Nickelodeon ’s revenue continues to decline

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Sorry, SpongeBob. Nickelodeon no longer rules the kids ad market.

Unable to count on youngsters parking themselves in front of the TV for shows like “SpongeBob SquarePants, Madison Avenue is accelerating the move of money out of Bikini Bottom.

Nickelodeon is on track to pull in $862.9 million in ad revenue this year, down 11 percent from $974.8 million in 2014, according to SNL Kagan. That’s nearly double the previous year’s 6 percent slide.

Viacom, which also owns younger-skewing cable nets like MTV, reported a nine percent decline in domestic ad revenue in the second quarter, fueling a meltdown in media stocks last week that was sparked by a weak ad market and rising cord-cutting fears.

The Big Three — Nickelodeon, Cartoon Network and Disney — have garnered an outsized share of kids marketing, but the addictive pull of Netflix, Minecraft and newer forms of entertainment is loosening their grip.

It’s been five years since Apple launched the iPad, turning kids into mobile video junkies able to swipe their way to a veritable candy store of their favorite shows without even having to reach up to the TV set.

They can catch “SpongeBob” and “Dora the Explorer” on Amazon’s instant video service, Cartoon Network’s “Adventure Time,” on Hulu and Disney’s “Phineas and Ferb” on Netflix.

Even Walmart has been hinting it might get into original kids programming through Vudu, its on-demand digital video service.

Starting this fall, Netflix will debut a slew of original kids shows, including a reboot of the movie “Mr. Peabody and Sherman” and “Care Bears and Cousins.”

Streaming and on-demand video options are rapidly becoming the mac and cheese of kids TV viewing. Dish Network boss Charlie Ergen told investors as much during the satellite-TV provider’s quarterly call. Kids shows “used to be right up there in the [No.] 2, 3 and 4 things people watch on Dish, but now they can watch an episode of ‘SpongeBob’ from 2007 and it’s irrelevant whether it’s new,” he said.

Ergen is also posturing ahead of next year’s renewal talks with Viacom. While ad revenue is falling at Nickelodeon, the channel is expected to command an additional five cents per-subscriber from its pay-TV distributors.

Despite higher affiliate fees, the ratings picture is bleak. A Bernstein Research report suggests kids cable networks lost 18 percent of viewing in the first quarter and 17 percent in the second.

“Mobile devices are exponentially expanding, yet not well-charted territory where much of the kids audience seems to migrate,” Nielsen wrote in a recent report.

But there are some strong hints. The toy licensing category shows rising interest in video games, with Microsoft-owned Minecraft in the top five of all toy licenses behind four Disney franchises, according to NPD Group.

Meanwhile, Netflix usage is up 30 percent while the average YouTube session is over 40 minutes, according to Morgan Stanley’s media analyst Benjamin Swinburne. He also made this prediction:

“Facebook will pass Disney in 2016 in US ad revenue and YouTube will pass Viacom and Time Warner in US ad revenue in 2017.”

© 2015, Premium Herald. All rights reserved.

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