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Carving a niche in edutainment; McGraw-Hill aims for 'underserved' 8- 14's.

LAS VEGAS -- With an unlimited supply of CD-ROM titles and a very limited amount of shelf space, the entertainment-software business is a difficult market to enter.

A handful of well-distributed developers has been able to muster the might it takes to land on the shelves of mass merchants, which have come to dominate sales.

McGraw-Hill Cos. is one of the latest to attempt to wend its way across the rocky CD-ROM terrain. It is doing so via its Home Interactive division, created last year. The division offers edutainment titles targeted at what McGraw-Hill feels is an underserved market: older children, ages 8 to 14.

"We've tried to identify a segment that's not well-served," said Peggy Lanier, vice president of marketing for McGraw-Hill Home Interactive, "so we are picking subjects that appeal to that age group."

And there's the rub. As Lanier explained, the trick will be to wean the target age group from cartridge-based shoot-'em-ups and to CD-ROM titles that may actually teach them a thing or two if they aren't careful.

"It's a difficult segment," acknowledged Lanier, formerly a manager of IBM Multimedia's home education titles. "Our goal is to provide them with educational titles that have a big, big game component to them."

William Nisen, president of McGraw-Hill Home Interactive said that although the group was primarily set up to offer original content, he is looking for possible synergies with McGraw-Hill's other properties. "My brain is spinning with the potential tie-ins among our companies," Nisen said.

McGraw Hill owns Business Week, Standard & Poor's and Byte magazine, among other properties.

CD-ROM sales have been in a slump -- most likely because shoppers are hesitant to gamble about $30 on titles that may not even be compatible with their PCs.

Peter Janssen of Janssen & Associates, a sales and marketing consulting firm based in Seattle, noted, "There are way more titles than anyone can begin to say grace over. There's a whole bunch of people trying to penetrate the market. But they can't just throw up a title and have the world beat a path to their door."

What it takes, Janssen said, is a good product, then "a complete marketing and distribution plan to convince retailers that the product will sell through."

Attention and creative energy are steadily shifting away from software and onto the Internet -- although no one has yet figured out how to make money on the Information Superhighway.

But the stress on information is where McGraw-Hill comes in, according to Nisen.

"Look at how the Internet has become a sensation, how many people use it to receive info," he said. "As we expand our concept of education, our goal is to also look at innovations in DVD and other types of technology that make it possible to deliver information directly to the consumer.

In keeping with this strategy is the first wave of the division's products, featured last week at Comdex here. Pony Express, Dr. Sulfur's Night Lab and Pyramid: Channel of the Pharaoh's Dream were released last month. The Fennels Figure Math is due in stores this month. The products, PC-and MAC-compatible, are expected to sell for between $40 and $50.

According to Lanier, the division will focus on the mass market channel, computer specialists and educational software stores like Noodle Kidoodle.

McGraw-Hill Home Interactive will advertise its wares in Home PC, Family PC, Business Week and Newsweek magazines, and is developing in-store promotions with some retailers.

"I would love to do demo days; have guys wearing lab coats in the stores," said Lanier, referring to Dr. Sulfur's Night Lab, which is designed to be a virtual laboratory in which children can learn chemistry principles while trying to create order out of a chaotic lab.

The titles are packaged in standard-sized computer software boxes. "We find most of the retailers we work with prefer standardized packaging," she said.

The division's strategy is to speak to both children and parent --read: actual buyers -- through a title's packaging. The front of the package is designed to appeal to children; the back tells parents exactly what each product is about.

"That's a real testament to our commitment," said Lanier. "Developers of early-childhood software would speak only to the parent. You really have to think about what your market is. Who is buying this?"

Taking this "know-who-your-buyer-is" strategy one step further, McGraw-Hill Home Interactive has invited children to help develop the titles.

More than 150 children took part in the eight-month testing phase.

The tests proved "invaluable," Lanier said. The division carefully analyzed its data to figure out what worked and what didn't.

"It really drove what is in our products," Lanier said. "We eliminated parts of some titles that children didn't find engaging." The company also learned how important sound and music are to children.

All in all, however, Lanier believes it is the parents who should make the decisions about what software titles children navigate at home. "Are there too many violent games? I don't know. I think each parent should look at what their child is doing on the PC or the TV. I don't believe in stopping the creation of anything."

The McGraw-Hill Home Interactive titles are rated on a thermometer-like scale: the higher the mercury, the more violent the title.

McGraw-Hill went a step further. In the Dr. Sulfur title, some characters die, and the packaging clearly says so.

"We're not hiding it," Lanier said, adding, "We try to keep as much of that stuff out as possible, but to make a title intriguing to a 12-year-old, you have to have something with consequences.

"We're small but talented," Nisen continued. "I've been so pleased with the show of support on the part of the entire McGraw-Hill organization, particularly from the highest levels. I'm a small-company, entrepreneur-type guy, and they were able to set up this autonomous group.

"They know the challenges and opportunities that interactivity offers an educational company."

Titles for the 8-to-14 set

Pony Express Rider: In what the company is billign as the first horseback-ride simulation, kids gallop throuh dangerous territories of the Old West on a mission to deliver the mail.

Dr. Sulfur's Night Lab: This science title places kids in a 3D virtual chemistry lab, where they conduct experiments and learn the principles of chemistry while trying to save Dr. Sulfur.

Pyramid: Challenge of the Pharaoh's Dream: Children are catapulted back in time to discover the secrets of ancient Egypt.

The Fennels Figure Math: Through adventures and role-playing, kids interact with characters and objects to successfully complete math puzzles.
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Author:Lieber, Ed
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Date:Nov 25, 1996
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