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Trend Radar 2008: Edutainment

Posted on Wednesday, Jan 30th 2008

Jeff Katz told me about the Tag when I interviewed him in the Fall, but I promised not to write about it. Well, now the announcement is out. Tag is the new reading product from Leapfrog, replacing the LeapPad franchise that took the company to heights in 2003.

If you want to know what led up to the Tag, read my interview with Jeff.

Tag, as I have said before, is Leapfrog’s turnaround strategy.

LeapFrog had a hit reading product in the famous LeapPad product line. It went on to sell 30 million LeapPads, and more than 70 million companion books. In 2003, the LeapPad family of products brought in $330 million, nearly half of LeapFrog’s revenues.

However, once the LeapPad line stopped being as hot, Leapfrog’s troubles began. They completely missed the Internet, instead spending heavily on flawed product strategies such as the FLY. All this while, Second Life, Stardoll, Neopets, Club Penguin, and other virtual worlds were becoming destinations for the same audiences that Leapfrog catered to.

Anyway, my feeling is that in 2008, we will see the notion of Edutainment leveraging the online rich-media virtual environments. Leapfrog should keep its eye out for such ventures, and acquire some before they become too expensive.

Meanwhile, for entrepreneurs interested in education, this is your opportunity. Investors have made money off deals like Club Penguin, Neopets, etc. and Stardolls will make money for its investors. The “virtual world” concept is accepted as a money-maker in the venture circles.

Education, however, has always been an “untouchable” category. In fact, the only investor who categorically invested in Education is Michael Milken, through his holding company, Knowledge Universe. Leapfrog, in fact, is a Knowledge Universe company.

But at this point, I think, we can agree that soon, text books would go away. Kids will learn via much more engaging “virtual environments”.

So. Entrepreneurs: Create them. VCs: Invest in them.

This segment is a part in the series : Trend Radar 2008

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