New tricks for education software makers

As the market flattens, education software companies add celebrity characters, Internet features to keep kids -- and parents -- happy.

In the old days, companies relied on cereal boxes and cartoons to mold young minds. Now they're pairing up with Barbie or Blue the dog to permeate homes via computer games.

Barbie, Blue and other animated TV stars will be out in force at the Electronic Entertainment Expo (E3) in Los Angeles, as education software makers jostle to get their name-brand characters in front of youngsters.

Brand-name characters are becoming increasingly important to education game makers hoping to get their products into America's living rooms. Four of PC Data's 10 top-selling retail games feature high-profile TV characters such as Nickoledeon regulars Blue and the Rugrats, or The Children's Television Workshop's Elmo.

At E3, software giant The Learning Co. will introduce new education titles based on Dr. Seuss' Cat in the Hat, and Sesame Street's Elmo and Ernie characters. Meanwhile, Knowledege Adventure, a division of Havas Interactive, will unveil some Teletubbies titles.

"The licensed character gets your foot in the door, " said PC Data analyst Roger Lanctot. "It gives the companies more leverage."

Lanctot said parents are more likely to buy familiar characters, though he added that games still must hold a child's attention if they want to succeed.

Without the household names in games, though, "you're not going to have a triple-A hit," said Catherine Hutchinson, a spokeswoman at Piranha Interactive Publishing, publisher of RedShift 3, which lets teens study space through a virtual planetarium.

Big business
The shift to big names underscores the transformation of education gaming, which these days is being shaped by only a handful of companies, due to a series of mergers among its biggest players.

For instance, Mattel has purchased The Learning Co., which had bought its way into the number two spot in consumer software, behind only Microsoft. Mattel will complete its merger with the Learning Co. later this week.

Industry watchers say the new environment makes it harder for startups to break into the market with one hit, as they could when the games market was still a fledgling one.

Nine of the top 10 best-selling education games in the retail channel came from bigwigs such as The Learning Co., Havas Interactive, or Humongous.

Grab a character or go under?
Purple Moon found out the hard way that it's nearly impossible for a startup to make it if it doesn't align with an established character.

The company, founded two years ago to make non-violent games for girls, folded in February. A month later, it was purchased by Mattel, which produces popular games based on Barbie. Mattel plans to incorporate Purple Moon's games into its product line.

While game makers look to transfer TV characters to games, it works the other way, as well. The Learning Co.'s Carmen Sandiego spawned a television show several years ago, and at E3, Knowledege Adventure will announce a new CBS television series based on its Blaster game line.

Internet features, too
A burgeoning must-have feature for education games is an Internet component, especially for the 8- to 14-year-old age group. By that time, many kids are already into gaming, so education software must provide constant updates and new features, so they don't get bored.

Right now, the Internet additions to education games consist mainly of sites where users can go to get additional links to information.

But in the future, industry watchers say people will be able to download characters and features. That will make software more enticing to parents.

"They can spend $40 on a piece of software, and it's a solid investment if they know they'll have access to upgrades over the Internet," Piranha's Hutchinson said.

Software developers also can use the Internet to develop education games into multi-player products, as Knowledge Adventure does. The company plans to announce more Web-enabled multiplayer features at E3, in addition to handheld devices and other toys.

Flattening market
Education software sales make up a sizable market, accounting for $110 million dollars in retail sales in the first quarter of 1999. It's the fourth-largest market in the consumer software category in terms of retail sales, behind business, finance, and games, but ahead of personal productivity, or how-to, software.

More titles are shipping, but the market growth is flattening. In the first quarter of 1999, education software revenue grew only 9.4 percent over the prior year, even though unit sales jumped 27 percent.

That's because companies are lowering prices to lure mass-market buyers in stores such as Wal-Mart.

"It's a real price war," Lanctot said. "These guys are fighting to get consumers to lock in on their characters and properties."

The result could be a devotion that lasts many years.

The education factor
But are kids learning?

Some educators are still skeptical. One study by the Educational Testing Service in Princeton, N.J., has shown that games can be an effective math teaching method, but mainly for middle school students.

The study, "Does it Compute?" found that education software boosted student achievement when teaching higher-level tasks, but wasn't as successful for simple drills.

But others argue that the games bring static paper pages to life for kids, letting them learn bland tasks like multiplication tables through colorful characters who talk.

"It's kind of like the workbooks and activity books that we had as kids," Arthur Pober, president of the Entertainment Software Rating Board and a former elementary school principal. He said computers don't get impatient, as parents might if they have to constantly repeat lessons.

"Most of us can teach a concept, but repeating it gets frustrating," Pober said.


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