Communiqué 37: Cocomelon meets Omo Berry

Limitless Studios is building a content empire for the next generation of African kids, beginning with Omo Berry.

I.

In 2021, according to Nielsen, one show was the most streamed in the US within the Black community (6.8 billion minutes), the Hispanic community (8.8 billion minutes), and the Asian community (2.1 billion minutes). It was also the second most streamed show in the country, with approximately 33.2 billion minutes of viewing. The name of the show? Not Squid Game, not Lucifer, not You. It was Me.

It was Cocomelon. A show for toddlers.

Cocomelon was created on YouTube in September 2006 by Jay Jeon, a father of two children in Southern California, as a hobby project. He just wanted to make something his kids could enjoy. But over the years, his hobby exploded, generating over 3.3 billion monthly views and 2.14 million subscribers.

In 2020, it was acquired for an undisclosed fee by Moonbug Entertainment, a London-based company that produces online shows for kids. Moonbug, armed with $120 million in fresh capital, also acquired other highly-watched kids’ shows, including Blippi, another massive hit. This wasn’t the company’s first rodeo. In 2018, it acquired Little Baby Bum, also a YouTube show, and now licences it to platforms like BBC iPlayer, Hulu, Netflix and Amazon Prime.

By 2021, just three years into its existence, Moonbug was already eyeing an IPO when Candle Media approached with an acquisition offer of $3 billion. Candle Media, which didn’t even have a name at the time, was founded by former Disney executives Kevin Mayer and Tom Staggs and backed by private equity firm Blackstone.

What began as a YouTube show for kids was acquired for $3 billion. If this could happen, what else was possible? What other opportunities are there in kids’ entertainment today, especially in this streaming era, particularly with the push for diversity and the billion-dollar opportunities that come with it?

II.

I came across Omo Berry in 2021 while searching for a Cocomelon alternative. The latter had become so ubiquitous that I had to find out if there were others like it or others with the same potential. Omo Berry was distinct. 3D-animated Black kids who looked very much like children I’d grown up with. They spoke with familiar accents and sang songs that stirred my nostalgia. They used illustrations and examples similar to what my teachers taught me. In some way, I felt seen. Until then, I was mostly aware of shows like Cocomelon (which parent isn’t in 2022?), PJ Masks, Badamanu, and so on. But none of them was like Omo Berry. None was so profoundly and uniquely African. None was as representative of a reality I could relate with.

Kids dressed as Omo Berry characters for Halloween. Source: Limitless Studios

Omo Berry was created by Limitless Studios, a company producing educational content for kids, and it went live in February 2021. Like similar shows, it lives on YouTube. It has garnered more than 38.3 million views and over 96,000 subscribers. The three most popular videos on the channel have 12 million, 7.5 million, and 2.7 million views, respectively.

This seems very much like the early days of Cocomelon or the foundation of a company that could replicate Moonbug’s success, but for a grossly underrepresented market.

III.

Is it possible to replicate Cocomelon’s success or create a version of Moonbug in Africa? Are there grounds for investing in kids’ entertainment the way we would, say, invest in tech startups? Is there a basis for expecting outsized returns? Is there even a pathway to that reality?

These are difficult questions. There aren’t that many studios creating African kids’ content for streaming platforms, but Limitless Studios is making an attempt.

Africa’s population continues to snowball, and while that comes with its bag of problems, it also brings some opportunities. A significant amount of that growing population is gaining access to the Internet and more mobile devices with which they can stream content. Many are becoming parents whose kids – potentially millions – will need to consume educational and entertaining content. There aren’t many companies building for that future.

In addition to Africa’s fast-growing population, migration trends continue to tick upward. The Africa Center for Strategic Studies says, “The number of documented migrants within and from the African region has nearly doubled since 2010, continuing a two-decade trend of expansion.” While much of the migration is intraregional (that is, Africans mostly migrate within the continent), a significant portion is from the continent to other regions. Europe, with about 11 million), is the top destination for African migrants, with the Middle East (5 million) and North America (3 million) following closely.

At least 21 million documented Africans live in other African countries. Several members of Africa’s fast-growing diaspora population will go on to become parents, and millions of them will be looking to preserve their culture with their kids. There aren’t many better ways to do that than by exposing kids to content that accurately represents their parents’ origin. This, again, provides a solid foundation for companies like Limitless Studios.

One of the most significant advantages of producing content for kids is guaranteed loyalty. Establish a brand relationship with a kid at a young age, and you can be confident you have their attention for several years. This is perhaps one of Disney’s biggest competitive advantages. If you can get a child into your product ecosystem at an early age, you likely have them as a customer for a significant portion of their early life (for up to ten years). This creates second-order opportunities like merchandising, gaming, educational technology, etc.

Again, there aren’t many companies on the continent doing this with content. But what would a path to profitable returns look like?

IV.

In “Communiqué 36: An African $500-million media exit”, I wrote that for any African media company to be able to hit this milestone (a $500-million exit), it needs to be generating up to $100 million in annual revenue across 5-6 African markets and with a mix of 3-4 solid revenue sources. I also stated that the company must be genuinely pan-African, with significant funding, and a focus on niches, not mass audiences. Limitless Studios meets most of these criteria.

Most of Omo Berry’s views come from the US, the UK, and Nigeria, in that order. So far, Limitless Studios has raised $1.2 million and will look to bring in additional capital in the future. Agnes Soyode-Johnson, the company’s CEO, says convincing African investors to invest in Intellectual Property can be challenging.

Investors are more enamoured with industries like tech, telecoms, and finance, and only a few see the possibilities in content (which isn’t necessarily the same as investing in media ventures). There’s an argument to be made for more investment firms to make room for creative industry-savvy partners, but that’s a conversation for another day.

The global commercial and cultural rise of Africa’s entertainment industries shows that it just takes a few successful investments to make everyone else realise what is possible.

In October 2022, the Multichoice Group, the parent company of DStv, announced the launch of Moonbug Kids, a channel dedicated to airing content exclusively from the Moonbug portfolio. This move, in many ways, signalled that Moonbug had its sights on Africa. It also signalled Multichoice’s further willingness to invest in children and family-friendly entertainment. But most significantly, it provided a potential exit path for companies like Limitless Studios. It opened up the possibility of future commercial partnerships or an outright acquisition.

For now, the company is focused on expanding its content offerings, according to Soyode-Johnson. If all goes well, there could be an acquisition by a major studio on the horizon, however far into the future.

In the near term, licensing deals with streaming services like Amazon Prime Video, Netflix, and even Disney+ are possible, just as they have been for Moonbug Entertainment. Merchandising, app development, and music licensing are also on the product roadmap. However, all these are contingent on how big and culturally significant Limitless Studios’ shows can become.

Omo Berry is a good starting point. What else can it conjure?