One of YouTube’s most popular brands has been bought by a trio of entertainment-industry veterans with ties to Disney and the Teletubbies, as independent creators find the way to expand is deep-pocketed backers or combining with other video producers.
Little Baby Bum—YouTube’s 9th most-watched channel and a savior of harassed, time-poor parents worldwide—has been bought by an agency called Moonbug, which may use the channel to pursue other YouTube-based companies in hopes of building scale and pooling resources, according to Little Baby Bum co-founder Derek Holder.
Little Baby Bum’s 54-minute compilation of nursery rhymes is the 20th most-popular video in YouTube history, with 2.1 billion views. Its 3D animations set to saccharine electronic music gave busy parents a free, safe space to distract toddlers, at a time when critics found increasingly disturbing children’s content elsewhere on the site.
Moonbug was started by investor and former Walt Disney Co. employee Rene Rechtman, and Alfred Chubb and John Robson of WildBrain. That’s a division of Canada’s DHX Media, which controls famous kids’ brands including Ben 10, Popeye and the Teletubbies. They beat out four other bids for the company, according to Holder.
Rechtman already took part in one of the biggest deals on YouTube: the sale of Maker Studios to Disney, which paid more than $650 million for the network of tens of thousands of YouTube channels.
Companies like Maker were once popular targets for traditional media companies looking to better understand YouTube, seen as an avenue to vast online audiences who potentially could be lured back to traditional TV or continue to be served on the internet. DreamWorks Animation SKG acquired AwesomessnessTV, Disney bought Maker, ProsiebenSat.1 took over The Collective and RTL Group SA took on StyleHaul.
Yet while YouTube’s sales have climbed past $10 billion, video creators and companies on the site have struggled to find similar success. Most of these networks have had to lay off staff and look to new areas, like merchandise and proper TV shows, for added revenue. AwesomenessTV, valued at $650 million just a few years ago, sold for a small fraction of that sum this year.
Moonbug’s trio became directors of Little Baby Bum on July 10, public records show, with husband and wife Derek and Cannis Holder of London stepping aside from the company they founded in 2011. Terms of the sale of Little Baby Bum were confidential.
Harry Hugo of the Goat Agency, a marketing firm around social-media influencers, estimated the purchase price between £6 million ($7.8 million) and £8.5 million, based on the company’s assets, audience and other valuations in the YouTube platform.
“I can foresee that a lot of YouTube channels will be bought out or merged with OTT platforms or television-channel owners looking to get to new audiences or audiences that have switched to this new platform,” said Hugo, who is based in London.
The new owners plan to try to take the Little Baby Bum brand to traditional TV, while also making episodes around the characters that star in the YouTube videos, Holder said. By hiring new staff, the new owners will increase output from two videos per week to four or five. They’ll also experiment with new formats such as titles, thumbnails and scheduling of content to try and appeal even more to YouTube’s algorithm, which decides what to promote on the platform.
Rechtman through a spokesman declined to comment on the transaction.
As a condition of the sale, the Holders are unable to produce any children’s content in the future.
In the last year, YouTube has focused on promoting original content starring traditional Hollywood celebrities after a backlash from advertisers unhappy at their products being shown alongside unsuitable content, such as politically extreme messages. The move has been at the expense of individual YouTube creators, who helped build the community of 1.8 billion active logged-in users every month. At the same time, changes to YouTube’s algorithm angered creators already facing immense difficulty in earning a living.
“We’d come to a crossroads to take the company to the next level,” Holder said. “To get from that to what really needs to happen now for the brand is that it needs to have a proper team to upscale it.”