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Disney is the latest to bet that Net kids are where the money is

Some simple math: When an adult logs on to an online service, he or she spends--on average--an hour. The average kid spends three. Today, there are 4.1 million kids surfing the Net. By 2000, there will be 19.2 million. Kids, who spent $307 million in 1996 on online services, will spend $1.8 billion by 2002.

It adds up to a huge market opportunity for advertisers and online service companies. If the numbers--estimates from market researcher Jupiter Communications Co.--are right, the kiddie market will be a cyber gold mine in a few years. And that's why media and Web giants are scrambling to offer new kid-friendly sites.

SAMPLES. The king of all kiddie media, Walt Disney Co., brought the phenomenon into the spotlight on Mar. 31 when it introduced Disney's Daily Blast. The site, which is featured on the fast-growing Microsoft Network (MSN), will have games, stories, comic strips with old and new Disney cartoon characters, and current events that are tailored to preteens. The area will be free to the 1.5 million members of MSN during its first two years of operation, but kids who surf to the Net site or other services will pay $4.95 per month or $39.95 per year. ''We think people are going to want to pay for the kinds of entertainment we can provide,'' says Jake Winebaum, president of Disney Online.

Kids who don't want to pay--or can't persuade their parents to cough up--will have plenty of other choices. Nickelodeon last summer launched a Web site called Natalie's Backseat Traveling Web Show. It includes games based on a Nickelodeon character named Natalie. Nickelodeon will try another TV tie-in with Kids Choice, an annual awards show to be hosted by Rosie O'Donnell this summer. Fox Broadcasting Co. is also planning a relaunch of its free Web site for kids, which is currently serving as a promotional vehicle for its televised programs such as Power Rangers Zeo.

There are also ad-supported Web sites aimed at kids. Yahoo! Inc. has created a separate area that lists and rates kids-only areas on the Internet. It's free, but advertisements are plastered all over it in hopes of capturing a piece of the estimated $150 billion in purchasing power that children control. Robert McHugh, senior producer of the Yahooligans! area, says that advertisers there have noticed a high ''click-through'' rate--meaning that kids not only see the ads but click on them and visit the advertised sites.

Game makers take yet another approach. Starwave Corp.--which is now forging closer ties with Disney (page 51)--plans a renewed push for its Castle Infinity service. For $39.95, kids get a CD-ROM game that connects them to a Web site where they and other kids roam a virtual castle to save dinosaurs. Castle Infinity has slightly fewer than 10,000 subscribers, but the company says it offers the two online activities that kids crave most: games and kid-to-kid chat.

HELP. The current leader in online services for children is America Online Inc. Since 1994, the company has offered a Kids Only area featuring homework help, games, and online magazines as well as the usual AOL fare of software, games, and chat rooms. Included as part of its $19.95 monthly service, the area gets about 1 million 8- to 12-year-old visitors monthly. Disney gave AOL first crack at hosting Daily Blast. But, says Rob Jennings, vice-president for programming for AOL networks, ''we felt we had a good mix already.'' AOL still has partnerships with other media giants such as Disney rival Viacom Inc.'s Nickelodeon unit, for other offerings, says Jennings.

Not everyone is rushing to reach kids online. Profits are still years away--and that's too long a wait for some companies. Richardson (Tex.) software maker 7th Level Inc. recently shelved its plans for Kids' World, an online service that would have connected children to each other in a virtual world filled with characters from its CD-ROMs. Given the number of companies jumping into the kiddie cyberspace market, though, expect one of them to land on Kids' World soon.

By Paul M. Eng in New York, with bureau reports


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Updated June 15, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.
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