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EdSurge

Is the Educational Games Industry Falling Into the Same Trap It Did 20 Years Ago?

By Blake Montgomery

Carmen Sandiego has reappeared.

Last November, Houghton Mifflin Harcourt released “Carmen Sandiego Returns,” the first iPad and iPhone version of the classic game in which players use their geography knowledge to track Carmen and her goons across the world.

Her re-emergence coincides with a resurgence in the popularity of educational games. The Apple App Store, for instance, boasts 80,000 apps in its “Educational” category. Teachers increasingly blog and write about using game-based learning in their classrooms. And the market for educational games may be worth $2.3 billion by next year.

Carmen may be in plain sight now, but things aren’t the same as when she last appeared. Once an icon of the educational gaming software in the mid-90’s—also known as the “edutainment” era—Carmen hasn’t been hiding as much as trying to claw her way back from obscurity. Her disappearance was less intentional and more reflective of the collapse of the edutainment industry.

Aftershocks of the collapse of the edutainment industry still trouble today’s teeming edtech market. Many of the key players from back then see history repeating itself: A crowded market doomed the majority of edutainment companies, just as the App Store's teeming virtual shelves may be doing today. What can today’s educational game developers learn from that boom-and-bust period?

The Heyday of Edutainment

To many, the embodiment of the edutainment industry was The Learning Company, the maker of such classics as “Reader Rabbit,” “Zoombinis,” “The Oregon Trail” and “Carmen Sandiego,” and several others that were popular in classrooms in the 1990s and early 2000s.

The company exploded soon after its inception. Sales reached $1 million in 1983, the first year it incorporated, and doubled each subsequent year, according to founder Ann McCormick’s blog. She and her team built a number of acclaimed titles in their early years like Rocky’s Boots, which won Software of the Year awards from several magazines. IBM contracted the company to create games for the PCjr. The games came prepackaged with Apple II computers as the desktop soared in popularity in schools.

The Learning Company was not without its troubles, though; it cycled through a number of executives between 1980 and 1985, with McCormick leaving in 1985. Nevertheless, the company continued to boast outstanding performance, especially in its years as a public company from 1992 to 1995.

In 1995, The Learning Company was acquired by CD-ROM publisher and distributor Softkey in a hostile takeover. After the acquisition, it continued to agglomerate businesses, buying Broderbund (the maker of Carmen Sandiego and Mavis Beacon), MECC (creator of The Oregon Trail), Mindscape, and Creative Wonders. The company swelled.

Then came the grandaddy acquisition of them all: Mattel bought The Learning Company for $3.6 billion in 1998. The Learning Company and all its subsidiaries became Mattel Interactive.

But something was very wrong. A steep devaluation tore through Mattel Interactive like a horde of locusts as the company lost $300 million in 1999. It hemorrhaged $1 million a day in 2000, and that year Mattel sold the subdivision for less than a tenth of the price it paid, according to The Daily Telegraph. Houghton Mifflin Harcourt owns it today.

Business analysts regard the acquisition as one of the worst in history. It is the subject of a case study at Dartmouth’s Tuck School of Business.

‘Edutainment’ became a toxic word,” said Toby Levenson, former Manager of The Learning Company’s Educational Design Department, “especially in regard to the financials. People thought anyone involved couldn’t handle money because of how badly the merger had gone.”

There isn’t a consensus on why Mattel’s purchase was an unmitigated disaster. Levenson believes budget imbalances crushed the game maker: In fierce competition for market share, the 1995 price tag of $39.99 for a game had dropped to $9.99 by 2000. Disney’s well-known brands became a big player, as did the Internet, crowding out The Learning Company even further. All the while, customers expected the games to pack in more material and features. Costs were up; revenue was down.

Lee Banville, editor of Gamesandlearning.org, thinks that there is a moral to the story. “The Learning Company showed that mixing games with education is a powerful tool,” he said, “but it also showed how difficult it is to grow that business and diversify and evolve.”

Likewise, consumers also began to wonder if the games could deliver on their promises: Did they actually help students? Many key players believe that the market became so crowded and diluted that the “educational” descriptor in “educational games” no longer applied. Quality plummeted. A euphemism emerged referring to the era's games that promised learning badly disguised by a thin layer of fun: chocolate-covered broccoli.

“The Learning Company operated under the assumption that that there was a whole market to be tapped,” Banville said. “Not only did that market become saturated, it became saturated with a lot of bad games.”

According to Levenson, the market had completely died by 2002.

What’s happening now?

Edutainment’s legacy lives on. Banville said, “‘Edutainment’ has grown in scope to mean any bad learning game, and a lot of learning games are struggling with the hangover effect of how titanic that economic collapse was. The Learning Company was one specific business, but the term has held the industry back in important ways. For many years, people making educational products didn’t want them to be entertaining because that could be called ‘edutainment,’ and that would hurt your funding.”

Today, rather than educational CD-ROM games, there are educational apps, which may be falling into the same traps. Instead of Toys R Us, the new marketplace is The App Store, which Ann McCormick struggles with as she works on the Reader Bee apps. “It's difficult to advertise and make money. My apps are focused, powerful and inexpensive, but parents aren’t looking for quality,” she said. “They want to keep their kids busy.” McCormick’s apps have won a suite of awards but, according to her, aren’t selling. She’s not optimistic about the app store.

She has reason to feel that way. The Joan Ganz Cooney Center counts 80,000 educational products in Apple’s App Store. Developers categorize the apps themselves, leaving independent review and effectiveness rating up to educators. Referring to the store's lack of regulations and curation, the Cooney Center also called the App Store the “digital Wild West.”

McCormick’s difficulties with the teeming App Store mirror The Learning Company’s dealings with Toys R Us. The retailer had strict sales targets that products on the shelves had to meet, but Disney far outpaced The Learning Company’s production, marketing budget and recognizable branding. In 1984, Toys R Us returned the majority of The Learning Company’s wares to their creators, according to Warren Robinett, one of the company’s original developers.

Without exception, the people interviewed for this story said the app store has become overcrowded. Levenson thinks that the overcrowded edtech market of today produces less immersive games more tools for teachers. Games become indistinguishable from one another and quality fails to shine through. Many are waiting for the silver sifter that will separate the truly educational apps from simple games.

“There’s always opportunity for entrepreneurs who make good products, but the problem with the app store is that it’s hard to find stuff,” said Mark Schlichting, creator of Broderbund's "The Living Books." “It’s also far more difficult to make money. You’re looking at a few dollars profit for an app instead of $30 for a CD game, and users expect more than they used to. To be a sustainable company, you have a higher bar for sales and quality.”

As when The Learning Company collapsed, Banville believes costs are up and revenue is down. “A lot of bad games today are descended from the irreputable games that put The Learning Company out of business. I like to think there’s a slow education of the market, and we’re seeing curated educational marketplaces spring up with serious funding behind them. The fact remains, though, that you can crank out a hundred flashcard apps for the same price and in the same timeframe as it takes to make one media-rich game,” he said. “These problems continue to dog educational game developers. Everybody blames the app store, but this began in the 1980s and 90s.”

Banville believes that the patterns of the edutainment industry are repeating themselves and that we should all pay close attention to what's happening to the current darling of electronic education: Minecraft. It’s in use in many classrooms and was recently acquired by a much larger company, Microsoft—what’s the fate of the block builder game? Is Minecraft the next Learning Company? Or something new?


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