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Social media platforms have become ubiquitous over the past 15 years, with many publicly traded companies making waves in this space. From established giants like Facebook and Twitter to newer entrants like TikTok and Snap Inc. (NYSE: SNAP), the competition is fierce and the potential for growth is enormous.
One segment that has caught the attention of investors and industry experts alike is the children's social media market. As more and more young people become active online, there is a growing need for platforms that cater specifically to their needs and interests.
Established players such as YouTube, a subsidiary of Alphabet Inc. (NASDAQ:GOOGL), and Instagram, owned by Meta Platforms Inc. (NASDAQ: META), have also introduced features specifically aimed at younger users, and new entrants are popping up all the time. As investors, it's important to keep an eye on these developments and assess the potential for growth in this exciting and rapidly evolving market.
In this article, we'll take a closer look at some of the key players in the children's social media space and explore the potential for growth and investment opportunities in this exciting segment of the social media and entertainment industries.
One company that is making a name for itself in the children's social media and entertainment space is Grom Social Enterprises Inc. (NASDAQ: GROM), a diversified media, technology, and entertainment company dedicated to family-friendly programming, web filtering technology, and safe social media for kids.
Grom Social Enterprises has several operating subsidiaries. Grom Social is their "mothership," a media platform devoted to safe social media for children under the age of 13, who are barred from using most social media platforms without parental permission. The app allows children to chat with their friends, view original content, and/or play games designed by the company, and it is monitored by live associates 365 days a year. The platform entertains children, allows them to interact with friends, access relevant news, and play proprietary games—all while teaching them how to be good digital citizens.
At the start of the year, Grom Social announced that they are currently working to rebrand and relaunch the Grom Mobile App. The app will relaunch with a focus on improving the in-app user experience, and GROM says they have identified unique features to develop and implement in 2023.
GROM Social CEO Darren Marks says, “We believe that these enhancements and additions will drive user traffic and pave the path to monetization, first through traditional advertising and sponsorship models and later through paid subscription.
Parents are demanding that these online spaces be better controlled to be more kid-friendly as the social media landscape changes. A study on early social media initiation found that “initiating social media platforms, namely Instagram or Snapchat, in later childhood (10 years of age or younger) was significantly associated with problematic digital behavior outcomes.”
With parents turning to other social platforms due to a lack of parental control capabilities and fear of what their children are doing on the internet, the Grom Mobile app has the potential to be a game changer in the space.
Another GROM subsidiary in the children's entertainment space is called Top Draw Animation. Top Draw produces animated content that has garnered recognition for some of the biggest media organizations in the world.
On March 8, GROM announced that they will lend their animation expertise to season two of Mansour, an emerging animated hit series from Bidaya Media, the production team behind Iftah Ya Simsim, which is the Arabic language version of Sesame Street.
“With rich characters, compelling storylines, and top-shelf animation, Bidaya Media has crafted the perfect hit series,” said Top Draw Animation President Russell Hicks. “We are thrilled to secure another major win for Top Draw, which continues to be a key growth driver for Grom.” Hicks continued.
Grom Social Enterprises Inc. also includes Grom Educational Services, which provides web filtering for K–12 schools, the government, and private businesses.
With their innovative children's social platform that includes social as well as educational and entertainment content, GROM is poised to pave their own path towards being the top player in the children's social media sector.
Their platform provides a safe and engaging space for kids to connect with their friends, share content, and learn new skills. With the potential for significant growth in this market, GROM is poised to become a major player in the children's social media and internet safety industry.
Snap Inc. (NYSE: SNAP), the disappearing photo application, rose to prominence on the backs of a younger user base than some of its contemporaries. The app seemingly exploded with the rate of use among teens and tweens with the app’s use of filters and content modification tools.
Last year, the company announced an update to make the app safer for its younger user base. The parental feature is an in-app tool called Family Center that allows parents to oversee their children's accounts. The home area of the Family Center displays three options: view the child's friends, see who they've messaged in the past week, and report abuse or safety concerns.
"Family Center is designed to reflect the way that parents engage with their teens in the real world, where parents usually know who their teens' friends are and when they are hanging out, but don't eavesdrop on their private conversations," according to the company. “.ur goal is to help empower parents and teens in a way that still protects a teenager's autonomy and privacy."
According to Pew Research, 80% of all parents with a child age 11 or younger say their child ever watches videos on YouTube, owned by Alphabet Inc. (NASDAQ: GOOGL), with 53% reporting that their child does this daily, including about a third who say this happens several times a day (35%).
In 2015, Google launched YouTube Kids, a website and video app, as a fun, family-friendly place for kids and families. The YouTube Kids app has popular children's videos and diverse new content, delivered in a way that's more child-friendly. The app provides a version of the YouTube service oriented solely towards children, with curated selections of content, parental control features, and filtering of videos deemed inappropriate for viewing by children under the age of 13.
YouTube Kids has faced criticism for multiple concerns, including the use of commercial advertising as well as algorithmic suggestions of videos that may be inappropriate for the app's target demographic of children under 13, as the app has been associated with a controversy surrounding disturbing and/or violent videos depicting characters from children's media franchises.
Criticism over the videos led YouTube to announce that it would take more stringent actions to review and filter such videos when reported by the community and prevent them from being accessible from within the YouTube Kids app.
While YouTube stands out as the most common online platform teens use, according to Pew Research, 62% of teens are also using Instagram, which is a subsidiary of Meta Platforms Inc. (NASDAQ: META). Instagram has made changes in the past, such as new safety settings for young users, making new accounts private by default for kids under 16, blocking some adults from interacting with teens on the platform, and restricting how advertisers can target its younger users.
The changes are a result of the increased pressure that lawmakers, regulators, parents, and child safety advocates have placed on social media platforms because they are concerned about the effects of social media on children's safety, privacy, and mental health.
While not involved in children's social media, Nextdoor Holdings Inc. (NYSE: KIND) is a company that could benefit from a government crackdown on foreign social media apps, such as Tik Tok.
Nextdoor is an app where you connect to the neighborhoods that users live in. Neighbors around the world use Nextdoor to receive trusted information from hyper-local users, give and get help, get things done, and build real-world connections with nearby neighbors, businesses, and public services. The Nextdoor application tends to cater towards an older audience, one that certainly has some crossover with other apps currently under scrutiny, and could see a push if other social media apps are banned from the US.
KIND unveiled a new line of products on March 7 to help small businesses expand in the face of escalating economic difficulties. According to the company, small business users now have access to an expanded set of free marketing tools, including events, polls, video, and unlimited business posts. This will unlock more ways to create meaningful connections with a high-intent local audience.
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