While kids are increasingly digital consumers, that doesn’t mean they’re abandoning traditional entertainment.
In 2014, children are playing Minecraft, watching YouTube and playing with apps – but they’re also still reading books, watching TV and playing with toys. Kids are more digital, but that doesn’t mean they’re abandoning traditional sources of entertainment.
That makes an event like the Children’s Media Conference very interesting. Founded as an annual gathering in Sheffield for children’s TV creators and executives, in recent years digital has played a growing role.
That was reflected in the opening keynote speech at this year’s conference in Sheffield, delivered by Dylan Collins, chief executive of children’s marketing and research network SuperAwesome, which works with various children’s brands to help them understand digital trends.
Collins laid out his thoughts on the challenges facing children’s entertainment companies in the next five years, while encouraging them to work more with the emerging group of “kid-tech” startups. Here are some of the highlights:
Most investors are still spooked by kids and technology
“We literally and figuratively represent the future of society, and yet most investors think that this is a tough space to invest in. I think that’s an interesting thing, and something we need to address,” said Collins, who is an investor himself.
He called for more acquisitions and partnerships between big children’s brands and broadcasters, and inventive startups, suggesting that the latter can become an important research and development lab for the wider industry.
“To get to success in the digital space, you need a process of efficient and repeated failure. You need to fail fast! And in the digital kids space that’s true more than ever,” said Collins. “We need to fail spectacularly, really really hard, in both brilliant and sublime ways.”
Mobile is the biggest threat to the children’s entertainment industry
“The single biggest threat to our digital content industry today is mobile: the thing that everyone thinks is the best thing ever,” said Collins, who noted that children’s app companies struggle to sell paid apps, and worry about appropriate use of in-app purchases and/or advertising.
“We make less money in our mobile digital content than a lot of other sectors, and there is huge pressure on marketing costs. The cost of actually getting [content] to kids in a meaningful way has gone up. It’s a basic maths equation: our revenue has come down and our marketing costs have come up,” he said.
“Fundamentally, the maths on that does not stack up. If you talk to kids’ apps developers, there’s not a single one who are not a little bit concerned about the sustainability of their industry over the next one, two, five years.”
Google and Apple aren’t content companies
Collins noted the importance of app stores from Google and Apple in driving things forward, but warned children’s firms not to over-estimate their ability to help solve these business challenges.
“App stores are not content distribution platforms. App stores are monetisation platforms. There’s a very real difference between the two,” he said.
“Google and Apple are doing an excellent job in promotion and everything they do, but bear in mind they’re not kids companies. They’re not even content companies. They can’t be expected to do this for us.”
Children’s entertainment will split into big and small firms
Collins thinks the children’s entertainment and technology industry is about to become much more polarised in terms of the kind of companies that can survive.
“Fundamentally, there will be two types of companies over the next three, four, five years. There’ll be the big ones, who can consolidate and create economies of scale. And then the niche companies who can make and craft beautiful things and charge a premium price,” he said.
“That’s it. There will be no inbetweeners. In order to survive in this market, you have to start thinking about which end of that spectrum you want to be: if you’re not in for size, you have to be aiming for the most beautiful, perfectly-crafted piece of technology that you can possibly bring to the world.”
YouTube could do to TV what social gaming did to consoles
“The internet guys almost always seem to arrive in any industry to spoil the party,” noted Collins, before suggesting that YouTube’s growing role as an alternative to traditional TV for children mirrors a previous disruptive entertainment trend: social gaming.
“We watched social gaming start: Zynga, Facebook and web browsers. And all the wisest minds in the console industry got together, looked at it and went ‘Nah, it’s not going to work. People want real graphics, real Hollywood-type experiences,” said Collins, a games industry veteran before founding SuperAwesome.
“And then Zynga IPO’d and the console industry largely got eclipsed. We’re seeing the same thing with TV content and YouTube: the internet guys are going in and messing up the furniture.”
The economics of YouTube are still challenging
YouTube may be big for children, but it’s hard for children’s media companies to make money there – even the big multi-channel networks (MCNs) like Maker Studios, which is being bought by Disney.
“Maker Studios was going to hit the wall: they were almost completely out of money. But Disney came along and paid $450m just to get their hands on it,” said Collins.
“If you look at what you can generate from TV content, it’s still quite far from the economics of online video content. There’s a gap there, and we’ve got to figure out how to bridge that. It’s going to be several years before the economics of online video can justify a lot of what we see on the TV side.”
Even so, Collins noted that YouTube is “the most powerful kids property in the world right now” while pointing to other emerging networks – Twitter’s Vine in particular – as forcing a rethink in the strategy of many media companies.
“We’ve talked to music labels whose production budgets are still weighted towards doing a traditional, four-minute music video,” he said.
“They’re going to flip that and start investing in six-second Vine clips, because they’re getting as much utility out of kids sharing Vine clips as they would from this 3-4 minute linear content.”
The kids will do it themselves
“We need to create digital infrastructure of the children, we need to create digital infrastructure for the children, and if we leave it too long, that same digital infrastructure will probably be created by the children,” said Collins.
“The change we are seeing with kids is the greatest change we’ve seen in a generation of children since the war. This is the generation of kids that is going to change everything. They are going to create. They are going to destroy.”
Collins cited several examples of app developers in their early to mid teens, noting that they’re educating themselves using sites like Codecademy and YouTube.
“For the first time in our society’s history, we’re being presented with a generation of kids capable of exceeding our abilities while they are still kids,” he said, citing another survey showing 26% of children claimed to have written some kind of code, while a third had used Photoshop or similar software.
“The reason Minecraft exploded was it allowed kids to create: it gave them the tools and empowered them,” said Collins. “As a society, we are woefully under-prepared for this generation, I think.”
Teachers are facing a big tech challenge
From this September, programming will be part of the UK’s national curriculum for primary school children and up, while the gap between the technology used by many children at home and in schools is growing
Collins thinks there’s a big challenge brewing for education. “Think about the classroom imbalance between some teachers and students when it comes to talking about anything technical,” he said.
“Now imagine what that is going to be like in five years time. It will be the new generation of kids, but it’s probably going to be the same teachers. How are we going to deal with that?”
Change isn’t always a good thing
During his talk, Collins was asked about the negative aspects of digital media and children, including cyberbullying on social networks. He held up his hands and admitted that not all digital change is beneficial.
“Change is not always good. I’m not saying going up this curve is going to be without speed bumps and downsides. Change is not always progress: sometimes it’s just change,” he said.
“But if we don’t have a sustainable industry, we’re not going to be able to do anything about it, because we’re not going to be around.”
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