Sesame Street may be the only kids' show in history to be sold on DVDs (specifically, the "Old School" sets featuring classic episodes from the '70s and '80s) that actually warn you that they may not be appropriate for children. After watching some of the clips on this page, you'll probably see why. Can you tell me how to get, how to get to a child psychiatrist?!
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Look at most videos featuring Placido Flamingo on Youtube. Half the comments are on how he terrified children.
It was heavily rumored this was why the character is no longer used on the show, but it apparently was due to the puppeteer's death, which brings up a lot of questions entirely.
A frequently cited example of this is the sketch where Bert and Ernie are exploring a pyramid. In it, there's a really creepy looking statue that looks almost identical to Ernie that moves and talks in a severely creepy voice when Bert's not in the room.
"Sound of B". The ending has Beautiful Day Monster screaming the "B" sound while the screen turns white (apparently to simulate the effect of the camera lens fogging up from the sound.)
"Count to Ten with Nobody". An odd little sketch from the early years of Sesame Street, where a floating face that looks like it's made of rubber bands, with quite possibly one of the scariest voices ever heard on the show counts to ten while weird animations and sound effects play continuously in the background. What Do You Mean, It Wasn't Made on Drugs?, indeed.
A commonly mentioned one would have to be the "I Beam" sketch. The highly suspenseful music in the background is just plain unsettling.
In the classic segment "Disco Frog", a really freaky looking ghostly silhouette of Kermit is featured. And in case you were born just a bit too late to catch it when it was still being used on the show, it made a return on an episode of Shalom Sesame (a miniseries about Israeli culture that aired in 1986 and 1990), this time partly dubbed into Hebrew. If anything, the dubbing made it even freakier.
This creepy as hell segment. Whoever designed that bird must've been having one hell of a trip.
There was also the Mysterious Theater sketches from the early 1990s. Though the stories about Sherlock Hemlock and his sidekick dog Watson weren't so scary, the opening title card (featuring a sad woman in mourning clothes next to a gravestone with the title on it, taken directly from the real Mystery! intro), the music, and the host Vincent Twice (a Muppet parody of former Mystery! host Vincent Price) scared many viewers during its run. It could be a reason why the segments have never been released on home video or rerun since 1999.
The ending of Kermit's More-and-Less lecture. After Kermit scolds Cookie Monster and lightly threatens to "teach a lesson", a gang of creepy monsters start surrounding poor Kermit in a threatening manner. The scary music does not help.
This short skit about the letter G certainly qualifies. "G" words were recited by Alice Margatroid on a stage with short cutscenes demonstrating the meaning of that word. It would have been completely forgettable if not for the last word spoken: "Gone", with a camera cut-back to the stage to show Alice gone. Sure, she could have just left, it being the end of her role...but why are her clothes still on the chair!? And why does that giant "G" that comes up right after that look so menacing?
Another unsettling G skit  has Grover next to a foam-rubber G as he talks about the various G words and how important they are. As he talks, the G begins move back and forth, and moreso, groan in a rather alarming way, all unnoticed by Grover of course. By the time he gets to the word "grow" at 1:40 the G begins to grow at an alarming rate as well as constantly growling; Grover finally runs offstage before the letter explodes.
There's a really old skit where the Count goes to Charlie's Restaurant, and asks Grover for hot dogs, just to count them. When Grover refuses to get more, because he won't eat them, the Count forces him by hypnosis. Then, Grover runs in fast motion for hot dogs until he faints. The Count's hypnotic power proved so scary for kids that CTW removed it.
Another sketch has the Count sleeping over at Ernie and Bert's place, and keeping Ernie awake by counting sheep. In the morning, an extremely haggard, zombie-like Ernie emerges, in a daze and still counting. ("Forty-three thousand...eight hundred and ninety-one...forty-three thousand...eight-hundred and ninety-two...")
Though the way he randomly interjects "Sheep." in the same dazed monotone when Bert tries to get his attention might be funny enough to be Nightmare Retardant.
The Vishnu Sketch showed a four-armed Hindu god or some such counting to twenty on his fingers while a female voice-over sang the numbers to a vaguely Indian-sounding tune. When you're 2, there is something indefinably creepy about that.
A short from the same period, with a similar vibe, featured the late Northern Calloway ("David") dressed in some sort of Orientalist garb. He played a shehnai and "charmed" a floating number 12 out of a snake-basket, while sitar music played. The whole thing was rather eerie and unsettling, but especially the end: David folded his arms, intoned "twellllve" and slowly vanished.
There was a standalone Elmo sketch where British comedian Ricky Gervais appears at Elmo's bedtime to sing him a "celebrity lullaby". After some funny parental bonuses, Ricky then begins the song, centered on the letter N—which begins by gently singing about nighttime and nightgown... to SCREAMING "NAHNAHNAHNAHNAH" at the top of his lungs at a traumatized Elmo, who responds with a theme-appropriate "No!" and ends up too terrified to sleep.
This short that tried to teach kids about pattern completion. The sound that plays when the missing space is revealed is horrifying.
The Wegman Dogs. For some, their first introduction to Uncanny Valley - either a dog's head on a human's body, or human hands on a dog that's walking erect for some reason, all wearing clothes and wigs and speaking in creepy monotone. Some people look back fondly on these sketches. Still, just as many admit to shuddering upon viewing the shorts today.
"Wet Paint". The YouTube comments speak for themselves.
The band's other song "Danger's No Stranger" wasn't much better. Same musical style, but now it's about things that can hurt you. What fun!
Two cosplayers showed up to Dragoncon 2012 dressed up as a realistic-looking Ernie and Bert. Unfortunately, it ended up looking VERY uncanny, to the point where the article calls them "Childhood Ruining Nightmare Fuel". See the horrifying, terrifying photos here and here◊...if you dare!
The "Teeny Little Super Guy". Sure, he dispenses good, down-to-earth advice... but damn it if he isn't creepy. The way he rises up and down from solid surfaces like a ghost, his gravely smoker voice and the choppy, awkward animation make him very unsettling to watch.
This particular sketch, which was first transmitted around 1986, is pure Nightmare Fuel. It features creepy wind-up toys doing things of their own accord and a mechanical arm that plays piano and spells out "SESAME STREET", intercut with footage of satellites. To top it off, it's all set to Janko Nilovic's "Portrait d'Un Robot", a creepy-as-heck piece of music (for any Australian fans playing at home, it was also the "Rocket Clock" theme from Play School). It's implied that its purpose is to somehow teach kids about machines and mechanics, but it just smacks of What Do You Mean, It Wasn't Made on Drugs?.
Similarly, the classic 1970s Bert and Ernie song, "Imagination", was originally a longer storyline, in which we actually see Ernie having nightmares about "Dark shadows, spooky things, and spooky scary monsters that creep up at you and go, 'Wubba-wubba!'." Ernie's nightmare ended up being too scary for the kids watching, so instead of the whole storyline being used for an episode of the show, just the part where Bert helps Ernie calm his fears by imagining balloons with the song "Imagination" was used as an insert.
Rosita originally had wing flaps as she was a fruit bat. After several seasons they removed the flaps and she became a Monster. The in-series reason is she was gliding through a cave with her family and it was so windy that they blew off. Let that sink in for a moment. The fact she said it wasn't painful despite all this, and that she hates to think about it, makes you think it was such a bad injury that her body blocked out the pain the same way you do when you get a large injury.
These kids are seen running and hiding from a giant fucking mutant rabbit. Even worse is when the funky BGM stops dead in its tracks when the kids hide behind trees and the rabbit passes by without seeing them, and then continues on as if nothing happened once it passes (and the kids run off).
The 1976 episode where Margaret Hamilton reprised her role as The Wicked Witch of the West is currently lost. The one time it aired, numerous parents sent hate mail saying it was too frightening for their children, and at least one Wiccan mother complained that the episode represented negative stereotypes of witches. It was banned due to the heaps of nightmare-inducing terror it featured according to parents.
Telly Monster's original design and characterization with his swirling eyes, antennae head, and druggie-like addiction to television. It's easy to see why Mr. Hooper is so frightened.
The "Cracks" animated segment, in which a girl imagines the cracks on the walls of her house as various animals, culminating in the monstrous "Crack Master." Once the Sesame Workshop stopped playing it, it was not seen anywhere until Christmas Eve 2013, when it was finally uncovered by The Lost Media Wiki.
The Martians (or Yip-Yips, as they're known to some tropers) have frightened many children over the years. Here is a typical Martian segment. It may have to do with their protruding lower jaws, their spastic shivering movements, their tenuous grasp on the English language and unsettling way of speaking, or the implication that they can teleport in from anywhere at any time they please, or even turn invisible. The creepy music and sound effects that plays throughout the skits made things worse. Of course, it doesn't help that Kermit is terrified of them.
The Christmas special "Elmo Saves Christmas" has the Easter bunny, who's surprisingly pretty creepy with the uncanny appearance: he's a guy in a bunny suit with a creepy smoker's voice (portrayed by Harvey Fierstein). It kind of makes you wonder how many kids were traumatized by this guy.
Not to mention the dark turn the special's "be careful what you wish for" message takes.
"The Ten Commandments of Health" Think about it. You have a slow, mellow doo-wop tune, a bunch of doctors standing around humming it, and what appears to be a blue corpse lying on a table. Then all of a sudden, the guy pops up and recites the commandments in a deep voice, as if saying, "Kids, if you don't do these ten things, this could happen to YOU!"
Averted for some, since the blue guy is a recognizable character ("Mr. Johnson") and that you can hear his heart monitor operating before and after the song.
There's something a little bit unsettling about these carnival masks.
Grover's "Health Minute" featuring Kermit the Frog. Grover wants to tell the kids all about oral hygiene using Kermit as a volunteer, but frogs don't have teeth. Grover says "Excuse us a moment" and wrestles Kermit off-screen. When Kermit comes back on, he looks extremely uncomfortable. Grover gets him to open his mouth and we see Kermit with a full set of teeth. While Grover is explaining the basics of dental care, Kermit looks straight at the camera, bares his teeth and makes a hissing sound, which stuns Grover for a second. When Grover asks if he can have his teeth back, Kermit chases after him, jaws snapping madly.
DonMusiclosinghistemper can be unsettling. It's no wonder his character didn't last long. In 1998, The skits were suspended from airing because parents send in complaints to Children's Television Workshop about their kids hitting their heads from home.
The Bigger Than the World! animated sketch which involves a frog trying to prove to a giant ox that it can be much bigger than the ox. So, the frog starts to constantly puff itself up until it was as huge as a beach ball and when it finally states that it has become bigger than the world, the frog suddenly explodes.