U.S. privacy, tax laws hit Malaysia-made Islamic children’s cartoon YouTube revenues
Islamic children’s cartoon Omar & Hana has been viewed over 3 billion times in 50 countries across its YouTube channels but this past year has been a struggle for Digital Durian, the Malaysian production company behind the show. Monetisation has been impacted by a new tax policy and U.S. legal cases on data collection from children’s content on streaming platforms, while the COVID-19 pandemic has hit merchandising.
Launched in 2017, the show about four and six-year-old siblings Omar and Hana quickly became popular in Malaysia, with its YouTube channel now nearing 5 million subscribers.
When an English language channel was launched, Omar & Hana attracted an international audience, with 830,000 now subscribing and daily views reaching 100,000. There were some 2 million views per day during Ramadan this year.
Despite such high viewing numbers, “the last year was challenging,” Sinan Ismail, CEO of Digital Durian told Salaam Gateway.
“The pandemic affected everyone, but it was the USA’s Children’s Online Privacy Protection Act (COPPA) that impacted us, with a drop of 60-70% in YouTube revenues last year,” he said.
Digital Durian’s business model is based on advertising revenues generated from the world’s most popular free-to-watch platform, YouTube, split 45% for the platform and 55% for the content creator.
However, in September 2019, the owner of the streaming platform, Google, was forced to reach a $170 million settlement with the U.S. Federal Trade Commission for allegedly violating COPPA, which restricts the collection and use of data from children under 13 years old without parental consent.
YouTube is facing a similar legal challenge in the UK for $3.2 billion.
In another hit to content creators like Digital Durian, new U.S. tax requirements this year deduct 30% of earnings on YouTube.
“There is not much we can do about that, but YouTube is still a platform we believe in as it is free for the masses,” said Sinan.
The loss in revenues has prompted Digital Durian to alter its business model.
“We pushed out YouTube channels in more languages and produced more content. It pushed growth and revenues up again,” Sinan said.
MULTILINGUAL
Similar to many content producers and companies that accelerated digital expansion plans due to the pandemic, Digital Durian sped up Omar & Hana’s Arabic launch.
“We started dubbing into Arabic three years ago, but we did not really understand the market, or what Arabic dialect to use. We weren’t doing it right the first two times, but now we’ve nailed it and growth has been pretty organic, alhamdullilah,” said Sinan.
Since September 2020, the Arabic channel has attracted 700,000 views a day and has 210,000 subscribers.
Saudi Arabia accounts for around 40% of viewers.
An Urdu channel was also launched, attracting 30,000 subscribers, primarily in Pakistan.
The need to reach more eyeballs and the monetisation challenge pushed Digital Durian to release a dedicated Omar & Hana app, which has been downloaded half a million times.
“In monetisation terms [the app] is not up to YouTube levels, but that many downloads in less than a year is good digital growth outside of a streaming platform,” said Sinan.
Merchandising of Omar & Hana toys and accessories has been hit by the drop in foot traffic at retail outlets in Southeast Asia due to the pandemic. Operated through a licencing model, Digital Durian was not able to force licencees to adopt new sales strategies, such as through e-commerce.
“It has been quite painful, as licencees are not that tech savvy,” Sinan said.
BACK TO SCHOOL
As the merchandising channel weakened, Digital Durian pivoted in a new direction, developing a pre-school curriculum.
Rolled out in Malaysia, Omar & Hana content is being used for educational modules.
“It is helping monetisation, and it is also diversification, to not have everything in the YouTube basket,” said Sinan.
FUNDING FOR GLOBAL ROADMAP TO 2030
Digital Durian is now expanding its plans with a roadmap for 2030.
“The biggest change is the direction of the company, with a long-term goal to become a world-class entertainment company with an Islamic essence. We will continue doing Omar & Hana, but we will also create new intellectual property content, release more apps and have global distribution,” said Sinan.
Digital Durian is seeking funding to achieve its international aspirations.
“It should be local and international investors, whether from venture capital funds or private equity, or foundations. Mostly importantly for us is belief in our mission,” said the CEO.
Raising funding for Muslim-themed children’s entertainment has proven challenging.
Canada-based Muslim Kids TV (MKTV) for instance is currently seeking funding after five years of operations, and has also struggled to attract the right kind of investor.
“There is no bench-marking for Islamic content, and I think it will be a challenge to find investors, but not impossible,” Sinan believes.
“What we are doing is huge, the need is there, the impact is there to see, but the longer-term impact will not be there to see immediately. If investors expect returns in two to three years, we maybe can’t do that, but if they stay for eight or 10 years it can be done, inshallah,” he added.
“The content we are creating goes into the brains of kids, which can be hard to explain. Some people really get it, others see it as just another cartoon.”
With funding in the bag, Digital Durian may look to partner with a streaming channel, provided they have control over their content, or develop their own streaming platform.
“We are a small company with 100 people, so we need to make sure we have sustainability and that we control our own platform. We are not really ready yet for our own platform as we have no other content but ours,” said Ismail.
By 2030, Digital Durian aims to have multiple shows and have developed indoor entertainment experiences, including theme parks.
“It is not just entertainment, but having an Islamic essence that families can benefit from, as with Omar & Hana,” said Sinan.
© SalaamGateway.com 2021 All Rights Reserved
