Can Cocomelon become the first billion-dollar YouTube business?

Follow Us Get the newsletter Rene Rechtman thinks Cocomleon can be the next "Peppa Pig." If that sounds like gibberish to you, I will do my best to translate. Cocomelon is the most-viewed YouTube channel in the world. In the average month, its animated videos are viewed more than 3.5 billion times, which means they are more popular on YouTube than Taylor Swift, Netflix and ESPN combined. While those videos net Cocomelon creator Jay Jeon millions of dollars in advertising sales a year, the unassuming kids' media mogul recognizes the real money is made off of YouTube. The biggest kids' media franchises start as popular movies and TV shows but become toys, live events and theme park rides. "Peppa Pig," a show about an anthropomorphic pig, makes so much money from merchandise that toymaker Hasbro paid $3.8 billion for its owner eOne. ("Peppa Pig" also has its own theme park.) But few, if any, YouTube channels have turned their popularity on the world's biggest video site into global media concerns. (They might sell a couple books, produce some TV or sell some beauty products, however.) That's where Rechtman hopes to help. Rechtman is the chief executive officer of a company called Moonbug, which just purchased Cocomelon for an undisclosed price. Guided by the belief that YouTube has replaced Nickelodeon and Disney Channel as the home for millions of kids, Moonbug has raised more than $250 million to purchase a stable of kids channels, including Cocomelon, Blippi and Little Baby Bum, that generates more than 7 billion views a month.  This is not the first time a company has amassed a large network of YouTube channels. A decade ago, companies known as multi-channel networks (MCNs) signed up thousands of channels and claimed they would be the next media barons. They weren't. But Moonbug is different in a crucial aspect; it owns all the characters and shows it's buying, and has a plan to exploit them off YouTube. "For Cocomelon, or Blippi or Little Baby Bum to become billion-dollar franchises, they need to be on multiple platforms, have proper licensing and merchandise and have a great presence on music platforms," Rechtman told me. Having learned from the failures of MCNs, owners of major YouTube channels, especially those for kids, have started to leverage their large audiences on the video site into other business opportunities. Toy companies have noticed the ability of YouTube channels like "Ryan's World" to drive sales, and several streaming services, including Netflix, Hulu and Amazon have started to acquire the rights to shows based on popular YouTube channels for children. Even music streaming services want nursery rhymes for kids. "Cocomelon has the potential to be the biggest property in the world when it comes to kids," Rechtman told me. 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