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Do you know what’s the most-viewed YouTube channel?
The first, most obvious answer that comes to mind is Mr. Beast.
But for your info, Mr. Beast is currently in number 6, and I’m talking about number one.
The current number #1 is Cocomelon…yeah, you read it right.
Screenshot from Social Blade
This all started when a guy named René Rechtman, who worked in the media industry for many years, thought about what are top 100 most viewed children’s bands online are.
He made a list of all brands and channels and found that big studios owned none of them. So, in 2018, he raised almost $145 million. Then he went to these big YouTube kids’ brands and bought:
Cocomelon for $103 million
Blippi for $17 million and
Little Baby Bum for $9 million
And then, 3 years later, Rene sold everything for 10X in return for roughly $3 billion and made an exit of $300 million alone, with his other co-founders and investors also profiting.
Screenshot from Variety
Amazing, right? But how did he achieve all of this?
Let’s get into today’s René founder story.
How this all started
A brief background of René Rechtman as a Danish entrepreneur.
Image source
Before he bought several kids’ brands.
René Rechtman is not new to the media industry. He has a long career in this field and co-founded media studios like Moonbug and TradeDoubler.
Today, he is an entrepreneur and a media public figure. He has 20 years of experience as a businessman and investor. Buying and selling media startups was not his first time.
Before selling kids’ brands, he made a lot of money buying and selling media startups. For example, he sold his video startup, GoViral, to AOL for around $100 million in 2015.
Image source
After selling GoViral to AOL, Rene teamed up with John Robsen to launch the Moonbug company. The idea behind building Moonbug was that…
Rene had realized that children’s entertainment was moving online — even toddlers watch YouTube on tablets and phones.
So, they start working on the mission and ideas. His 20 years in digital media equipped him with valuable tools. Moonbug started in early 2018 as Project ABC. It quickly raised venture capital to seek content.
Idea and creation
After raising the necessary capital, Moonbug’s founders set out to acquire popular kids’ channels rather than starting new shows from scratch.
The aim was to buy popular brands and then wanted to turn these brands into even bigger hits. With their industry experience and the daily rise of YouTube views worldwide, they see a great opportunity.
Image source
So, from 2018 to 2020, they acquired several top preschool brands.
Some noteworthy deals include:
UK channel Little Baby Bum for $9 million.
Cocomelon (a 3D-animated nursery rhymes channel) for $103 million
Blippi (a live-action children’s show) for $17 million
A set of nursery rhyme animations for $ 8 million
Screenshot from Wikipedia
After buying many top kids’ brands online, Moonbug has grown into one of the largest networks of kids’ channels. It has over 235 million subscribers across all its channels and 7 billion monthly views on YouTube.
Screenshot from Buzzacott
Now, with everything in place, it’s time for action.
Rene predicted that within a few years, Cocomelon would have the potential to be the biggest property in the world when it comes to kids’ viewership. Which today already is.
By the end of 2020, Rene and his team had created content in over 26 languages. They managed more than 15 YouTube channels, reaching global audiences and expanding their influence.
Marketing and monetization — going all in
Moonbug used its top hits to grow globally. It expanded through distribution and merchandising. Its shows were made available on 100+ platforms.
Yes, I am not talking about YouTube only; they publish content, on Netflix, Hulu, Amazon, Sky, HBO, and others.
For example, Cocomelon began streaming on Netflix in mid-2020. It reached kids with parents who like streaming.
By mid-2021, the company had produced content in over 25 languages and published it on more than 100 platforms. It’s easy to see where the revenue will go.
Screenshot from Times
But they didn’t stop there. Moonbug brought their content into everyone’s living room. They also made distribution deals in China, like with Tencent Video.
In just a few years, the company has shared its content with a global audience. This happened despite challenges with resistance and distribution.
Screenshot from Wikipedia
Over time, Moonbug marketing has begun transforming its kids’ channels into consumer brands for a global audience. The company has started brand licensing and merchandise aggressively.
They are making their kids’ characters into big sellers. This includes Netflix shows, toys, and other fun items. For example, Cocomelon toys and books are sold at retail.
Right now, its official online store carries 100+ baby items.
Their marketing strategy is like Disney’s. They monetize characters through merchandise, clothing, and games.
Screenshot from Wired newsletter
Slowly but steadily, Moonbug also moved their content to live events, podcasts, and even created theme park tours, on the other side, monetizing their music.
You might not believe it, but Cocomelon’s songs get millions of daily Spotify streams.
As I was researching Moonbug, I was really shocked by its explosive growth.
From 2019 to 2020, they moved from making $20 million a year to $55 million in revenue.
With each day and month, their viewership numbers are staggering.
For instance, the top 3 Moonbug channels now have over 200 billion total YouTube views since they launched. Recently, they had 3 billion views in just one month.
Plus, in early 2021, Cocomelon logged 33 billion minutes streamed on TV devices, far above any Netflix hit. Moonbug became one of the fastest-growing kids’ media companies ever, rivaling legacy networks.
How is it doing today
In November 2021, a new media company bought Moonbug. Kevin Mayer and Tom Staggs lead this company, with support from Blackstone.
According to Reuters, Moonbug’s valuation was as much as $3 billion.
Screenshot from Reuters
Profits are not public, but the company still earns money. It gets licensing and streaming revenue from its large audience. Cocomelon is often one of Netflix’s top kids’ shows. Blippi also streams to millions every month.
And as for the previous founder of Moonbug, René made $300 million for his 3 years of work. His co-founder, John, also made $300 million.
The head of M&A made $60 million. And the CFO made $30 million.
Rene and John keep their equity, so they are still motivated to grow Candle’s kids’ content empire.
Putting key story lessons together
As adults, we often chase shiny things. We forget to look around and find solutions to our problems. There’s no such thing as a boring business!
Rene and John have the skills and connections to build the kids’ empire. So, don’t think you can do that alone with just one laptop.
Finally, if you have a strong team and a solid idea, focus on raising capital. Trust your process, align with your values, and know when to simplify.
This is it for today.
See you next week.
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