The New Revenue Source Catching on with Game-Based Learning: Mom and Dad

Game-Based Learning

The New Revenue Source Catching on with Game-Based Learning: Mom and Dad

By Emily Tate     Apr 26, 2019

The New Revenue Source Catching on with Game-Based Learning: Mom and Dad

When Julia Rivard Dexter first launched her game-based learning startup, Squiggle Park, she was hoping to reverse declining literacy rates by creating games that were so fun and engaging kids would want to play in their free time. She envisioned something that could rival a Clash of Clans or World of Warcraft, but steeped in learning research.

Squiggle Park, the company’s eponymous game, was designed to help children become literate by third grade—that critical point when students transition from “learning to read, to reading to learn,” Rivard Dexter explains. It was also intended, from the very beginning, to be accessible to any child anywhere in the world.

Launched in early 2017, the basic game is geared toward 3- to 8-year-olds and available free to schools. Extra features, such as data dashboards, which many schools find essential for measuring student progress, came with an annual fee: $699 for schools, $99 for classrooms. That put a crimp on the original mission related to equity.

“So many teachers were pulling money out of their pockets to pay for [Squiggle Park] or calling us, frustrated, because they knew their kids could benefit from the program but couldn’t get the license costs covered,” Rivard Dexter says. “It became so obvious to us this is not a scalable market for education.”

At that point, Rivard Dexter vowed her next game would be different. Enter Dreamscape, the company’s second, more advanced literacy product geared toward older students. Rather than charging schools, the game relies on a different business model: Ask parents to pony up instead.

The idea hinged on Rivard Dexter’s initial theory that if she could develop an educational game that was as engaging and addictive as popular consumer games, kids would love playing it so much that they’d go home and ask their parents to buy it for them.

“Parents who can afford to purchase this would actually subsidize the distribution to every school and district that wants to take advantage,” she explains. “It’s an equalizer.”

This business model—provide the product to schools for free, rely on families to pay for the license—was a gamble for the young company, Rivard Dexter admits, but so far it’s paid off. The product launched to the public in January and has signed up more than 140,000 players in the months since, with an average 15 percent growth week over week, she says.

The goal is to reach one million players by the end of 2019, and to sell at least one parent membership (priced at $8.95 per month or $60 per year) for every class using Dreamscape. That ratio, she says, is the company’s ticket to an effective, scalable business model.

“The trick to making this work is, ultimately, the demand has to be from the player. They have to love the game and want to play at home,” she says. “That’s at the crux of making this successful.”

If the model sounds unique, it’s actually catching on—and showing success—at a handful of other game-based learning companies, including Prodigy and codeSpark.

Squiggle Park, which is based in Nova Scotia, Canada, prefers to compare itself to the likes of Supercell, the maker of Clash of Clans that raked in $810 million in profits in 2017, rather than fellow game-based learning companies. But comparable education companies do exist—and their financial successes offer a promising roadmap for startups hoping to remain equitable while also turning a profit.

Take codeSpark, a Pasadena, Calif.-based startup that helps kids learn the fundamentals of computer science through a word-less interface.

CodeSpark was founded in 2014 after Grant Hosford, a co-founder and the company’s CEO, signed up his 6-year-old daughter for a robotics class and learned she was the only girl in the class and the youngest person by about a five-year margin.

Hosford wanted to create an approachable option for his daughter and other young children to learn the “ABCs of computer science,” he says. So, together with Joe Shochet, he started codeSpark, which offers an interactive, story-based game designed for ages 5 to 10. The company’s 1.5 million monthly active users build an average of 27,000 games and interactive stories each day.

Like Squiggle Park, codeSpark is available to schools, libraries and nonprofit organizations for free—part of giving students “equal opportunity and exposure to computer science,” Hosford says. But if kids want to play at home, their families must purchase a monthly subscription, which costs $7.99.

“It’s very difficult to build educational games that both teach kids and that they enjoy using, but we know that’s what we had to do to be successful,” Hosford tells EdSurge.

Between the first and second year of using the subscription-based model, codeSpark doubled its revenue, which Hosford said was in the “low millions of dollars” after year one. In other words, it was not insignificant revenue. The company is on track to be profitable for the first time later this year, he says.

The model works for codeSpark, he adds, because the game encourages creativity and expression; kids don’t even know they’re learning because they’re so engrossed in the game.

“I think if you asked most of them, they’d think of it as making and having fun,” Hosford says. “They know their parents think it’s educational, but they believe they’re pulling a fast one on mom and dad.”

Prodigy Education, the math game used by 6 million students each month, follows a similar business model, co-founder and co-CEO Alex Peters explains.

“All our educational content is free forever,” Peters says. “The only way we make money is through a completely optional parent upgrade,” which comes with features like additional hats for the characters to wear. “This allows us to keep all the educational content free, which we believe is a more equitable model than traditional models, where schools are forced to pay or nobody gets it.”

It’s been that way since Peters founded Prodigy in 2011 in Ontario, Canada, and the company has been profitable for the last few years, he says.

“It’s worked. It’s allowed us to scale,” Peters says. “It can be harder to scale extremely quickly [with this model], but we’re scaling at a rate we’re happy with. And it’s allowed us to provide an equitable business model, which is the goal.”

  

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