Streaming giants take over: Sesame Street’s deal marks end of ‘Peak TV’ era

Sesame Street’s new distribution deals with Netflix and PBS marks more than a shift in where Elmo and Big Bird call home—it reflects a broader, ongoing power shift from traditional media to streaming giants in the realm of children’s entertainment. As legacy broadcasters shrink their investments, and streaming platforms expand their offerings, the fate of educational media—and the institutions that produce it—is increasingly shaped by Silicon Valley rather than public or cable networks.

Sesame Street’s deal with Netflix, announced in May 2025, signals a new chapter for the 56-year-old show that has historically relied on public and cable television. For the first time in over a decade, new episodes will premiere simultaneously on Netflix and PBS, the latter of which had previously been forced to wait months under the former HBO deal.

While PBS remains part of the picture, it is Netflix—with over 300 million global subscribers—that now offers the broader reach and financial lifeline Sesame Workshop desperately needs after the expiration of its $30–35 million annual deal with HBO, and a 20% staff layoff earlier this year.

Traditional media companies like Warner Bros. Discovery, HBO’s parent, have dramatically reduced investments in children's content amid broader cost-cutting. As the New York Times reported, the network let its lucrative deal lapse and replaced it with a much smaller $6 million arrangement for back-catalog episodes.

This withdrawal reflects the collapse of what industry insiders once called the “Peak TV” era—a time of overspending on content in the battle for streaming dominance. According to Variety, most legacy media companies are now scaling back and aiming for profitability rather than content volume.

Unlike traditional networks, streaming platforms can leverage deep viewer data to fine-tune programming and personalize recommendations. This advantage is critical in children’s entertainment, where high engagement and repeat viewing are essential.

Netflix, in particular, has identified children’s content as a strategic pillar. In a 2024 earnings call, the company stated that children’s programming accounts for roughly 15% of all viewing on the platform. It has backed this up with acquisitions and exclusive content deals for titles like Peppa Pig, Ms. Rachel, and now Sesame Street.Additionally, Netflix's plan to develop Sesame Street-themed games reflects a multimedia approach that extends beyond passive viewing—a format PBS cannot match. By integrating characters into interactive formats, the company is adapting legacy brands for digital-native audiences.