Kartoon Studios Reports Strong Progress and Provides Business Update for the Fourth Quarter and Full Year of 2023 - Seite 2

Mr. Heyward added: “Having reached break-even, we are extremely encouraged by the outlook for Kartoon Channel!, as we have cut our customer acquisition costs by approximately half from the first to the second half of 2023, enhancing our margins through better media efficiency and a strategic approach to content. In 2023, we also saw our paid subscriber base expand by 19% over the previous year, outperforming many streaming services that have faced declines. Notably, ‘free trials’—which are a critical predictor of our future growth—more than doubled in the fourth quarter of 2023 compared to the same period in 2022. We attribute our success to the high quality of our child safe content and, crucially, to our leadership team's direction, led domestically by Todd Steinman, President of Toon Media Networks who brings formidable experience and expertise in this industry, having held leadership positions at The Walt Disney Company and Warner Brothers. Kartoon Channel! has evolved into a leading destination for children's entertainment, offering thousands of episodes of meticulously curated, safe and family-friendly content. We believe our streaming services, bolstered by strong market reach, and the high quality of our service—as evidenced by our consistent 4.9 out of 5 stars rating on the Apple app store, are poised to be a significant driver of Kartoon Studios' growth strategy moving forward. We continue to be the highest-ranked streaming service in the Apple app store amongst our key competitors, including Netflix, Disney+, PBS Kids and Cartoon Network.   Kartoon Channel International, under the leadership of former Disney Channel Worldwide Managing Director, Paul Robinson, has also enjoyed growth, as it continuously expands its global footprint around the world.

“Our Mainframe Studios affiliate has seen a robust recovery and an influx of new projects following the resolution of the Writers Guild of America (WGA) and Screen Actors Guild (SAG) disputes in late Q3 and early Q4 of 2023. Despite Kartoon Studios and its affiliates not being members of the WGA or SAG, the strikes had a pronounced effect on the entire industry, leading to a reduction in spending and new content orders. Now, with the industry beginning to order new content, the Company is seizing this opportunity and Mainframe Studios has secured contracts for a substantial number of new content series, already in our production pipeline. These contracts, extending across the lifespan of the respective projects, are anticipated to begin contributing to our revenue in 2024, with further recognition in subsequent years. Importantly, our sales pipeline is more robust than ever, and with our streamlined operating structure, as well as additional initiatives underway to reduce costs through strategic implementation of new production technologies, we believe we are well positioned to further increase margins. Animation, a consistent and sought-after genre for broadcasters and streamers, remains a cornerstone of the Company’s strategy. Towards this end, Mainframe has established itself as a leading provider of content to major platforms like Netflix, Disney+, and YouTube, as well as to companies like Moonbug, Sony Kids, Mattel, and Spin Master, among others. In fact, Netflix reports over 315 million views of the studio’s productions on their streaming platform. The fact is, Mainframe Studios produces hits, which is evident by the success of titles, including CoComelon, the most-subscribed animation channel on YouTube and the most popular global animation show on Netflix; numerous Barbie movies and series, the #1 performing toy series on Netflix; Unicorn Academy, which hit the Netflix Global Top 10 across three weeks; Octonauts: Above & Beyond, the latest entry in the popular long-running series; and SuperKitties for Disney Junior, which I’m pleased to report begins its second season this month. The premier reputation of Mainframe Studios underscores our confidence in its ongoing success and its pivotal role in our future growth, as it continues to deliver for leading and high-performing brands,” continued Mr. Heyward.