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November 02, 2022

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📺 Situational awareness: Paramount reported a 5% decline in its TV business from both pay-TV subscribers and ad revenue being down. But its streaming business is growing.

1 big thing: Moonbug CEO eyes gaming shopping spree

Illustration of a fridge covered in fridge magnet letters spelling out "ka-ching"

Illustration: Sarah Grillo/Axios

Flush with resources following its $3 billion sale to Candle Media, Moonbug Entertainment is scouring the market to boost its gaming business, its CEO René Rechtman tells Tim.

Why it matters: Moonbug is aiming to become one of the largest children's entertainment brands in the world. Even before it was bought by Candle Media, it was a busy dealmaker with 14 acquisitions since its launch in 2018.

Below is a Q&A with Rechtman:

How much of an expansion into gaming do you want to get into?

  • Big. The question is with which brands. The CoComelon brand [is] launching on Nintendo Switch, which is probably less than 20% of our audience. [But] that's a very recognized brand. It's a very protective brand, and they're very curious how they can invest more.
  • We will also launch a similar educational game on social, which is the other 70-80% of our audience. So that's definitely an expansion area.
  • From an acquisition point of view, I'm really keen on looking at any high-engaging social game so we can build a franchise, but also with the idea that our other brands can then be accelerated to market from a gaming point of view.

There's some really big IP out there. "Alvin and the Chipmunks" is trying sell. Pocketwatch hired Lazard to look at options. Are those kinds of things a possibility for you guys? Or are they too big?

  • No, no, there's nothing that's too big. We're looking at everything that is IP driven. We are an IP company; we believe that that's our strength.
  • We're probably looking the most at gaming. We just don't have that strength yet; that's why I'm more careful in jumping into that area. Buying studios without IP is not our business. Our business [is] to buy IP and make it relevant, develop it and make it stronger.
  • We're looking at some big acquisitions, whether they will happen or not ... I'm not the only party that will have to decide that.
  • Now, is it cheaper to buy now than it was six months ago? I'm not sure that the good assets are significantly cheaper than they were before. The money is, of course, more expensive and therefore there will be less buyers. That might put a pressure on price. I don't overpay.

How do you look at something like the metaverse?

  • I think there's a few metaverses out there, they might not be called metaverses. I'm not crazy about [that] word. If you look at Roblox, it is a closed metaverse — before everybody talked about metaverses.
  • Go on Roblox and you will see at least 50 copy games that somebody has done on "CoComelon" and "Blippi" that we have nothing to do with. That is something we need to be part of.
  • I think gaming is probably the step in that world for us.

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