Adults are unlikely to sign up to a streaming service to watch a cartoon featuring Willy Wonka and his Oompa Loompa workers at his chocolate factory. But Netflix is betting kid-friendly shows can keep them from cancelling their subscriptions.
The streaming titan is buying The Roald Dahl Story Company from the Dahl family and some managers. The business controls the rights to beloved stories such as Charlie and the Chocolate Factory, The Twits and The BFG. The deal — thought to be worth $500m-$1bn — underscores how kids’ TV has become the new front line in the battle for subscribers between Netflix, Disney and other streaming services.
These have become America’s go-to babysitter for parents desperate to catch up on emails or make dinner. Thrifty adults may leave a service as soon as they have binge-watched the latest hit series. Families stick around for shows children can watch on repeat.
Disney — home to Pixar, Marvel and Star Wars — has used its enviable library of family-friendly content to amass 116m global subscribers in just 20 months. Netflix has 209m. But Netflix is struggling in the US and Canada, where it lost 430,000 subscribers in the last quarter. It hopes to create a “unique universe” of interlinking stories and characters around Roald Dahl stories.
The model is Disney’s $4bn acquisition of Marvel in 2009. The move, criticised at the time, now looks like a masterstroke. To date, 25 Marvel-based films have grossed more than $25bn at the box office, making it by far the most lucrative film franchise of all time.
Assuming Netflix is paying $750m, the midpoint of the mooted price range, that works out to nearly 42 times The Roald Dahl Story Company’s pre-tax profit in 2019.
The deal is unlikely to generate the kind of pay-off Disney has seen with Marvel. Live-action movie rights to six Dahl works have been licensed out to other studios. This leaves Netflix producing mostly animated and live-action TV shows. Projects based on Dahl’s books such as HBO’s version of The Witches have failed to generate much excitement.
Moreover, Netflix, as a large US media group, may struggle to retain the underlying savagery that draws children to Dahl stories in the first place. Willy’s Wonkavision had the unfortunate side effect of diminishing the characters it filmed. Netflix should beware of making the same error.
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