http://www.businessweek.com/articles/2012-12-18/will-amazons-netflix-for-kids-fuel-kindle-sales

Media

Amazon Eyes the Kids' Tablet Market


Amazon Eyes the Kids' Tablet Market

Kids: Getty Images

(Replaces an earlier version that contained an incorrect name for the maker of the Kurio 7 tablet.)

It wasn’t so long ago that the notion of kids having their own tablet computers seemed excessive. But as tablets flood the market in record numbers—more than 27 million were purchased in the third quarter alone, according to market researcher IDC—it’s become clear that the entertainment-laden devices are tailor-made for smaller hands. “With the original Kindle Fire, we were really surprised with the feedback we got from parents regarding the fact that they liked to hand it over to their kids, and the kids were using it,” says Peter Larsen, vice president of Amazon.com’s (AMZN) Kindle unit.

That’s why in December the online retailer also started positioning its hot-selling tablet as a makeshift toy. Amazon introduced FreeTime Unlimited, a subscription multimedia service for the Kindle Fire and the Kindle Fire HD aimed exclusively at children between the ages of 3 and 8. Part streaming media generator, part content-vetting baby sitter, FreeTime costs $4.99 a month for a single child subscription and $9.99 a month for a family membership. (The price drops to $2.99 and $6.99, respectively, for Amazon Prime members.) Its young users have unlimited access to a vast trove of G-rated books, games, and films, featuring big names like Nickelodeon’s SpongeBob SquarePants and Dora the Explorer, as well as content provided by Walt Disney (DIS), Sesame Street, and DC Comics.

Getty Images

Amazon is heavily promoting the service’s parental controls, which allow adults to limit the time each child can spend watching videos and restricts purchases kids can make while online. “FreeTime Unlimited reduces the contention that parents have with their kids,” says Larsen. “Where a kid is always like, ‘Hey, can I buy this? What about this extra book or extra app?’ For parents … we’d like to have to not make those micro decisions every day.”

While the digital media landscape has been perilous for paid subscription services, there’s evidence that FreeTime Unlimited could succeed where others failed because it’s built on unfettered access to a bottomless well of content. “That’s what Netflix (NFLX) and Hulu Plus use,” says Ken Doctor, media analyst and author of Newsonomics. “The model has worked for that. But Amazon’s play is a combination of retail sales and media. And really, nobody else is in that business.”

Doctor is referring to Amazon Prime—which he calls the company’s “Trojan horse.” Introduced in 2005, Prime was conceived as a premium delivery service that guaranteed two-day shipping on all orders for an annual rate of $79. It morphed in 2011 into a streaming media subscription service that competes with Hulu and Net-flix. “Now they say if you’re a Prime member, you get all this media on demand for free that other people have to pay for,” says Doctor. “There are all kinds of wins in it for Amazon when it comes to young parents and their children.”

Amazon is helped by the fact that many children are drawn to tablets. “When they touch a tablet, it responds contingently,” explains Sandra Calvert, professor of psychology and director of the Children’s Digital Media Center at Georgetown University. “In that sense, it’s far superior to a television that you’d sit and watch, and it’s much easier to operate than a traditional computer.”

Other companies are designing tablets tailored specially for kids. Toys “R” Us just released the 7-inch Tabeo, a Wi-Fi-enabled device loaded with games, books, and video. Oregon Scientific makes the Meep!; CIDE Interactive makes the Kurio 7; and educational toy company LeapFrog Enterprises offers the LeapPad. All of them retail for about $149. Larsen is quick to dismiss the rivals. “A lot of folks are coming out with these kid-only tablets, which I’m sure are nice products,” he says. “But as a parent I’d much rather spend $159 [the cost of a 7” Kindle Fire] and have the option of turning it into a kids’ tablet, but also having the option of taking it back.”

In 2011, Netflix released its own streaming service called Just for Kids, for use on Apple (AAPL) TV and gaming systems such as Sony’s PlayStation 3. It was added as a section of its iPad app in October. Apple declined to comment on future kids’ products of its own, but spokesman Tom Neumayr points out that its iTunes service already has an extensive selection of children’s content with an option for parental settings. (Larsen and Neumayr both declined to say if FreeTime Unlimited may become available as an iPad app.)

James McQuivey, an analyst at Forrester Research (FORR), says the cable-TV industry’s experience has been that many parents find parental controls too hard to use—but want them anyway. “FreeTime makes it easier for parents to give a wide range of videos that are bubble-wrapped in this kid-friendly, cordoned-off environment,” McQuivey says, “but at the same time it also has a bunch of activities including the pseudo-intellectual ones like reading books, which is going to feel good to parents.”

The bottom line: With tablet sales soaring, Amazon’s new streaming service for kids is meant to increase market share for its Kindle devices.

Mayo is an associate editor for Bloomberg Businessweek.

Later, Baby
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus