Web content for young children sees a growth spurt

Internet Strategies for Education Markets: The Heller Report, May, 2001

The software business has always been fond of the early childhood education market. Steve Koenig of NPD Intelect (Reston, VA, www.npdintelect.com, which recently purchased the point-of-sale tracking division of PC Data, Inc.) has been watching software sales of software for children ages zero to five, a category which, in 2000, accounted for 31% of dollar sales for the education segment and 39% of units.

Even so, like all categories within education, sales are down. Though unit sales are up a bit, dollars sales in Q1 2001 are down to $32.7 million, compared to $37.8 million in 2000 and $35.5 million in 1999. And units dropped about 12% between 1990 and 2000, from 10.2 million to nine million.

Sales at the kindergarten level lead the segment, says Koenig, accounting for 50% to 60% of sales on a monthly basis. Based on 50%, he sees pre-school titles accounting for another 40%, toddler titles for 9% and software for babies at 1%.

Koenig believes that consumers are beginning to tire of $20 titles that children rapidly outgrow, that they are beginning to doubt the real education value of the software fox young children, and-throughout the education category-they are turning instead to the Internet. All these trends suggest web offerings could grow the category. "Maybe they are waiting for bon a fide elementary school classes for four year olds," suggests Koenig.

Is It the Web's Turn Now?

With the notable exception of sites supporting children's television programs, however, Internet businesses have not commonly offered content for the 0-5 group. But the web's avoidance of wee ones is changing. QualKids (Maitland, FL, http:/qualkids.com) and Beansprout (Arlington, MA, www.beansprout.net), for example, are at work building online distribution channels to child care centers. And in addition to content for child care providers, those sites are now building, licensing or otherwise distributing content designed for pre-kindergarten children.

Knowledge Kids Network (KKN, Los Angeles, CA), a Knowledge Universe Learning Group company (KULG, Menlo Park, CA, www.knowledgeu.com), now offers the subscription version of their FamilyEdge Internet service, and that service includes activities for children as young as three. LeapFrog (Emeryville, CA, www.leapfrog.com), another Knowledge Universe company, will be adding Internet updates to its LeapPad toys. Reality Based Learning (Redmond, WA, www.rblc.com) has brought the web-based Literacy Launcher to market, a program that assesses reading readiness for kindergarten and provides games to improve pre-reading skills. Pearson's Learning Network will also be introducing a pre-reading screening tool with assessments and activities in partnership with the National Center for Learning Disabilities. ChildU (Weston, FL, www.childu.com) is creating online stories for pre-readers, and RVI Solutions (Shoreham, NY) has recently launched Reading Village, a web site for pre-readers.

There are challenges in this new space. QualKids' ceo David Milov points to tremendous fragmentation within the child care industry and the subsequent lack of distribution channels. On the consumer side, parents are simply accustomed to buying CD-ROMs. The Internet also has technical limitations. Without broadband, animation is limited. Furthermore, several content creators in the field point to the difficulty of delivering audio-based navigation for pre-readers over dial-up connections.

There are also advantages to web products. Web-based activities allow for assessment, tracking and individualization. Web subscriptions and services may be priced lower than comparable CD-ROM collections while providing greater variety. The web can also provide some continuity between a child care experience and the home. And smaller players may find surfers more available than shelf space. Plus, as Steve Sandborg, vp marketing for KKN, points out, the Internet is now part of the family computing experience, and parents want to include it among their child's activities.

The following articles profile the early childhood offerings and market approaches of these companies.

And in one additional note, this movement is not limited to the US. Portal Educational (Sao Paulo, Brazil, www.educacional.com.br) now offers the "toddler's teaching room," with activities targeted at two to six year olds. The activities are designed for adults to be with a child during play. MA