SM: Even the kids are very connected these days.
JK: I was fond of saying that for whatever reasons the memo of the Internet did not make it to the company in 1999. They had that failed effort and the management team was disenchanted. We had to get our products connected so that notion of making the experience richer, letting people connect with the product online, and letting the environments interact was important for positioning the company for the next stage.
That is one of the big things we demonstrated at our investor day last week: what we mean when we say web connected products and the ramification from the consumer and financial point of view. Those were a few of the big findings. There are six or seven themes, some of which were revenue thematic like reading and others are culturally thematic where the culture has to be metrics oriented. That is probably the chief … when I look back … the chief thing the company ignored were all of the metrics. They could see them and they were there. They could see that LeapPad was declining too rapidly to fix with a color change. They ignored the metric. They could see the web was real, there were models out there like WebKinz, and they were just saying “not for us”.
In fact I have had major retail buyers say “I don’t think our customer is web connected”.
SM: Who isn’t connected these days?
JK: Everybody is and the data shows that. This notion of metrics, being aware of what is happening, is important. At least then you are able to try and do something about it. If you are blind to it then you are probably not going to do anything about it.
SM: Let’s talk about the product strategy you have put in place as a result of this strategic reorientation.
JK: Mission number one for us was to come back with a set of reading products which are really as close as we can get to fabulous. We are really happy with what has happened there. We have this product which is called Tag which we will launch next summer. From feedback we get from consumer testing and from retailers, we really think this is going to bring reading back for us and the consumer marketplace. Whether it will be as big as LeapPad is hard to say.
SM: What age group will Tag cover?
JK: Tag will cover, the marketers will say something like 4-8, but in reality it is a product that will be used by kids 3.5 to 6.
SM: So you are back to the core LeapPad market.
JK: That is the core market. It is certainly extendable. We can go a little older and a little younger. We know a lot about brand extension experiments. It is a web connected product, it uses real books. It is fun, the name is playful, and it will be our most global launch. We are going to retake reading; we have good visibility of where we are going with that and the whole web connected nature. It gives us lots of opportunities we did not have even in the peak of the LeapPad days to allow people to create their own content.