Consumption of all types of kids-focused digital media has soared with a large portion of the world’s children home from school right now. At all times of day, children are playing games, watching shows and using edtech tools — often in a social context with friends online.
This only accelerates the normalization of virtual spaces as social hubs, and it makes protection of children’s data a more pressing concern for entertainment and communications platforms (like Zoom) that haven’t built a product specific to this demographic.
During last week’s TechCrunch Live session on the state of kids’ media, I had an engaging discussion with three industry leaders about how COVID-19 is impacting companies in the space and what long-term changes could result from it:
- Craig Donato, chief business officer of Roblox, the $4 billion gaming platform that counts the majority of U.S. kids age 9-12 among its active users.
- Nancy MacIntyre, co-founder and CEO of Fingerprint, the company behind Kidimo, a leading subscription video and gaming service for children.
- Dylan Collins, co-founder and CEO of SuperAwesome, the London-based creator of “kid-safe” adtech and privacy tools.
Below is the recording of our conversation as well as the full transcript (with minor edits for clarity):
TechCrunch: The COVID-19 crisis has put families all at home together and changed a lot for your businesses. I want to set context first by looking at the couple years leading up to this. What have been the two biggest changes in the kids’ media space from your perspectives?
Craig Donato: One huge shift that we’ve seen over the last five years is the evolution of games into social places — experiences where kids hang out with their friends, do things with them versus these narrow competitive environments. We really see Roblox as a medium of shared experience. That’s a pretty significant shift, and it’s really benefited platforms like Roblox, but also Minecraft and Fortnite.
Dylan Collins: Look at just the explosion of kids going online. Five, six, seven years ago when a lot of us were starting companies in the space, kids weren’t really talked about as a real audience. Today — well, pre-COVID — they were 40% of all new internet users going online. So, they were already beginning to be huge and becoming established as a real audience.
And all of the non-kids companies and the mainstream platforms — over the last year, 18 months, two years even — were beginning to realize that they have to deal with kids as just part of the audience makeup on any general platform. And part of that was driven by all of the new kid digital privacy laws, but you had a huge amount of acceleration that was going on with kids as a digital audience over the last couple years.
Nancy MacIntyre: I would add that we’ve really seen this incredible proliferation of digital content services in the last two years. If you’d looked at 2017, probably there were one or two apps in the app store for kids that were subscription. Now, 18 of the top 20 are that. But between Netflix, Prime, Spotify, you name it, digital content solutions are where it’s at for this digital generation that wants a personalized experience. And so we’ve gone from kids selecting what content they wanted on TV to now they have a whole range of digital services with created content that feels like it’s just for them. And their parents have embraced the way to purchase these solutions. So, it’s very different than it was even three years ago.
Craig:It’s interesting that this generation who’s grown up online being able to interact with their friends, in some of the focus groups that we’ve seen, they perceive reality differently. There isn’t a difference between physical and digital reality. They have a foot in both worlds. And they’re constantly interacting with friends, doing all these activities in this digital world. And it’s a fairly profound shift.
Dylan: All of that was going on even before COVID. And you look at to Nancy’s point, as well on the content side, you look at Disney+ and Netflix and all of the big SVOD [subscription video on demand] packages, even before all of this happened they were making a kid’s offering front and center. Kids have become the minimum viable offering for a lot of these content packages that were the next wave of digital SVOD-type products that were going into the home. So, even before the explosion of what has happened in the last few weeks, there was almost a near exponential growth that was happening anyway.
Nancy: Yeah, exactly.
So let’s talk about that. I’m curious the impacts each of your businesses has seen from COVID-19 with kids all around the world staying at home and spending a lot of that home time on screens. I’m curious, both in terms of what I expect is likely pretty meaningful surges in usage, but also any interesting behavior changes you’ve seen in terms of the type of content being consumed or engaged with or the times of day that are peaks. Nancy, maybe you can start us off.
Nancy: What’s really interesting is before COVID, our prime time, if you will, was 4:00 to 6:00 p.m.. Dinner’s being made, kids are doing their schoolwork, and so now they’re ready to play. And so, 40% of our usage was probably in that time window. And it was very much a peak towards dinner and then down.
Today, there is no peak. In fact, there’s as many kids playing between 6:00 a.m. and 9:00 in the morning as there are between 9:00 at night and midnight. And the out-of-school factor is just massive because parents are controlling screen time less. They are letting their kids play things that they feel comfortable with. And kids are playing them all day long.
And they’re also playing a different content. We have fun and learning across games, books and video. Pre-COVID we over-indexed on learning; during COVID we over-index on entertainment and videos. It’s exactly what you would expect to see, that there’s this shift. We’ve increased about 50% every month since December as more kids are playing and they’re watching more video. They are, on average, opening the app more than 40 times a month, which is quite a lot.
Wow. Dylan?
Dylan: We see the world from more of an aggregated perspective. Our tech sits in thousands of kids’ apps and digital experiences, powering community and safe advertising and parental consent. I would absolutely echo everything Nancy has said in terms of the general surge. We’ve seen it, I suppose, country by country as school lockdowns were happening over the last three, four or five weeks. All of the traffic is up absolutely everywhere. There’s no doubt about that.
One other thing from more of a general ecosystem and company perspective, is we’re seeing a huge amount of inbound coming from companies that are now thinking about how to onboard kids and families into their offerings which weren’t originally designed for kids in the first place. Everyone has talked about Zoom as the example of this, but there’s a lot of products that were never designed expressly for kids. Kids are essentially just hijacking the things, and using it and repurposing it for their own communications, in many cases as a proxy for physically hanging out, which is back to the trend that Craig was talking about in terms of just using environments to be able to interact.
I actually think that you’re going to see a huge amount of — I guess we would call it kidtech enablement — but a compatibility for both parents and kids being designed as standard. It’s just happening very quickly because of the sheer numbers. That’s going to be a trend that we will see stay over the next couple months.
Craig: We’re definitely seeing a big jump in engagement driven by more play by existing users as well as new users entering the platform. And we saw about a 40% jump in March over February. So, it was a pretty big lift. And we’re regularly seeing over 4 million concurrent users and MAUs over 120 million miles. So, that’s been great.
Ultimately, social distancing, sheltering in place leads to social isolation. And we see a lot of people turning to Roblox as a place to hang out with their friends to stay connected. And that’s people jumping on. I know my son, that’s where his school recess happens now. We’ve heard stories about people taking birthday parties and now bringing them into places like Roblox. So, a lot of the features that we see… we have a feature called VIP servers, where it’s a place where just you and your friends hang out. We’ve seen a lot of uptake on that. And, in fact, we rolled out a specific game, so it was just games that feature VIP servers like water parks and all these interesting places that you can just go and hang out with your friends. So, that’s been a huge change in behavior.
Dylan: We released a study last week and, as part of that, we interviewed hundreds of kids in the U.S. and the UK, and about 50% of them all said that they were missing their friends pretty badly at this point. And, Craig, what you’re describing is just so fascinating. Who’s it? Matthew Ball talks about the Metaverse, which is where all of this is going towards, where it’ll just be some persistent type of world that people can hang out in as opposed to playing games in.
But it really feels like this is going to be just a full-on immersion into that concept because the definition of like, “What is a birthday party now? What is a field trip? What is a school? Where do all of these things take place?” We were joking before we went on air about, “This must be the moment for VR.” But in many respects, it seems to be more games, rather than VR, or games platforms, that are stepping in rather than anything else.
Nancy: I was going to say that kids are great at hacking things for their own purposes. You think when FaceTime first came out, people were like, “Get in touch with your families,” but kids were inventing all kinds of games to be played on FaceTime, and they were really driving the innovation there. And you’re seeing it with Zoom. You’re seeing it with Houseparty. We were already seeing it with Google Classroom and Google Hangouts and everything well before this. Kids, by nature, are going to find the place to hang out where they can be themselves and their parents aren’t there.
And also this is a generation that has grown up not really making phone calls. They’re much more comfortable text chatting and being in a big group in an environment where they don’t have to make a commitment, if you will, that I’m calling somebody on the phone. So, games really provide just an incredible venue for that.
And I completely agree with you that things will change, behavior will change and it will probably create a whole new genre of types of experiences that were not either technically feasible or safe enough for children in the future. I find the whole Houseparty thing super interesting. And we’re going to see a next generation of that type of product targeted at children.
Craig: What’s fascinating to me is that kids are incredibly well-versed with the stuff. It’s been amazing how quickly my kids are watching movies together with friends, having digital recesses, all these things. The folks that are learning about it is us, as adults. We’ve seen this again in focus groups where kids, they get it. They get how to do online. It’s parents that are confused by it.
My son’s in his room and my wife was yelling, “Why aren’t you out playing with your friends?” And he’s like, “I am playing with my friends.” He doesn’t even understand what we’re talking… right? That’s just the world that they live in. And it’s us that are now starting to see the potential for what this metaverse or digital reality looks like.
Dylan: Everyone’s kid or kids have become the household CTO. If it wasn’t that way already, it sure as hell is now, you know?
Nancy: Yeah, definitely.
This has definitely accelerated virtual spaces as a norm for socializing.
Dylan: But not just with virtual spaces where kids are a force with product and technology adoption. I don’t know what anyone else thinks, but we’re estimating that the next six months is going to be roughly equivalent to about the next three years, concentrated, compressed into that period of time, when you add up the effective hours that are being spent and the adoption curve that you’re getting.
And, Nancy, to your point on a Houseparty for kids or something like that, you’re going to see a couple of huge companies be born in this period over the next four, or five, six months. We might not realize they’re huge until two, three, four years from now. But like the next Roblox, the next Minecraft is going to emerge in this period.
On that point, what stays after this period? Whenever the world returns to normalcy and kids go back to school, what of the current surge stays as a permanent shift that people now love? Certainly, spending time in games and virtual worlds was already a rapidly growing trend. This just accelerates that. I’m curious in terms of other kids’ content behaviors that you’re seeing right now, what’s not just an exception for this period?
Craig: Speaking as a consumer watching my kids, it’s how they’re actually, not just playing in the digital world online, but how they’re consuming media online. They’re all watching a Netflix movie at the same time synced, and then talking about it, and they’re mixing these medias. So, the way they’re just digitally consuming things together, seems to be the most surprising for me.
Nancy: What’s going to stay here is this whole idea that you can have a family movie or a friend movie night, and not be in the same location, and be chatting, talking, etc. And there’s been a bunch of products like Airtime and others that have tried to do this thing, but you can really see that the media companies are going to want to find new ways to build engagement with their audiences, and this is happening already, and you know they’re going to run for this. So, you and I can watch a game together, maybe starting with sports, but it could be movies, anything else, an ongoing chatting, communication, shared experience. That we’ve now taught everybody how to have a multiple video chat. Now, why not start doing other things with that?
Craig: Yeah, I agree. It’s all about shared experience. There’s going to be a whole golden age of shared experience coming up.
Dylan: I’m intrigued to see what happens with the displacement of cinema and theatrical. So, you’re seeing the Trolls… The latest Trolls movie is going to be direct-to-digital this month. And it’s one of the first big studio releases that has skipped theatrical release and is just going direct download for absolutely everywhere. And that ties in roughly to the same trends that for families, in particular, the convenience of being able to bring a movie into the home, particularly with young kids, as opposed to going to the theater and having to drag kids everywhere. That could be one of those things that maybe gets enough traction to finally push Hollywood over the edge there.
Craig: I also think we’re going to see a lot more big digital events. Last Saturday… or was it two Saturdays ago? We had our big award ceremony for all our creators, and we hosted it in an auditorium on Roblox. And we had close to 600,000 kids show up for that in Roblox. And that’s Saturday at noon. So, just this idea of people coming together to share an experience, to share an event together, whether it be a concert or some consumption of media. We’re going to see a lot more of that in the coming months.
Nancy: I was going to say I agree with that. That we’re going to get to a place where there are pay-per-view events just like you would see with boxing or whatever, where people are willing to pay $20, $50 to watch something or participate in something all together for the first time in a way that’s very different than “I just order a movie from Comcast or something.”
To Dylan’s point, the policy changes companies are making here, given the crisis, are interesting. The question is when and whether they change them back, like taking kids’ movies that were supposed to go into the exhibitor window in cinemas and putting them direct-to-streaming platforms.
One of the questions that’s come in on the Q&A that makes an interesting point is from Shai at KidSafe, who asked about the services offering educational content or kids’ content temporarily for free right now. It raises the question: How do those companies determine when’s appropriate to go back to their normal pricing models? And does it create a problem if all of a sudden a bunch of families, who had signed on when they thought the product was free, realize they’re now getting charged?
Nancy: I can speak to that because we did it. And most of our partners did it from the very beginning. The general consensus is that we all picked a window that was for the stay-at-home time period, which in general terms is two to three months. And that’s what you’ve seen across the board. That may get extended if kids are out of school for longer thing.
But in general, everybody sees this, not to sound crass, but it’s a public service but it’s a customer acquisition tool. And everybody feels like it’s worth giving the extended free period if we generate new users out of it. And that’s the general consensus. And if you’re thinking about education products in general, everybody in the world suffers from how to get adoption, both in schools and at home. And so, this actually helps with that.
Dylan: From a monetization point of view, you’re going to end up seeing, rather than a binary free/paid, you’re definitely going to see a lot more passive revenue monetization models get plugged into some of these kid-safe advertising and things like that, which is now a big enough sector where that can actually be a meaningful revenue stream for some of these particular services. And it’s safe and all the privacy requirements are built in. So, that may be one route that people will go down. But I do think you’re going to see a multiplicity of monetization being introduced to all of these services and maybe even cross-substitution in different types of ways.
One of the things that this may lead to actually is more bundling of services and apps. We’ve gone through this great cable unbundling, or still going through it I suppose, exercise over the last four or five years, but you’re now starting to see the dominant streaming bundle in the home, whether it’s Netflix or Disney+ or whatever. And the opportunity to start adding onto that, it would seem pretty timely, particularly with a lot of the educational services, to think about plugging some of those in as well. So, there’s a lot of optionality on the table.
Dylan, do you see that happening is marketing partnerships between those large platforms and different children’s media companies? Or acquisitions and a roll-up in the space?
Dylan: All of the above. The battle for the trusted family digital brand is one that neither Facebook nor Google has won. It’s funny, actually. From the same study that we had with kids, if you look at the brand that resonates most with kids and actually most parents, it’s Netflix, but… if you look at the acceleration of digital services within the family space, there’s a huge amount of opportunities in terms of what and who is going to be trusted in there. So there’s definitely going to be a logic in terms of marketing partnerships that are going to be happening.
But if you’re a subscription offering and you can bring an additional $10 a month of value to the table but only charge $2 for it because you can cross-subsidize with your main package somewhere else, that starts to be pretty meaningful, particularly if you’re a Netflix and you can bundle an interesting educational package there because you know everyone else is trying to get into the home. If you can win that battle, and it’s meaningful to you in terms of that brand and that adjacency, then it does seem like now would be the time to do it. So, we’re going to see a lot of M&A in this space.
I’m curious, from a user acquisition standpoint in this space, if you’re targeting kids there’s often the difference of your end user isn’t necessarily your buyer. I’m curious, and obviously there’s a big difference between different types of products here, are you seeing any changes in terms of whether user acquisition is being driven or discovery is happening from the parent side versus the kid side?
Nancy: Well, I’ll answer from our perspective. We always focus on the parent because our product goes from 3 to 10 years old. And we’ve found that it’s a lot easier to talk directly to the parent, deliver a great experience to kids if they want to talk to each other about it, but really focused on the parent because we have a hard paywall. We require a credit card or payment credentials upfront. And so, when the payer and the player are two different people, it’s really much easier for us to talk directly to the parents. But we rely on our product to sell itself to kids. But to get acquisition, we really focus on the parent.
Craig: We’re probably on the opposite end of the spectrum. We don’t typically do much user acquisition; it’s done word-of-mouth by kids, inviting other kids to play with them on the platform. And also there’s certainly a lot of visibility we get on YouTube as well from people not just playing, but watching other people play.
Craig, you mentioned before that you were seeing kids have recess now on Roblox. Did you just mean that as a practical social hangout space like they would have as recess? Or have you actually seen organized efforts by schools or parents to say, “We’re having a set recess every day on Roblox?”
Craig: I’ve seen… as in across the hall from me in my son’s room, where… he’s doing online classes. So, when lunch happens, when lunch breaks happen, they all go online together into a place like Roblox. I know some of the kids doing it on Minecraft and other places. But they’re all congregating together to have their social time together in the digital world.
Got you. Dylan, you spent a lot of time, obviously, given the focus of your company, focused on changes in data privacy happening in the kid space. Could you talk a little bit about what some of the big changes, particularly the last year or so, have been, and how the ripple effect of whether it’s GDPR-K in the E.U. or COPPA compliance here in the United States, how that’s changing the compliance environments and the way that kids’ media companies have to look at monetization?
Dylan: And probably lots of other companies as well. So a quick history of kids’ digital privacy laws. It started in the U.S. with COPPA, which was updated in 2012. And that expanded into Europe with, as you say, GDPR-K. And all of these laws basically state that no personal data can be captured on kids. So they have to be allowed to operate in a zero-data environment unless there’s some parental consent.
Those laws have effectively spread around the world now. So, we see them, versions of them, in China and Australia and Brazil. And the UK recently rolled out an extension of these laws called the Age Appropriate Design Code. So, essentially, what we’re seeing is that, as kids are becoming more and more of the fabric of the internet, there is more of these laws in place that are designed to really regulate how companies interact with them.
I suppose probably one of the milestones of all this was YouTube’s COPPA fine last year. So, the FTC fined them $170 million for capturing personal data on kids on YouTube. And that was the moment where the whole world went, “Okay, right.” This is now being taken very seriously by mainstream platforms, who, even though they weren’t designed for kids, they have kids that are clearly accessing them.
That’s the key trend to watch in all of this, particularly as all of these laws are not only starting to move from digital privacy into user interface, but they’re also expanding the age. So, COPPA in the U.S. defines a child as under 13. GDPR-K goes up to 16. And the UK is doing the same thing. So, I would say it’s not just kids’ media companies or kids’ digital service providers that have to be mindful of this, but the way the laws are now being framed, any product that can be used by a child has got to be compliant with these laws.
So part of the challenges that companies like Zoom and others are facing is that, by definition, they have kids jumping all over them. They’ve got to figure out like how do they create parent-consent mechanisms? How do they figure out their compliance plan for all of this? And that definitely makes things more complicated in this landscape.
My single piece of advice for any company that finds themself in that position, particularly Zoom, is appoint a chief children’s officer today. One person just to start thinking about all of these things. And make a checklist. Because what we’re probably going to see emerge out of all of this is children’s digital privacy start to merge into something like family digital privacy laws, where we see an expansion of protection from kids into communication between kids and parents, and kids and grandparents and things like that.
I’m curious, to what extent are any of you seeing kind of, either voluntarily by companies themselves or maybe in different place through regulation, a focus on limiting screen time of kids?
It’s been interesting seeing Apple and other companies implement this default in phones, showing consumers their screen time in different ways to be more conscious of it. Obviously, in China, there was a big change in the last year or so of the government limiting children to only 90 minutes a day of playing video games, and not after 10:00 PM.
I’m curious what you’re seeing in the market. Are there restrictions or more consciousness about limiting screen time by kids?
Nancy: I’ll start. For, I don’t know, over six years, we’ve been delivering versions of our platforms that have complete and total parent controls that allowed the parent to determine “How many hours a day can the child play? Can they play games, books and video?” to actually control the experience. And parents claim to want to know what their kids are doing, and so we give them the tools to be able to do it. And so, it’s necessary, but the jury’s still out about how well-used they are.
Craig: For us, it makes the most sense more at a platform level or at a device level because otherwise they’re just hopping from experience to experience within those controls. So, it happens at a different element of the stack.
But I do think it’s a good conversation to have because as digital experiences become more and more immersive, more and more engaging, more and more attractive, part of growing up and being a parent is teaching the kid how to build a muscle on how much time they spend online and offline. And that’s just something that they’re all having to learn.
And what’s tricky as parents is we didn’t grow up in this world. So, we’re addicted to our screens and we haven’t really built those muscles. So, a lot of what we’re trying to do, in terms of some of our parents’ education stuff, is to try to really just bring light to some of these issues. This is part of what we need to teach kids, how to responsibly be on-screen and off-screen.
And it’s tricky because in this world that they’re growing up on, not being on the screen isn’t really an option. That’s part of the reality is that they need to be connecting friends. But it’s all about making it not obsessive, not overly consuming. So, it’s a very tricky line to walk.
Do you think the current environment, with so many kids at home, is likely to change the perspective many parents have on how much screen time is appropriate, or a more nuanced view of bad screen time, so to speak, versus healthy screen time or social-interaction screen time?
Craig: Yeah, it should. I hope so. We’ll see. I know one of the things that we ended up doing at home was, for example, putting on platforms that gated the amount of time my son can play. So, hard limits. But then we remove them and we track them. And then if he went over the line, we put the limits back on, but we were trying to teach him how to regulate himself. That’s more the model we need to go to. So there’s a role for them. I don’t know if they need to be government, but, as parents, we need to teach kids how to be able to self-regulate on this stuff. It’s a more nuanced conversation in terms of what’s the right infrastructure to put in place and how parents can use it.
Nancy: I completely agree with that. And I would add that all screen time is not created equal. And if you think about how kids use screens, there’s three main functions, social, entertainment and education. And prior to COVID, the general consensus among parents is that a tablet was primarily for the first two, social and gaming, because adoption of tablets in schools is still fairly low. So, education is more like consumer education applications, as opposed to things you have to do in school. That’s all flipped on its head now that hundreds of millions of kids are home. And so, I do think that…
We lost your audio, Nancy.
Dylan: Just when she was getting to the very best bit.
There we go. We missed the last part of what you said, Nancy. Your audio cut out.
Nancy: Oh, sorry about that. What I was saying is that kids’ attitudes might actually change about devices now that they are using it for productivity and education as opposed to strictly entertainment and social. And they may begin to feel that it’s a tool rather than an entertainment device. And so, you see that the usage of family TV is way up as well. And so, I don’t think we know, but what we do know is the parents are going to lessen up their thought process around screen time because they have to.
Craig: I was going to say, the interesting thing that we’ve seen, where if parents perceive it’s all bad and something that needs to always be limited, what that does is the kids…this is where they have their social interaction. It’s a must-have for them. So, it drives them underground in terms of what happens, which isn’t really a positive interaction in general. So, how do we actually have people talking about how it’s used, what it’s used for, this will help with all that.
Dylan: But this is also why we need to see way more investment in kid-tech infrastructure by all the major tech companies and the operating systems and everything else because there’s still a deficit of good tools and shared platforms that can be used to enable all of this. It’s not a substitute for parenting or anything like it, but, it’s still a tiny fraction of R&D that gets deployed every year.
Craig: Fair enough.
Nancy, Craig, Dylan, we’re hitting our time limit here, but thank you all for taking the time to chat.