Tax laws

US Privacy and Tax Laws Hit YouTube Revenue from Malaysia-Made Islamic Children’s Cartoons | Salaam Gateway


Islamic children’s cartoon Omar & Hana has been viewed more than 3 billion times in 50 countries on its YouTube channels, but the past year has been a struggle for Digital Durian, the Malaysian production company behind the show. ’emission. Monetization has been affected by new US tax and legal policy on collecting data from children’s content on streaming platforms, as the COVID-19 pandemic hit merchandising.

Launched in 2017, the show about four and six-year-old siblings Omar and Hana quickly gained popularity in Malaysia, with its YouTube channel now approaching 5 million subscribers.

When an English-language channel was launched, Omar & Hana drew an international audience, now with 830,000 subscribers and 100,000 daily views. There have been around 2 million views per day during Ramadan this year.

Despite so many viewers, “the past year has been difficult,” Sinan Ismail, CEO of Digital Durian, told Salaam Gateway.

“The pandemic has affected everyone, but it is the United States Children’s Online Privacy Protection Act (COPPA) that has affected us, with a 60-70% drop in YouTube revenue in the year last, ”he said.

Digital Durian’s business model is based on advertising revenue generated by YouTube, the world’s most popular free platform, split 45% for the platform and 55% for the content creator.

However, in September 2019, the owner of the streaming platform, Google, was forced into a $ 170 million settlement with the United States Federal Trade Commission for allegedly violating COPPA, which restricts collection. and the use of data from children under 13 without parents. consent.

YouTube faces a similar legal challenge in the UK for $ 3.2 billion.

In another success for content creators like Digital Durian, new US tax requirements this year are deducting 30% of YouTube revenue.

“There’s not much we can do about it, but YouTube is still a platform that we believe in because it’s free for the masses,” Sinan said.

The loss of revenue prompted Digital Durian to change its business model.

“We have broadcast YouTube channels in more languages ​​and produced more content. This again increased growth and revenues, ”Sinan said.

MULTILINGUAL

Similar to many content producers and companies that have ramped up digital expansion plans due to the pandemic, Digital Durian has ramped up the Arabic launch of Omar & Hana.

“We started dubbing in Arabic three years ago, but we didn’t really understand the market, or which Arabic dialect to use. We weren’t doing it right the first couple of times, but now we’ve been successful and the growth has been pretty organic, alhamdullilah, ”Sinan said.

Since September 2020, the Arab channel has accumulated 700,000 views per day and has 210,000 subscribers.

Saudi Arabia accounts for around 40% of viewers.

A channel in Urdu was also launched, attracting 30,000 subscribers, mainly in Pakistan.

The need to reach more eyeballs and the challenge of monetization prompted Digital Durian to release a dedicated Omar & Hana app, which has been downloaded half a million times.

“In terms of monetization [the app] doesn’t measure up to YouTube, but that a lot of downloads in less than a year is good digital growth outside of a streaming platform, ”Sinan said.

The merchandising of Omar & Hana toys and accessories has been affected by the drop in foot traffic at outlets in Southeast Asia due to the pandemic. Operated under a licensing model, Digital Durian has been unable to force licensees to adopt new sales strategies, such as e-commerce.

“It was pretty painful because the licensees aren’t that tech savvy,” Sinan said.

BACK TO SCHOOL

As the merchandising channel weakened, Digital Durian took a new direction by developing a preschool program.

Deployed in Malaysia, Omar & Hana content is used for educational modules.

“It helps monetization, and it also helps diversification, not to have everything in the YouTube basket,” Sinan said.

FINANCING THE 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 of becoming a world-class entertainment company with an Islamic essence. We will continue to do Omar & Hana, but we will also create new IP content, release more apps and enjoy worldwide distribution, ”Sinan said.

Digital Durian is seeking funding to achieve its international aspirations.

“They should be local and international investors, whether they are from venture capital or private equity funds, or foundations. The most important thing for us is to believe in our mission, ”said the CEO.

Fundraising for Muslim-themed children’s entertainment has proven difficult.

Canadian channel Muslim Kids TV (MKTV), for example, is currently seeking funding after five years of operation and has also struggled to attract the right kind of investor.

“There is no benchmark for Islamic content, and I think it will be a challenge to find investors, but not impossible,” Sinan believes.

“What we’re 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 or three years we may not be able to do it, but if they stay for eight or ten years it can be done, inchallah, ”he added. .

“The content that we create gets into children’s brains, which can be difficult to explain. Some people really understand it, others see it as just another cartoon. “

With the 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’re a small company of 100 people, so we need to make sure that we have sustainability and that we are in control of our own platform. We’re not really ready for our own platform yet because we don’t have any content other than our own, ”Ismail said.

By 2030, Digital Durian aims to have multiple shows and has developed indoor entertainment experiences, including theme parks.

“It’s not just about entertainment, but about having an Islamic essence that families can benefit from, like with Omar & Hana,” Sinan said.

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