Two issues are crucial in chasing the children's market, say analysts. One, the availability of a steady stream of commercial-free, kid-friendly content is a crucial draw for parents.
U.S. digital video viewer penetration in the 11 years old and under category is expected to jump to 74 percent by 2019, compared with 68 percent in 2013, according to research firm eMarketer.
By 2019, kids 11 years old and younger will make up about 8.7 percent of the total digital streaming market, which is forecast to include about 224 million people by the same time, compared with 196 million last year, eMarketer said.
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HBO, which had little interest in kids programming a few years ago, has to broaden its offerings if it wants to be considered a bonafide direct-to-consumer option, said Rich Greenfield, an analyst at BTIG, pointing to the network's new show "Vice" and a partnership with Bill Simmons as examples of its attempts to diversify its content.
Secondly, getting kids to identify with a platform early is perceived to help strengthen brand loyalty when they grow up, which makes children a very attractive audience for both advertising- and subscription-based platforms, according to media industry experts.
"It's all aimed at reducing the reasons to churn and giving more people in the household more reasons to use the service every single day, which wasn't so important in the bundle world, but is very important in the direct-to-consumer world," Greenfield said.
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BTIG has a "buy" rating on Netflix and a "neutral" rating on Time Warner, HBO's parent company.
By itself, the children's market is big. It is estimated that advertisers spend more than $12 billion per year to reach the youth market and that kids view more than 40,000 commercials each year, according to the American Psychological Association. Other estimates have placed the figure as high as $17 billion per year.
According to the Advertising Educational Fund, the market to kids 12 years old and under is valued at about $500 billion.