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Why Nickelodeon Is Viacom’s Crown Gem

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Nickelodeon’s content strategy

Viacom’s (VIAB) Nickelodeon is a key flagship brand for the company. Nickelodeon continues to enjoy high program ratings and has been the number one network for kids for the past three years. In fiscal 2Q17, Nickelodeon’s program ratings grew 5% YoY (year-over-year).

Nickelodeon has a strong content pipeline, with around six to eight of its popular shows grabbing a 65% share of advertising-based viewing for kids. Viacom is also looking at building franchises through programs like SpongeBob, which can be effectively monetized through consumer products, movies, and game applications for mobile phones.

Nickelodeon is also looking at producing content that can cater to various kids’ genres, including animation, live-action, and preschool. Viacom aims to license these franchises to theme parks and resorts and plans to launch a resort in Mexico in 2018.

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Viacom has also licensed its content on Nickelodeon to SVOD (subscription video-on-demand) services like Hulu to offer its viewers multiple access points to its content. Nickelodeon ranks high in advertising revenues, as it has become the preferred network for advertisers when it comes to reaching out to kids, given the popularity of its content.

Netflix also exploring different content genres

Meanwhile, Netflix (NFLX) is looking at extending its content portfolio in the US (SPY) and in international territories. Netflix is primarily eyeing family-friendly content in this regard, including kids’ programming. According to Netflix’s internal data, ~50% of Netflix subscribers view kids’ programming regularly on a global basis.

Netflix is also investing in content for kids’ programming through legacy cartoons like Popples and Glitter Force.

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