April 6, 2017 6:58 AM EDT

Sesame Street prides itself on being one of the world’s most inclusive places, but it’s quite a hard joint to break into.

When the show introduced Julia, a character on the autism spectrum, in April, she had been gestating for six years. The first brand-new Muppet in a decade, Julia was initially planned as a cartoon character for the web but got such a big response that after an 18-month test run in the exurbia of digital storybooks and animation, she was canonized in Muppet form and allowed into the neighborhood.

The Sesame folks, who produce a 30-page-plus curriculum for the show every year, consulted with more than 250 experts and advocacy groups as Julia was being formed. A series of white papers had been written on her before she even had a face. She has a compendium of autistic characteristics, such as an increased sensitivity to sound and a tendency to flap her arms when excited. (She has a spare set of arms for such occasions.) The covering of the toy she carries, Fluffster, had to be changed because it would distress some kids with sensory issues. She arrived fully loaded with online resources for teachers and parents. As a final touch, Julia’s puppeteer is the mother of an autistic child.

For the autism community, Julia’s debut is a watershed moment. Not only do kids on the spectrum rarely see a kid like themselves on TV, but other kids don’t either, especially one who is treated as part of the gang. “It resets the baseline of understanding,” says Kristie Patten Koenig, chair of the department of occupational therapy at New York University. “If you have a child who’s autistic in your neighborhood, you have a different understanding than if you don’t. With Sesame Street, we all have an autistic child in our neighborhood.”

Getting Julia right may have been a tall order, but she isn’t close to the biggest challenge the organization is taking on. Kids’ TV has undergone a climate change, as the behavior and viewing patterns of families shift and former sources of revenue dry up. To survive, the show founded with the express purpose of reaching every child did a deal with subscribers-only HBO. That cultural adjustment has to be negotiated just as the organization attempts a more radical structural shift: Sesame Workshop no longer wants to make a TV show that tries to help kids learn and be kind. It wants to become a global educational force that happens to have a TV show.

Some form of Sesame Street is now broadcast in 150 countries: the show has introduced an Arab Muppet to Israeli TV and an HIV-positive Muppet in South Africa and Nigeria. In Afghanistan, says Sesame‘s research, 80% of TV-watching children and 70% of their parents tune in to Baghch-e-Simsim (Sesame Garden), which in 2016 introduced the hijab-wearing Zari, a model of girl empowerment.

Last year the folks who popularized the phrase “I can’t hear you–I have a banana in my ear,” joined forces with the International Rescue Committee. Their joint proposal to take educational and social-emotional support to refugee kids in Jordan, Lebanon, Iraq and Syria is now one of eight finalists for a prize from the MacArthur Foundation worth $100 million, alongside such global heavyweights as the Carter Center. “The MacArthur competition puts us in a different conversation,” says Sesame Workshop’s chief operating officer, Steve Youngwood.

The organization is also on the cusp of a pilot program that pairs Sesame Street characters with IBM’s Watson to test adaptive learning in schools. The plan is to figure out if a computer can interact with a kid in a way that would enable it to learn a child’s strengths and weaknesses and adjust its responses accordingly. But there are some very low-tech experiments too. “We take TVs on rickshaws into villages in Bangladesh” so kids can be exposed to healthy and positive messages, says Sherrie Westin, who heads the philanthropic and humanitarian arm of Sesame Workshop. She cites studies that suggest young kids are the most receptive to programs that lessen the effects of childhood trauma.

Sesame Workshop spent $22 million furthering its global ambitions last year, raised from a combination of foundations, government and corporate partners. But the State Department has funded Baghch-e-Simsim only through November. “If I don’t get funding for Afghanistan, I have to walk away,” says Westin.

While the organization tries to change the landscape overseas, the domestic terrain is shifting under its feet. Very few children watch Sesame Street the way their parents did, by sitting down in front of the TV at a given time to watch an hour-long Saturday Night Live–meets–Dr. Seuss mashup of celebrity appearances, pop-culture spoofs and the letter p. Nor do their parents buy episodes on DVD. They can just bring up whatever clip they want on the Internet. “The rules have changed so much,” says Sesame Workshop CEO Jeff Dunn. “Kids have changed so much. The funding models have changed so much.”

And that shift has been fast. In the last quarter of 2015, kids ages 2 to 11 watched about 11 hours of Internet video a month, according to Nielsen. By the end of 2016, that had jumped to 15 hours, an increase of 36% in one year. Meanwhile, time spent watching TV, either in real time or on demand, dropped 10% over the same period, to 90 hours a month. Ratings for Disney and Nickelodeon have been on a steady decline since 2012, even as the number of kids younger than 11 in the U.S. has held at about 48 million.

In response to these changes, Sesame Workshop cut its broadcast back to half an hour and in 2016 started a nimbler studio that makes only videos for the web. But its offerings are a little like kale on a buffet table groaning with eyeball candy. Kids have more tempting options. Since March 19, for example, a clip of Julia playing with Elmo has garnered more than half a million views on YouTube. That sounds respectable until compared with other kid-centric channels, like Ryan’s ToysReview, where a clip of a little boy playing with toys (educational value: zip) got more than 15 million views over the same period.

“[Sesame’s] videos move a little more slowly than kids are used to,” says Jill Murphy, editor in chief of Common Sense Media, a nonprofit that helps parents negotiate media. “That can be a positive thing. It teaches patience.” On the other hand, parents want their kids to watch stuff together, and older kids age out of Sesame Street earlier than they used to, so the younger ones switch off too.

Toddler junk food like Ryan’s ToysReview aren’t even Sesame Street‘s biggest rival. “It’s competing with every piece of content ever invented, from a cat video to Gone With the Wind,” says Gary Knell, a former Sesame Workshop CEO, who now runs the National Geographic Society. “That’s a bit daunting.”

Also daunting: from 2008 to 2016, Sesame Workshop lost 70% of its DVD revenues and 50% of its licensing income, Dunn says, mostly because of the one-two punch delivered by the iPad and streaming video. Endless free programming ensures that no character can dominate the toy shelves the way Elmo did in the ’90s. And even if Julia did become the must-have doll of the season, fewer kids play with toys because of all those games on the iPad.

In 2015, Dunn negotiated a deal with HBO, which covers the cost of producing the show for the next five years. Why did the cable giant best known for racy and violent entertainment want a wholesome kids’ show most people can get for free? In no small measure because Netflix and Amazon Prime have kids’ shows and HBO craves parents. “Programming that parents can trust has never been more important,” says Lisa Heller, HBO’s senior vice president of family and documentary programming. The arrangement, for an estimated $20 million-plus a year, gives HBO exclusive rights to new episodes for nine months. After that, PBS can air the show as it has done for almost half a century. Since most sub-5-year-olds don’t have much of a grasp of novelty, the Sesame executives guessed the change would not cannibalize their PBS audience.

So far the gamble appears to have paid off. Ratings for the show were 12% higher on PBS in 2016 than in 2015. And the HBO show is drawing a third more viewers this season than last. So the TV show, for now, seems safe. “What we hope is that quality rises to the top,” says COO Youngwood. “The HBO deal gives us five years to reinvent ourselves.”

As for changing the world, that might take a little longer. But it’s hard to completely dismiss the power of an operation that has outlived most TV shows simply by sticking by its principles. And its puppets.

This appears in the April 17, 2017 issue of TIME.

Contact us at letters@time.com.

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