SpongeBob's Big Problem: An Ocean of Streaming Video

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SpongeBob's Big Problem: An Ocean of Streaming Video"Are you ready, kids?" asks the animated patch-eyed pirate at the beginning of every SpongeBob SquarePants episode. "Aye, aye, Captain," responds a chorus of kids.

"I can't hear you," bellows the pirate hat-donning captain.

The theme music kicks in shortly after that, but maybe the reason the captain can't hear the kids is because there aren't as many around as there used to be.

Viacom's (VIA) Nickelodeon has a problem.

Fresh ratings data from Nielsen shows that Nickelodeon's popularity is slipping fast. Ratings fell 11% in September relative to September of last year, with an average of 969,000 kids between the ages of two and 11 tuning in. Things have only gotten worse. Viewership dropped 17% in October, only to plunge by 19% through the first three weeks of November.

Give it up, Captain. The kids can't hear you, either.

In the Nick of Time

A logical explanation for Nick's slip is that the competition has gotten smarter.

Disney's (DIS) Disney Channel ratings have climbed by nearly 6% during the same time. Discovery (DISCA) also teamed up with Hasbro (HAS) to reposition its Discovery Kids channel as The Hub earlier this year, and ratings there have jumped more than 50% -- though we're only talking about an average audience of 46,000 kiddies for the second-tier cable channel.

Those are the exceptions, though. Time Warner's (TWX) Cartoon Network and Disney's own XD have been posting lower ratings, though neither channel is experiencing the kind of freefall that Nickelodeon is going through right now.

Overall, Nielsen's data shows that the number of young viewers has actually increased over the past year, but they're not watching the tube the same way. They're not checking out as much TV during the day, and they're also spending more time away from the kid-geared channels.

Is that really such a surprise? Did we really think that today's children would continue to consume television the same way previous generations did?

Generation Stream

Many of today's kids have grown up not having to wait for content, much less having to sit through prolonged commercial breaks. Google's (GOOG) YouTube has taught them that content is short in nature. YouTube, Hulu, and Netflix (NFLX) -- the three most popular video streaming options these days -- have also taught kids that the video begins when they want it to start.

Choice? Are you kidding? Their older siblings may have been down to switching between Disney Channel and Nickelodeon, but today's youngsters have tens of thousands of on-demand options through Netflix and Hulu -- and countless more via YouTube.

Netflix made its own luck on this front when it created a kid-friendly landing page earlier this year. Folks streaming Netflix on their computers or through Wii video game consoles can explore the site's family friendly streaming options though an interface with familiar character icons and content. Kids get what they want, and parents can rest easy knowing that Junior isn't going to go from Wallace & Gromit to Scarface.

However, the popularity of Netflix and YouTube with younger audiences also leads us to another likely conclusion: Kids are consuming a lot of video, but they're not necessarily consuming a lot of television.

Tablets, iPod touch media players, and smartphones handed over by brave parents are how kids are doing a lot of their video watching these days. There may not be a definitive study on how much content kids are consuming through Web-tethered gadgetry, but it may help explain why tired eyes just aren't in the mood for Nickelodeon after catching a few Phineas and Ferb episodes on an iPad 2 or Kindle Fire.

Grinch by Grinch

This is naturally a lousy time for Nickelodeon to be pulling a disappearing act in the ratings book. Toy makers are trying to advertise on kid-friendly networks where they can reach the largest ideal audience. Unless the trend reverses, cable and satellite television providers will be angling for better terms when it's time to renew those programming deals.

The fact that Disney's ratings have climbed nearly 6% over the past year should actually come as encouraging news to Nickelodeon. It implies that programming tweaks may be all that the well-known network needs to get back on track.

However, the longer-term trend isn't as encouraging. The days of going to school and everybody in the class discussing the same show they watched the night before are over. Today's kids are consuming customized programming.

Seth Godin's We Are All Weird argues that the days of mass marketing are over. The Internet has created a new playing field of custom-tailored consumption. Everyone is allowed to be different, armed with the tools to demand -- and get -- the content that they crave no matter how thin the niche.

Today's kids know it. Viacom doesn't want to know it.

"Are you ready, kids?"

Not only are they ready, Captain -- but they've gone and sailed on without you, on a fleet of ships built for one.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Disney and Netflix. The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of Netflix, Google, Walt Disney, and Hasbro.


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181 Comments

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savemycountry911

Why is this cartoon character a sponge and why does he live in a pineapple under the sea? Makes no sense.

December 07 2011 at 10:45 PM Report abuse +1 rate up rate down Reply
Pamaleener

Maybe if you kept it on at the same time in the mornings and stopped with the jerking it around, you could keep regular watchers watching. I'm 53 yrs old and love watching it with my kids while they are getting ready for school. Now, they have to keep searching for something to watch and its nothing like getting to watch Sponge Bob every morning. Changing it around like that will even stop the faithful watchers for looking to see if its on.

December 03 2011 at 2:24 AM Report abuse rate up rate down Reply
wildinaz

nick shows now SUUUCCCKKK!
classic 90s shows are better
nothen is good on nick any more
**** nick at nite sucks for playing crap shows friends and the nanny!
nick needs to stop airing crap shows and bring in real good ones

looney toons is better then 90% OF NICK SHOWS THAT ARE ON NOW!!!!!!

December 03 2011 at 1:29 AM Report abuse rate up rate down Reply
Richard

I love Spongebob -- please, please find a way to keep him going ----- not sure what I would do without Bikini Bottom and all the folks that live there ---

December 03 2011 at 1:27 AM Report abuse rate up rate down Reply
BUDWISERDEE

well i love spongebob!! when my grandkids come over every weeekend they love it cuz they dont have cable to watch at their house..but thats the thing too. i know many who got rid of cable cuz of the cost and now the boys watch pbs and they love it!!! but i agree with weiiwell, show have gotten lamer where as spongebob and patrick did silly things but it lead up to a lesson..now its just whatever..not even as funny anymore!!

December 03 2011 at 1:15 AM Report abuse rate up rate down Reply
weiiwell

Eh, I'm a teenager. However, I still watch cartoons, and Sponegbob is not one one them anymore. I'll tell you why I stopped watching. Spongebob used to be fun, and had clean humor for the most part. The old episodes a lot of times even had morals about friendship and things without being cheesy. But now? It's creepy stupid humor. They even hinted a gay joke about Squidward and Spongebob. Who wants kids to watch that? Not to mention Spongebob's IQ seemed to drop. He went from innocent, fun loving optomist to a stereotypically gay idiot. Money ruins everything, I guess.

December 03 2011 at 1:03 AM Report abuse rate up rate down Reply
Shadd

who the heck has time for cable tv anymore heh,.. regular tv back when I was a kid had saturday morning cartoons,.. now they dont even play cartoons at all anymore on regular tv. I think we're moving out of the society of television again due to people wanting what they want and looking for what they want to watch rather than wait to see it in a couple hours and constantly being bombarded with advertisements they dont want to see! . People are tired of the advertising and waiting! This is why we have new technology, even reported that cd's will be non existant within a year or 2.

December 03 2011 at 12:45 AM Report abuse +1 rate up rate down Reply
Steve Slawinski

How exactly do they know kids are not watching. Every kid I know watches spongebob and they love it. Adults also watch (me included). Just because this article is on the internet does not mean it is the gospel truth. There are a lot of devious marketing techniques out there that would love to destroy Spongebob. We have to remember that.

December 03 2011 at 12:38 AM Report abuse +1 rate up rate down Reply
Amanda

Out of all the horrid shows my kids force me to watch (Adventure Time, Regular Show, Avatar, Amazing world of Gumball, ICarly, Victorious, Ned'sDeclassified School Survival Guide, Fairly Oddparents, Johnny Test, Ant Farm, So Random, etc.) Spongebob is by far the best. At least I can enjoy this show without feeling like I want to smash my TV through the wall! Spongebob is funny and entertaining. It's parent friendly, too. The problem with Nick is that they play reruns all day long - the same shows, over and over.The same episode of ISnarly they played originally is the same one they'll be playing hours later. Of course kids are losing interest! Who wants to watch the same episodes of the same show repeatedly, day after day after day? Seriously, wake up!

December 02 2011 at 11:52 PM Report abuse +1 rate up rate down Reply
2 replies to Amanda's comment
rboy509

Have you even watched a single episode of Avatar: The Last Airbender? That show is considered to be one of the greatest pieces of Western animation ever made. Really, if you haven't seen it, you need to. It definitely challenges the notion of cartoons being solely for children.
But stay away from the M. Night Shamalama-whatever movie. That was just plain terrible.

December 03 2011 at 12:16 AM Report abuse +3 rate up rate down Reply
rboy509

Yeah, um... have you ever even watched a single episode of Avatar: The Last Airbender? There's a reason why people call it one of the greatest pieces of Western animation ever made. Really. It really challenges the notions of cartoons being just for kids (you know, by including things like genocide and what-have-you).
But really, stay away from the movie. That was just an embarrassment.

December 03 2011 at 12:24 AM Report abuse +1 rate up rate down Reply
Jaye

Nickelodeon should listen to its former viewers ages 20 to 30 and bring back the classic shows from the 80s and 90s to help boost ratings. Say around primetime? a nice block from 8pm to 12midnight would be a great idea. better than "90's Nick" on Teen Nick at 12midnight to 3am

December 02 2011 at 11:52 PM Report abuse +2 rate up rate down Reply