CD-ROM SWOOSH WINS PUBLISHERS' HEARTS: KIDS' PUBLICATIONS SPIN OFF DISCS; LICENSING, JOINT VENTURES TAKE ROOT

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Fueled by the explosive growth in the home PC market, sales of CD-ROM products for kids are booming.

Last year, according to Multimedia Business Report, the CD-ROM software market soared to $319 million a year, up from $172 million in '93.

"The presence of children at home is one of the main reasons people are buying new CD-ROM compatible computers today," says Kris Forbes, general manager of kids' marketing at Microsoft Corp.

Magazine publishers as well as book and movie producers are now scrambling into the market as high-quality content providers. Often the strategy links entertainment aimed at kids to educational themes.

According to PC Data, in November, the last month for which complete statistics were available, the No. 2 selling CD-ROM title nationally was the Microsoft/Scholastic joint venture entitled "The Magic School Bus." Licensed to Microsoft, "Bus" is a multimedia project that ties together a popular science books series and a Public Broadcasting System program aimed at elementary-school age children.

"The CD-ROM allowed us to take interactivity to the next level and actually allow the kids themselves to be in control of where they go next," says Debbie Forte, an exec VP of Scholastic Productions.

"The kids' market for technology is huge," says Ed Keating, senior VP at Griffin Bacal, New York. The population of kids in the 4-to-12-year-old bracket is expected to hit 34 million with disposable income pegged at more than $15 billion, he says.

A 1994 readership survey for Outside Kids showed that 70% of its readers, ages 8 to 15, owned computers.

"We didn't realize that would be that high. We are moving rapidly to CD-ROM and online," says Scott Lancaster, sales & marketing director at Outside Kids.

Mr. Lancaster thinks CD-ROM and online supplements "bring a publication to life for the reader."

For marketers, the big question now may be how to tie into the explosive growth the CD-ROM market is experiencing.

"I don't think marketers know yet how to get their messages associated with the products, but it will happen," Mr. Keating predicts.

Some of the best-selling products build on brand names that already have a following in print. Though Newsweek last year was forced to scale back when it tried to produce an ad-supported quarterly CD-ROM title, others have had success with less-time-sensitive material.

Sports Illustrated for Kids, the one million circulation monthly from Time Inc., released 25,000 copies of its first CD-ROM product, The Everything You Ever Wanted to Know About Sports Encyclopedia. It retails at $29.95 a copy and, according to SI for Kids Managing Editor Craig Neff, has been selling briskly since landing in stores just before Christmas.

"We're now working on a second" CD-ROM product, he says.

There are technology hurdles for the traditional print people who enter the CD-ROM world.

Many media companies are getting around that by bringing in outsiders to start new-media groups, partnering in joint ventures or licensing their product to software developers.

Magazine giant Meredith Corp., after working with Multicom Publishing on three CD-ROM products-two adult titles linked to Better Homes & Gardens and one kids' title, Dandy Dinosaur-formalized the relationship with a strategic investment in the multimedia company in June 1994.

One of the most-watched developments may hit this summer when Living Books, a joint venture between Random House New Media and Broderbund Software, finally releases its first Dr. Seuss CD-ROMs.

"The playfulness of Dr. Seuss' stories and illustrations lend themselves perfectly to the new multimedia format," says Doug Carlston, chairman-CEO of Broderbund at the time the deal was announced in April 1994.

It's not clear how advances in online services will affect the CD-ROM market. Nonetheless, "100% growth in the CD-ROM kids' market over the next year" is predicted by Microsoft's Ms. Forbes.

The market still lacks an abundance of quality CD-ROM products.

"There are literally thousands of titles out there and dozens of them are very good," says Jake Winebaum, president of Family PC.

Mr. Winebaum says his publication is developing and testing its own CD-ROM product and hopes to introduce it by yearend.

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