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Fast Forward: Educational Software Now A Tough Game [The Washington Post]

by Hope Katz Gibbs
Fast Forward / The Washington Post
Business section

LAST WEDNESDAY, HUMONGOUS ENTERTAMENT SHIPPED the fifth installment of its Freddi Fish series, “Freddi Fish 5: The Case of the Creature of Coral Cove.” It’s the latest in a stream of $20 games featuring well-known, market-tested characters.

The next day, the company held a meeting in a suburban Seattle hotel, where 82 employees found out they would lose their jobs. Humongous’ parent corporation, French video game publisher Infogrames, had decided it was “refocusing its efforts” away from Humongous’ more established franchises, such as Blue’s Clues, Spy Fox, Putt-Putt and Pajama Sam—as well as Freddi the little yellow guppy.

“Rather than putting out new [character] titles every few months, we’ll be more opportunistic about it and do a better job at exploiting what we have already produced,” said spokeswoman Nancy Bushkin.

With 40 percent of the workforce out the door, Humongous’ remaining 117 employees will concentrate on the Backyard series of sports games (Backyard Football, Backyard Baseball and Backyard Soccer) that the company launched in 1999.

When it comes to cranking out sequels, Humongous hasn’t been the only fish in the sea. Disney Interactive has made moons on Mickey’s Preschool, Mickey’s Toddler and Mickey’s Kindergarten. Recently, it launched a Winnie the Pooh trilogy, and now it offers a Buzz Lightyear series, too, filled with games that stress the ABCs and 123s.

Knowledge Adventure employed a similar strategy with its Jumpstart series, publishing more than a dozen learning titles to accompany a child through almost every early developmental stage. Nine-month-olds could start with Jumpstart Baby, then graduate to such more advanced titles as jumpstart Third Grade, Jumpstart Artist, Jumpstart Phonics and Jumpstart Languages.

“It doesn’t take a genius to realize that if a character or brand is popular, the developer is going to cash in on it for as long as possible,” says Steve Koenig, a senior analyst at NPD Intelect (formerly PC Data) in Reston.

But that strategy may be wearing out its welcome, as Humongous seems to have discovered. Sales have plummeted from the $600 million the educational software industry grossed in 1999. NPD’s figures illustrate the drop: Through May of this year, 7.8 million units were sold, generating $132 million in revenue—while in the same period in 1999, 10 million units flew off the shelves, for $210 million in revenue. In 2000, 8.8 million units were sold, bringing in $175 million.

Educational software also claims less of the overall software market—13.3 percent today, down from 20 percent in 1999.

The number of newly released titles has dropped in the last few years, too. Children’s Software Revue, a Flemington, NJ-based trade magazine, counted 912 titles two years ago. Today, the total on the market is 678.

Finally, few companies are publishing educational software in the first pace—from 350 titles last year to 200 today. That’s the result of a wave of mergers and closings that has seen more companies disappear, others consolidate, and other shift their efforts to different markets—such as programs.

Publishers say they realize that the industry’s sequel-it is may be tiring many kids, to the point where a 5-year-old daughter of a reviewer will wave of that new Freddi Fish.

Leslie House, vice president of the Kids Business Unit at Knowledge Adventure (itself recently acquired by French conglomerate Vivendi Universal) said the downward spiral in the educational software segment should not be a surprise.

“There has really been no new news and no movement in the marketplace for a number of years, and it became very clear that if we didn’t start to introduce new things, people would stop buying our products,” said House.

Says Stephen Finney, general manager for North America Disney Interactive in Glendale, Calif.: “We realize a company cannot make money by simply repackaging the same old stuff. Kids and their parents figured that out a few years ago, and they want to know why they should spend money on [something] that doesn’t provide a high creative value.”

But what comes next? That’s not so obvious.

‘This is an industry in flux,” says Warren Buckleitner, editor and co-founder of Children’s Software Revue, which since 1993 has tracked trends and reviewed the latest software offerings. “To say that the last year has been a turbulent one for children’s software publishers is quite an understatement.”

He blames the large consolidations, which started about three years ago—and hasn’t stopped. “The mergers and layoffs have been brutal,” he admits, “but it is good, too, because the slowdown will shake up sleepy, lazy publishing houses that will have to start turning out better products.”

One of the educational software industry’s veterans concurred. “This is, a necessary, market correction,” said Shelley Day, who co-founded Humongous Entertainment with Ron Gilbert in 1992 and sold the company to GT Interactive in 1996 but stayed on until Infogames bought out GT in 1999. “It has reminded people that to succeed the business needs to be sound, and the company needs to be innovative.”
Buckleitner voiced hope in the possibilities of educational software that runs on devices besides personal computers, for instance, Nintendo Game
Boy handhelds. “There’s no reason that educational games can’t be created for these little machines that kids love to play with on the sofa, in the car, at the dinner table everywhere.”

LeapFrog’s LeapPad Learning Center—a lightweight, turquoise, laptop size. “interactive storybook” that runs, tiny cartridges-is another positive example, Buckleitner said. Its titles are, sound educational games, covering topics from geography to music to reading and the $50 device’s small dimensions means kids don’t have to sit at a computer desk.

“Companies are moving away from traditional software, and that is likely, to be a good thing,” says Allison Druin, a professor at the University of Maryland in the College of Education and the Human Computer Interaction Lab.

Giving children a place to play with educational software away from the keyboard is powerful because it lets them move around to play, and that is what comes naturally to them.”

At the lab, children and adults together help create and test toys that combine technology and play. It’s a practice from which corporate software companies could learn a lesson, Druin said. “Too many games tell kids what to, do rather than letting them control the technology.”

That is exactly the lesson that Humongous’ co-founder Day said she took with her when she and partner Ron Gilbert left Infogrames in December to start Hulabee, an online educational site for kids.

“Children’s games don’t need to be boring and drill-like to teach kids important skills and lessons,” says Day. “I think that we’ll be seeing the lines blur between what is considered an educational game and what is considered a frivolous toy.”

Day is going further than that, betting that the traditional CD-ROM game will go the way of the floppy disk in coming years. Hulabee, on the belief that the Web will take its place, is launching Sports Squad (www.spoitssquad.com), which it describes as the first comprehensive sports site for kids. The content includes sports news written for kids and updated several times a day games, message boards and other interactive features.

Day realizes that other companies’ attempts at subscription-based sites for children have failed miserably, but said their mistake was not charging from the start and hoping that free trials would hook parents instead.

“We are going to charge our subscribers from day one, so parents and kids will not think we are giving them something free, then taking that away,” she says.
Most developers, however, expect the CD-ROM to continue to dominate the educational-software market. They do, however, plan to blur the lines between games and educational content even further.

Consider a new Knowledge Adventure release due in October, ScanCommand: Jurassic Park III—a big departure from its previous curriculum-based titles such as Learn French Your Way, Math Blaster and Excel@ Middle School.

The game features an evil scientist, who, with an army of ferocious dinosaurs, takes over Jurassic Park; kids must use bundled handheld scanners and (get this) scan bar codes found in the local grocery store. When they get home to the computer, they upload the codes (that is, special dinosaur powers) into the game to create stronger, smarter, fiercer dinosaurs that can defeat a T-rex or Raptor and help them escape from Jurassic Park.

Confusing? Perhaps. But, well, at, least it’s something different.

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"I get by with a little help from my friends," says Hope, who gives special thanks to:

• MICHAEL GIBBS, website illustration and design: www.michaelgibbs.com
• MAX KUKOY, website development: www.maxwebworks.com
• STEVE BARRETT, portrait of Hope on Bio page: www.stevebarrettphotography.com

Contact HOPE KATZ GIBBS by phone [703-346-6975] or email.

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