Spoke to online chat just now, their best suggestion was to do a factory reset and try again.
Did so and still the same issue but observed some interesting behavour -
1) It always plays two episodes (i.e. will auto play the next episode once), then drops back to the episode selection screen.
2) At the end of the first episode, you get a small window pop up bottom-right which shows the next episode and says "Next episode starts in..." with a countdown. It will then automatically play that episode when the countdown ends.
3) At the end of that second episode, if you watch closely you will see that same next episode window appear, but only for a split second as if it's cancelled itself. Then you are dropped back to the episode selection screen.
I've recreated the above on a number of shows and different kids channels.
Spoke to online chat again and they have acknowledged the fault and told me that their "higher end team" is working on it. Hmm..