable feedback which the company also incorporates into its content.

Market Snapshot

There is no dearth of content creators for children in the global market. In recent years, several mergers and acquisitions similar to that of Moonbug have taken place, such as the acquisition of kidtech platform SuperAwesome by Epic. This is a testament to the rising popularity of content creation for children on major platforms such as Youtube, with these avenues becoming hotspots for investors. As a result, the creation and consolidation of mega-production houses like Moonbug is on the rise, as detailed by this source.

However, Moonbug remains a leading name in the industry. According to Moonbug EMEA Head Nicholas Eglau, the unique selling point for Moonbug is that it provides content offering created to be a natural part of a child’s upbringing. The content focuses on healthy values and allows kids to learn essential life skills. This success of Moonbug can be seen by the fact that in January 2020, Moonbug was named the 3rd largest kid’s entertainment media organization “in terms of minutes watched”, as per a source. Furthermore, 3 Youtube channels owned by Moonbug (Little Baby Bum, Blippi and CocoMelon) alone generated 2.37B views in November 2021.

Going forward, officials at Moonbug have a strong interest in the Asian market. They have learned that Asian parents tend to focus more on hard skills such as math and reading. However, with the circumstances surrounding the coronavirus pandemic, parents are looking for more educational content to keep their children busy while at home, which also contributes to Moonbug’s success.

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