Here's how Netflix is coming for your kids

When MGA Entertainment, the world's largest private toy company, premiered its newest kids' show about a teen-girl team of super spies, it skipped Saturday morning TV and staged a splashy premiere on Netflix - replete with a matching toy line, a few dozen dolls and play sets like the "lip balm lab activity kit."

And Netflix, the world's largest streaming service, was more than happy to fold the show, "Project Mc2," into its exploding empire of kids' entertainment. Much of the $5 billion Netflix is spending this year on movies and TV shows will be spent on fare for the playground set.

The big-business battle for kids' distracted attention spans has never been more competitive - or eye-poppingly lucrative - and Netflix has aggressively angled to use its data-driven insights to make programs kids don't want to turn off.

About half of Netflix's 75 million members regularly watch kids' movies or TV shows, executives say, but the potential for long-term profits runs much deeper. If the site is able to win over viewers when they're young, executives said, they may be able to secure their loyalty for life.

"We have a ton of data on what they watch, so we know what properties resonate and when they don't - when (viewers) have had enough of a franchise and when they can't get enough of it," said Andy Yeatman, Netflix's director of global kids content. "We always try to feed that demand so they always want more."

Netflix will spend roughly $5 billion on movies and TV shows this year: far more than its competitors, and roughly half of what all American movies made at the box office last year, combined. And much of that is aimed towards young audiences; Netflix chief content officer Ted Sarandos said in January that the company is "doubling down on kids and families."

We always try to feed that demand so they always want more.

Andy Yeatman, Netflix's director of global kids content

About 20 of its 70 new and upcoming "global originals" are geared specifically to kids, from a cartoon series on magic teen mermaids by a French animation studio ("H2O - Mermaid Adventures") to a reboot of the short-lived '80s animation "Popples," made by the toy-making megastudio behind "Power Rangers" and "Digimon." Nickelodeon, the kids' cable giant that premiered in the late '70s, will air 650 new episodes this year from roughly 30 different franchises.

Watch YouTube trailer: H2O Mermaid Adventures:

For binge-watchers of Netflix's gritty original series such as "Daredevil" or "House of Cards," it may come as a surprise that the video giant is spending so heavily on fluorescent preschool cartoons, remakes of disco-era reruns and glossy computer-animated series such as "Dinotrux," on a group of giant creatures that are half dinosaur, half construction vehicle.

But Netflix's rise has largely been fuelled by its youngest viewers. More than 80 percent of Americans younger than 35 have a Netflix subscription - up 9 percentage points since 2014, according to MoffettNathanson Research. And in kids, Netflix sees a captive audience that could further plead the case for millennial families.

Americans streamed 42 billion hours of Netflix last year, company data show, cutting deeper into how the average American chooses (and pays) to unwind. Netflix accounted for about 6 percent of a typical household's television viewing last year, up from 4 percent in 2014, a MoffettNathanson analysis found.

When parents are going through their family's entertainment spending, we want them to feel great about their Netflix bill.

Andy Yeatman

And more Americans today say Web video is an invaluable part of how they live. Last year, 61 percent of U.S. consumers said a streaming video service was one of their three most irreplaceable subscriptions, up from 17 percent in 2012, according to a Deloitte survey released this week. Respondents ranked streaming video higher than a smartphone data plan (55 percent), landline telephone (38 percent) and a print or digital news subscription (26 percent).

"Our goal is to have everyone in the household's favourite show: the young kid in preschool, the teenager, the parents," Yeatman said. "When parents are going through their family's entertainment spending, we want them to feel great about their Netflix bill."

Meanwhile, the giant's competitors for kids' amusement have struggled. In January, only one of America's three biggest kids' TV networks, Nickelodeon, saw its ratings climb over the previous year - about 5 percent, Nielsen data show. The other two, the Disney Channel and Cartoon Network, saw its ratings crumble that month 25 percent.

Netflix's kids' spending spree comes at a time when viewers of all ages are drowning in stuff to watch. The deluge of new original content is growing at about five times the amount of time actually spent watching TV, researchers with Barclays said this month, a shift that would further hurt cable networks and shunt more viewers toward Netflix and other "digital aggregation platforms."

But the site is not alone in betting on kids. In January, HBO premiered its first new episodes of "Sesame Street," the psychedelic, puppet-filled series that had spent most of its 47 years on public television, after announcing it had purchased the show last year. The gamble, executives said, was that families who had paid to subscribe for HBO's signature adult fare, such as "Game of Thrones," would end up sticking around once the kids got hooked, too.

Modern kids' media saturation has given them far more nuanced tastes, said Bronwen O'Keefe, Nickelodeon's senior vice president of development and production. Her cable network is trying to follow, by moving away from the traditional kid sitcom and further into both "happy reality" series, with the same faces and sensibilities of viral YouTube videos, as well as serialised scripted shows with "more genre-bending, more complex storytelling, more drama, mystery and suspense."

Unless regulators enact clear-cross platform rules that acknowledge children deserve protections regardless of the platform, we can expect to see Netflix to be flooded with kid-targeted programme-length commercials.

Josh Golin, executive director for the Campaign for a Commercial-Free Childhood.

"Kids want everything," O'Keefe said. "They want more, more, more, and they want different, different, different, and so we're exploring every genre, every style."

Netflix allows viewers to set parental controls for "little kids," "older kids" and "teens," helping prevent young streamers from stumbling or otherwise finding their way into the many shows and movies on Netflix not designed with their eyes in mind.

But because the service is Web-centric, it is not regulated by longstanding kids'-TV rules, like those imposed on network giants by the Federal Communications Commission.

Kids want everything. They want more, more, more, and they want different, different, different, and so we're exploring every genre, every style.

Bronwen O'Keefe, Nickelodeon's senior vice president of development and production

"On traditional kids TV, there are at least some clear FCC regulations that dictate separation of commercial and programming content," Josh Golin, executive director for the Campaign for a Commercial-Free Childhood. "Unless regulators enact clear-cross platform rules that acknowledge children deserve protections regardless of the platform, we can expect to see Netflix to be flooded with . . . kid-targeted programme-length commercials."

Netflix is so popular with kids because its richly colourful menus and view-anywhere freedom offers "such a natural viewing behaviour for them," Yeatman said. About 57 percent of the parents surveyed last year by marketing firm Miner & Co. Studio said their kids would rather watch video on a handheld device rather than on TV.

But parents are increasingly contending with worries that all of that staring into screens might damage kids' eyes or inappropriately colour their thinking. Children's advocacy groups last year called for a federal investigation of YouTube Kids, Google's children-friendly video app, after advocates said impressionable viewers younger than 12 were being inundated by ads.

Melissa Henson, director of programs for the Parents Television Council, said complaints to the entertainment watchdog group have increased over concerns about Netflix, including the difficulty of finding show ratings information they're used to seeing on TV at the corner of the screen.

There is a pretty vast grey area where it's not real clear who the intended audience is.

Melissa Henson, director of programs for the Parents Television Council

Netflix's parental controls are clear on some devices but cloudier on others, Henson said, allowing the menus to mix kid and adult content so that "'Thomas the Tank Engine' is right alongside a hard-R movie." And some of Netflix's kid-targeting originals have "disappointed," she said: "Fuller House," a reboot of the squeaky clean '90s family drama, is peppered with innuendo crafted for the viewers who watched the original show as kids themselves.

"There is a pretty vast grey area where it's not real clear who the intended audience is," Henson said.

In 2011, Netflix first rolled out its kids section, highlighted by the colourful "character carousel" through which child viewers can jump quickly from "Inspector Gadget" to the "Beverly Hills Chihuahua." Believing kids weren't picky about watching old shows, the site poured money into acquiring lots of cheaper reruns, through content partnerships like a deal with Disney valued then at about $300 million a year.

The alliance was beautifully nourishing for Netflix; its competitors, including Nickelodeon, saw ratings weaken after viewers began streaming their own shows through Netflix's tubes. But in recent years, Netflix has spent increasingly more on original movies and TV shows to both protect against the growing costs and restrictions of licensing content, and create addictive works that their paying audiences won't want to live without.

I am getting every toy you put out.

A science-loving 10-year old

Netflix's stable of original kids' series is expected to swell to nearly 40 within a year, up from about three in 2014, Yeatman said. And because the network is available globally, the kids' unit is spending heavily on franchises with a wide range of target markets - not designing just for, say, 8-year-old boys looking for explosions on a Friday night.

This year, Netflix has unveiled some of its most disparate and ambitious ideas yet, from a live-action, "Hunger Games"-style battle royal set in an elite California boarding school ("The Greenhouse") to a whimsical cartoon series based on a toy line of plastic rag dolls ("Lalaloopsy").

The site will turn the franchise for Stretch Armstrong, the '70s gel-filled muscle-man toy, into a 26-episode animated series, rescuing the action figure from the ashes of two previously failed movie attempts. And it will host a summer premiere for "Beat Bugs," an animated series featuring dozens of Beatles songs performed by musicians including Pink and Eddie Vedder - a show only recently made possible, following a mammoth deal over the worldwide rights to the Beatles catalogue.

Netflix has staged focus groups with kids, a hallmark of the industry meant to pin down flitting minds into franchises they can sell. But executives said they rely even more on their internal viewing data, which allows them to see exactly how kids stream: "What we see kids watch is more important than what they say they watch," Yeatman said.

Because Netflix rolls out its programs around the world on the same day, kids can also provide viewing insight that Netflix has found surprisingly universal. Roughly 7 of the 10 most-watched kids' shows are consistently top-ranked across all countries, a sign that the cultural complexities of adult viewing are less important in the land of neon-washed sitcoms and cartoons.

"Project Mc2's" Netflix debut made it available in five spoken languages, 190 countries and practically any smartphone, tablet or computer a modern kid would deign to use. And the show was easily shared and celebrated, via the viral ways of the Web: One commenter, a self-professed science-loving 10-year-old, wrote in the show's comments, "I am getting every toy you put out."