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A perspective on Toys vs Tablets and how the world will react when children ultimately decide to become predominantly entertained and educated over the mobile Internet.Over the years, publishers have faced a growing number of hardware platforms for licensing their digital content. The separation between tablet makers and toy makers is about to collapse with certain products. A variety of factors will set these products apart including content collection/catalog, quality user experience, aspirational brand value, price point, and the ability to remotely access content and store content in the Cloud. This presentation will address the rapid convergence of device types from generic Asia-sourced tablets becoming simpler and cheaper, to toys becoming smarter and more complex. Both trends have their merits. In the end, the “market” (aka the child) will make their choice, thus leaving an eventual void from which one or the other has to recover.Speaker
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TOC Sala Rossa11:00am
March 18, 2012
The Hardware Conundrum: How Children Are Shaping the Next Generation of Mobile Devices
2
Who Am I?
Matthew
Venture Investor, Entrepreneur, @IAmGrowney
Educated on Encyclopedias, TRS-80, & Flash Cards.
3
Who Am I?
….but more importantly now:
Father, Uncle, and Godfather.
4
How Are My Kids Learning?
Playful Discovery.
5
How Are My Kids Learning?
And Digitally.
6
Ultimately….
Learning = Atoms + Bits
(Device) + (Content)
7
A Kid’s Desire vs. A Parent’s Wallet
Huge current demand coupled with strong desire for a better solution
USER DEMAND BUYER RELUCTANCE
(Source: Nielsen, 2011)
Interest in Buying in the Next 6 Mo. (Kids 6-12)
PlayStation Portable
PlayStation Move
Nintendo Wii
Other Mobile Phone
Microsoft Xbox 360
e-Reader
Blu-Ray Player
PlayStation 3 / PS3 Slim
Smartphone (non-iPhone)
Television Set
Nintendo DS / Dsi / DS Lite
Tablet Computer (non-iPad)
Computer
iPhone
iPod Touch
iPad
0% 5% 10%15%20%25%30%35%40%45%50%
10%
10%
11%
12%
16%
17%
17%
17%
19%
20%
22%
25%25%
27%30%
44%
Device PRICE
CONTROLContent
"Everyone wants their children to have a tablet, but not everyone wants to spend
$500 for a iPad that a child can throw onto the floor.” –Gary Storch, CEO Toys “R” Us
“…the industry faces hurdles. That includes setting a price parents can live with and dealing with concerns about kids getting hooked on technology too
early.” –Bloomberg
“Amazon Kindle Fire Criticized for Lack of Parental Controls” –PCWorld
8
Understanding Your Content Opportunities
It will become increasingly important for Publishers, Content Developers, and Authors to understand:
(1) How is your content being consumed?
(2) How is it being distributed?(3) How can it sell a zillion copies?
In the end, your BITS are very dependent on the ATOMS that present them.
9
Will it Be On Toy or Tablet or Something New?
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I. How Is Content Being Consumed?
1. The Device’s Cost (Toy or Tablet)- Toys are inherently cheap. Can’t do
much in digital.- Tier 2 or “Value Brand” tablets are
also cheap. Price and performance.- Tier 1 brands have created an almost
unattainable price point for much of the human population (especially children).
11
Tablet Price and Demand
2010 2011 2012 2013 2014 2015$0
$100
$200
$300
$400
$500
$600
$700
0
100
200
300
400
500
600
700
29
162
243
349
481
$647
$533
$400
$340 $289
$246
Tablet Sales, Millions Average Selling Price - Tablet Computers
(M)
12
I. How Is Content Being Consumed? Cont.
2. The Device’s Construction- Toys typically are constructed w/
extreme cost sensitivity and sell content as an accessory.
- Tier 2 tablets won’t withstand children’s usage, cheaper components equals lack of functionality.
- Even Tier 1 tablets won’t survive a Drop Test or are “juice-proof”.
13
Example of a Tier 2 Tablet
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I. How Is Content Being Consumed? Cont.
3. The Device’s Connectivity- Toys are not typically connected to the
Internet.- Tier 2 tablets are typically WiFi.- Tier 1 tablets offer both WiFi & Cellular
4. The Device’s Lifecycle- Toys typically churn in 20 days (left in the toy
box with sporadic reuse).- Tier 2 tablets are being used on average 3-6
months before being churned out due to performance issues (memory, battery).
- Tier 1 tablets are being handed down as new models are selected.
15
II. How Is The Content Being Distributed?
1. Content Availability/Discoverability- Toy Companies typically preload their
content and are extremely price sensitive and prone to working with only large Publishers (eg. Disney, Hasbro).
- Tier 2 tablets rely heavily on what they can afford to preload or the AppStore.
- Tier 1 tablets select more preloaded content based on the device’s functionalities.
16
II. How Is The Content Being Distributed? Cont.
2. Content Curation- Toy companies curate based on their
target demographic (Toddler, Early Reader, K-6), but again work primarily with larger publishers.
- Tier 2 tablets work almost exclusively with a minimally curated AppStore. Category definition, age grading, Rating, are typically not provided.
- Tier 1 tablets are not much better organized in presenting content selections then Tier 2.
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Children’s Content Use/Purchase Is Soaring
Over 80% of the top selling apps in the Education category of the iTunes Store target children
In 2011, 72% of the top selling apps targeted preschool or elementary aged children
Game-based Learning Mobile Learning
% of Apps by Target Age
DEM
AND
MAR
KET
RESP
ON
SE
2010 2015
$232M
$413M
2010 2015
$959M
$1.82B
12.3%CAGR 13.7%
CAGR
(Source: Ambient Insight, 2011)
Toddler/Preschool Elementary Adult
35%
12%
57%58%
29%
40%
(Source: Ambient Insight, 2012)
(Source: The Joan Ganz Cooney Center, 2012)(Source: The Joan Ganz Cooney Center, 2012)
18
3. How Can I Sell A Zillion Copies?
1. Marketplace- “Free” is important for Discovery, but not a
good business model.- Content prices need to be diverse and
allow for a “Pay”- model to function.- iTunes averaged $100 in paid purchases
from iPad owners for children in 2011.- Create a Discovery experience for your
brand
19
3. How Can I Sell A Zillion Copies? Cont.
2. Artistic / Literary Excellence- Content still needs to preserve its
authenticity, integrity, and originality.- Not everything needs to be a “shiny”
object like an App. A PDF is sometimes just as good if tells an amazing story.
- Understand the “Game-ification” trend. - Experiment with Touch, Audio,
Highlighting, but don’t use it all for everything.
20
3. How Can I Sell A Zillion Copies? Cont.
3. Education- Support pilot programs with ALA, Non-for-
Profits, and other Verticals to help validate the children’s digital education model.
- Education content is much needed in various commercial book stores.
- Much classroom testing of devices is still needed.
4. Other Distribution Considerations- New devices with private content collections- White labeled or private labeled eReader
application for individual publishers
21
Is There Room For A Tier 1 Children’s Tablet?
High-end Tablet Designed and Priced for Children
Affordability for Children
Suita
bilit
y fo
r chi
ldre
n
($389)($80)
($200)
($130)
($80)
($200)
($250)($499) ($499)
($499)
for Children
for Adults($380) ($330)
22
The Journey For Such Has Begun…
Learn more at www.IsabellaProducts.com.
(Shameless plug)
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