HBO takes over 'Sesame Street,' looks to compete with Netflix for increasingly influential kids audience

Signaling the importance of kiddie audiences in direct-to-consumer subscription programing models, HBO has formed a unique partnership with PBS, taking first-run rights to the iconic series Sesame Street and fully backing the show's production.

The deal will mean that HBO will fully fund the public broadcaster's Sesame Workshop production division, enabling it to substantially increase the number of episodes it creates. Sesame Workshop will produce 35 episodes for the 45-year-old series next season, up from 18 last season.

Starting this fall, new, first-run episodes of Sesame Street will debut for HBO's 36 million U.S. households on its various platforms, including its new HBO Now streaming service. PBS will then be able to air these episodes nine months after they debut on HBO.

"Sesame Workshop's new partnership does not change the fundamental role PBS and stations play in the lives of families," Anne Bentley, a PBS spokeswoman, said in a statement.

Less than 10 percent of Sesame Street's production backing has come from public broadcasting funds, and Sesame Workshop has struggled to meet its budgetary needs in recent years. The company has worked to increase revenues through such things as sales of licensed toys and DVDs. 

Under terms of the partnership, HBO also licensed 150 archival episodes of Sesame Street.

"We were instantly thrilled for the opportunity to bring an iconic series like Sesame Street to HBO," said HBO CEO Richard Plepler. "Sesame Street stands for excellence and quality in children's programming, and we stand for excellence and quality in all programming. If we are going to lean into that and start to do more, we want to associate ourselves with a brand that is consummate to ourselves."

While the HBO partnership liberates the public broadcaster from sizable production burdens while still keeping it in the Sesame Street business, it also provides HBO with an essential asset needed to compete in an SVOD business increasingly influenced by younger audience members. 

Netflix (NASDAQ: NFLX), for example, has effectively used kids content -- both originally produced and from third parties like Nickelodeon and DreamWorks Animation -- to fuel its extraordinary subscriber growth.

For more:
- see this HBO release
- read this New York Times story
- read this Washington Post story
- read this Newsday story

Related articles:
Analyst: 'ESPN not ready to go direct-to-consumer any time soon'
HBO's Plepler: Less than 1% of HBO pay-TV subs have bolted for streaming service
HBO Now launch costs exceed network's $21M revenue rise in Q2

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