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PE Playbook: Moonbug Entertainment
State of Play
The children's entertainment landscape has transformed drastically in recent years. Linear TV, once the dominant medium for kids’ content, has seen viewership collapse by 85–90% in the last decade. For example, in 2016, Disney Channel and Nickelodeon each averaged around 1.3 million daily U.S. viewers, but by 2023, those figures had plummeted to barely 130–180k (R.I.P. Spongebob!).
At the same time, children have flocked to on-demand digital video. As of 2024, kids 2–17 accounted for nearly 30% of all YouTube viewing, showing how platforms like YouTube and Netflix have become the new “Saturday morning cartoons.”
Riding on this mega-trend, ex-Disney and Wildbrain execs René Rechtman and John Robson launched Moonbug Entertainment in 2018. After successfully rolling up some of the top kid’s YouTube channels like CoComelon (the 3rd most subscribed channel worldwide), Moonbug was acquired by Blackstone in 2021 for $3 billion to continue its empire building in kid’s content.
In this piece, we’ll walk through the rise of Moonbug Entertainment and how it’s evolved from a YouTube content business into a mini-Disney.
How Moonbug Makes Money
To give you some context on what I mean by “empire building in kid’s content”, we should first touch on the various ways Moonbug is generating revenue.
YouTube & AVOD Advertising: At its core, Moonbug is a content company, so one obvious stream is advertising revenue from its vast viewership on digital channels. Its shows (e.g. CoComelon, Blippi, Little Baby Bum) garner billions of views on YouTube, generating a steady flow of ad income. For example, CoComelon’s channel alone was estimated to earn on the order of $100+ million annually from YouTube ads
Source: YouTube
Content Licensing & Distribution: The company distributes its shows on 100+ platforms globally – from Netflix, Hulu, and Amazon Prime Video to traditional broadcasters and streaming apps in Europe, Asia, and beyond. By selling rights or co-producing content with these outlets, Moonbug earns fees and royalties. For instance, it licensed CoComelon compilation episodes to Netflix starting in 2020, where CoComelon quickly became the #1 kids show on Netflix.
Source: Netflix
Consumer Products: The consumer products business is arguably Moonbug’s crown jewel. Following the playbook of Disney’s Mickey Mouse, Moonbug turned its characters into merchandising products.
Moonbug’s official online shop alone lists over 120 CoComelon products and 90 Blippi products, from easels to plushies.
Source: Moonbug
For context, a powerhouse preschool IP like Peppa Pig is estimated to generate around $229 million a year in merchandise and licensing revenue for its toy partners alone. In 2022 alone, Moonbug signed 66 new consumer product licensees.
Music & Podcasts: Moonbug’s shows are inherently musical (packed with nursery rhymes and songs), so the company distributes its soundtracks on Spotify, Apple Music, YouTube Music, etc. In 2024, Moonbug’s music streams across platforms actually outpaced those of Taylor Swift.
Experiential / Live Events: The company launched live touring shows such as “Blippi: The Musical” and the “CoComelon Live!” concert tour, all of which have sold out theaters by giving young kids a chance to sing and dance with characters in person. These real-world experiences not only generate ticket and merchandise sales on-site, but also deepen the brand connection with families (driving more content consumption and product demand in a virtuous cycle).
This multi-channel monetization makes Moonbug less dependent on any one platform or algorithm. It also mirrors the old Disney model, but optimized for the digital-first Gen Alpha audience.
Investment Thesis
For investors, Moonbug represents a compelling play at the intersection of digital media and evergreen children’s IP.
1. Unprecedented Digital Consumption by Kids
Kids are spending more time than ever (and binge watching) on their tablets and phones.
Source: Backlinko.com
And YouTube has become the dominant channel of consumption
Source: Precise Advertiser Report
YouTube Kids App Downloads Worldwide
Source: Statista
2. Long-Lasting Intellectual Property
Kids’ characters can have extraordinary staying power. Take these examples: Sesame Street, Thomas the Tank Engine, Barbie, Dora the Explorer, and Mickey Mouse.
Barbie, which was first produced in 1959, continues to print money for its owner Mattel.
Source: Statista
3. Multi-Channel Revenue Generation
One of the most enticing aspects of kids’ content IP is how efficiently it can be monetized through consumer products. Globally, licensed merchandise tied to character IP is estimated to be a $100 billion+ market.
Global retail sales of licensed character merchandise
Source: Statista
One of the most compelling aspects of licensing products for investors is the profitability – while content production has decent margins, merchandise licensing can be a cash cow (royalties from product sales flow with minimal incremental cost). And the success in merchandise licensing has contributed to Moonbug ~5x’ing its revenue in two years from ~$50 million in 2020 to ~$240 million in 2022.
4. Opportunity to Roll Up (Often, Single Creators)
A single creator working out of a garage can spark a phenomenon (as CoComelon’s original founders did), but to truly unlock global franchise value, you need a company that can professionalize production, navigate distribution deals, and court licensees.
Moonbug’s aggregation of multiple top channels created a virtuous cycle, where it gained negotiating leverage with platforms and retailers, cross-promoted content to grow its audience, and attracted more hit creators to join. From an investment perspective, this turns what could be a volatile hit-driven business into a more stable, diversified portfolio.
Company History: Moonbug Entertainment
Moonbug Entertainment was founded in 2018 by Réné Rechtman (former head of International at Maker Studios and CEO of The RightsXchange) and John Robson (former MD at WildBrain).
Early Capital Raises
Moonbug initially raised a small seed round in 2018, which was followed by a $145 million Series A in 2019 led by Raine Ventures, Felix Capital, Fertitta Capital, and others. This Series A provided the firepower to begin executing their acquisitions, which include:
1. Little Baby Bum (September 2018)
Acquired from: Cannis and Derek Holder
Deal value: Reportedly between $8–10 million
Stats at time of acquisition:
17M+ YouTube subs, 30B+ views, 9th most watched YouTube channel at the time
Popular for 3D-animated nursery rhymes like "Wheels on the Bus"
2. My Magic Pet Morphle (2019)
Created by: Arthur van Merwijk
Stats: ~5B lifetime views
Educational cartoon about a boy and his magical pet
3. Supa Strikas (2019)
Acquired from: Strika Entertainment
Pan-African soccer-themed animation with distribution in 100+ countries
4. CoComelon and Blippi (July 2020)
Acquired CoComelon from Treasure Studio (owned by a single producer Jay Jeon) and Blippi from producer Stevin John
Deal value: Reported at $120 million+ combined
Stats:
CoComelon: 90M+ YouTube subs, 3B monthly views
Blippi: Educational live-action series with 12B+ lifetime views
To finance this, Moonbug raised an additional $120 million growth round from investors led by Goldman Sachs
Acquisition by Candle Media / Blackstone (2021)
In November 2021, Moonbug was acquired by Candle Media, a media holding company founded by ex-Disney executives Kevin Mayer and Tom Staggs with capital backing from Blackstone. The deal value was reported at ~$3 billion, reflecting ~30x EBITDA and giving early investors a significant return. It’s an incredible story of how a thesis-driven roll-up play went from near zero revenue to $240M revenue in 4 years.
Source: RollUpEurope newsletter
Rechtman (CEO) and Robson (COO), each reportedly collected $300 million from the sale. Check out this article from RollUpEurope, which details the cap table and payout waterfall for Moonbug.
Looking Ahead
Following its acquisition by Candle Media, Moonbug continued to make strategic acquisitions to bolster its content library and international reach. Notable post-Blackstone deals include:
Little Angel (2022): A rapidly growing preschool YouTube channel known for nursery rhymes and family-oriented characters.
One Animation (2022): Singapore-based studio behind Oddbods, expanding Moonbug's global, non-verbal content footprint.
Moonbug is a classic private equity roll-up—consolidating a fragmented market—but applied to a nontraditional corner of the media world. It only came together through the rare mix of seasoned operators, deep-pocketed backers, and real conviction.
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