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Transcript of TOC Bologna 2012: The Hardware Conundrum: How Children are Shaping the Next Generation of Mobile...
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?
10
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
14
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.
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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.
17
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)