‘Youth Electronics’ Seen Gaining Prominent CE Shelf Space at Retail

The approach to the category and whether some products are better-suited for the CE section than the toy aisle are considerations that still vary by retailer, the executives said. And whether the digital camera buyer should also have responsibility for selecting less sophisticated fare from Hasbro, Mattel, MGA Entertainment and others also remains open to debate, they said.

Wal-Mart, for example, has a dedicated youth electronics buyer and a similarly appointed section within its toy department. But arch-rival Target does not, although it does group together like products and in some case brands -- LeapFrog Enterprises is one example -- industry officials said. Toys ‘R’ Us was making the rounds at Toy Fair talking of expanding its youth electronics assortment with products strikingly similar to those found in most CE departments, but with a decidedly lower priced, youthful bent, industry officials said. And Best Buy has started dedicating gondolas within its so-called “Jill” customer-centricity stores to the category, industry officials said.

“It’s still a category in search of a definition and it may take a few years to get there,” Oregon Scientific Exec. Vp William Uzell said. Much of what will govern whether retailers dedicate a buyer or a department to youth electronics is based on the revenue the category generates, said the company’s national sales mgr., William Fleckner. The overall youth electronics market in the U.S. generated $600 million in annual revenues in recent years, according to NPD. “You have so many different things -- DVD games, LeapFrog devices, digital audio players -- that many retailers aren’t sure how to merchandise it,” Snap TV Mktg. & Development Mgr. Jason Tenenbown said.

Whether to dedicate sections to youth electronics also hinges on the breadth and depth of the products and whether they continue to garner interest from an increasingly techno- savvy audience, industry officials said. Oregon Scientific showed a prototype ATC-1000 Action-camera ($99) a year ago that was splash-proof, delivered video with 640x480 resolution and had an SD slot that accommodated memory cards with up to 1 GB of capacity, Uzell said. By fall, a new version, the ATC-2000, will be water-proof to a depth of 10 ft. under water and have an expansion slot for up to 4 GB SD cards, he said. The video frame rate also will be doubled 30 fps, Uzell said. The current model can record in 3 resolutions -- 640x480, 320x240 and 160x120. For its part, Hasbro is continuing to market the V-Cam, which shipped last fall and features 32 MB of internal memory and an SD slot. It’s capable of taking pictures in 3 resolutions -- 320x240, 640x480 and 1,280x960 -- and can accommodate up to 7 min. of video in 320x240. It also has a 1.3” color LCD on the back with 280x240 resolution, company officials said.

Despite appearing to mirror products found in a retailer’s CE department, much youth electronics gear in reality may be a generation behind cutting-edge devices. For example, while most CE products have upgraded to USB 2.0 connectors, almost all youth electronics sport 1.1 versions. And while the internal memory of CE devices is growing rapidly, the standard for most electronics-oriented toys is 32 MB. The main reason is the need to keep the retail price under $100. “Right now 32 MB is the sweet spot of the market because it carries a lowest cost, but in 2 years it will be 64 MB,” Uzell said. In the current market, 16 MB memory carries a higher cost because there are fewer suppliers and the industry if shifting to 32 MB, he said.

Meanwhile, the trend continues among toy manufacturers to enter proven electronics categories with product offering slight differentiation or lower pricing from goods already there. MGA Entertainment unveiled its Text-to-Talk 2-way radios ($49 a pair) minus the 1.3-megapixel camera found in Hasbro’s ChatNow model ($79), but with the same 2-mile radius. At the same time, a Hasbro spokeswoman ChatNow’s price may be reduced by fall.

In consoles, LeapFrog threw its hat in the ring with LeapsterTV ($49), filling out a line that includes the Leapster and L-Max handheld devices, the latter having the ability to connect to a TV for game play. The new console comes packaged with a Dora the Explorer cartridge that reserves a portion of its 2-4 MB memory for storage to allow a user to resume a saved game at the point where it was shut down. The console also is compatible with the library of 40 Leapster games, including 11 new titles expected to be introduced this year, company officials said. Among the new titles is Disney/Pixar’s Cars and Nickelodeon’s The Backyardigans ($24.99 each) as well as “arcade” games such as Letterpillar and Number Raiders ($17.99 each). LeapFrog also introduced a pink version of the L-Max to target girls and is packaging it with a Scooby-Doo title, company officials said. “It made sense for us to venture into the console category because it’s the way kids interact with games and we believed we could provide a platform to match the age of a child,” a LeapFrog spokesman said.

In response to LeapsterTV, Vtech may lower the price of its V.Smile TV Learning System to $49 from $59, company officials said. They said the product has sold 1.2 million units since its introduction in 2004. V.Smile also added 2 accessories, including a Jammin Gym Class activity mat and an art studio (both $29.99) that plugs into the console. The latter leads 5-9 year-olds through art lessons and creative play. The V.Smile Pocket, which sold about 500,000 units in 2005 and is forecast to sell another 500,000 this year, also will be available in a pink version as the price drops $10 to $79, N. American Mktg. Vp Julia Fitzgerald said.

Vtech also took the wraps off the V.Flash Home Edutainment System ($99). The V.Flash extends the V.Smile platform to 5-9-year-olds in deploying LSI Logic’s Zevio reference design that’s built around a 32-bit processor operating at 150 MHz. That’s a significant boost from the 16-bit, 27 MHz processor found in the V.Smile. V.Flash has 8 MB of memory. The Zevio platform, unveiled at CES, also incorporates Koto’s 3D graphics technology and Access’s uMore real-time operating system. Koto’s 3D graphics were previously deployed in its WonderSwan handheld gaming system in Japan, while Access recently acquired PalmSource.

The V.Flash console also shifts from so-called “Smartridges” used in V.Smile to standard CDs. About 3/4 of the space on the CDs is reserved for the title itself, while the remaining space is used for “bonus” activities such as 3D puzzles. V.Flash will ship with a half-dozen V.Disc titles ($29) including Disney Princess and Spiderman. V.Flash will be packaged with the Jumping Bean Island V.Disc.

Vtech also joined the growing number of toy companies designing CE devices for 6-36-month-olds. V.Smile Baby ($39) is a console-based system that attaches to the TV and is packaged with an RF-equipment keyboard. The console contains the same processor as the V.Smile TV, while the keyboard has 3 settings for games -- play time (6-12 months), watch and learn (12-24 months) and learn and explore (24-36 months). The keyboard has a 15 ft. range. LeapFrog is responding with a similar product -- Little Leaps Grow-with-Me learning system ($39) -- that features baby and toddler modes. The heart of the system is an RF-based wireless controller that flips over to feature a more advanced design based around a joystick. The system will feature interactive discs ($17.99 each) that include puppetry, animation and live-action activities.

Toy Fair Notebook

Emerson Radio is expanding distribution of its SpongeBob Squarepants and Dora the Explorer CE products to Target, which is expected to carry 6 SKUs this year, Product Development Dir. Jodi Palm said. Emerson already has strong distribution for the line through Wal-Mart (11 products) and Toys ‘R’ Us (10 products), but Target proved tougher to crack given its assortment of Disney-themed CE devices supplied by Memcorp. Emerson initially tested sales of a SpongeBob CD boombox radio ($39) through 200 Target stores and expects to add a model with recordable CD and cassette in the spring, Palm said. The new agreement represents a return to Target for Emerson, which sold Hello Kitty brand CE products through the chain in the late 1990s. Among the new introductions were a Dora the Explorer Video Camera ($59) that ships in Aug. featuring 32 MB of internal memory for the recording of 130-sec. of video and an SD slot for up 64 MB cards, Palm said. Also available will be a Dora the Explorer portable DVD player with a 3.5” LCD and a SpongeBob digital camera with 8 MB of internal memory and resolution of 640x480. While Emerson had success with the SpongeBob- and Dora- licensed products, the same can’t be said of the Blue Clues sing-a-long system, Palm said. “Blues Clues just didn’t fit into the CE category as well as the other products,” she said. Emerson also will add another license to its stable in 2007 for CE products, said Palm, who declined to disclose details.

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LeapFrog is carrying over its Fly Pentop computer this year, but is adding new software, including Fly Through titles focusing on algebra, writing and memorization ($29). Also available are 6 “quick play” games ($9.99), titles that use Flay “strip” technology that activates content stored in the PenTop’s base ROM. Among the strip titles are Fear Factor, Fly Logic Games and Harry Potter: Interactive Marauders Map. Meanwhile, Enfora’s TicTalk cellphone ($70), which uses 5 LeapFrog-developed games (CED June 24 p6), is experiencing a slower-than-expected launch at retail. Walmart.com is selling the product, but Enforma is still trying to crack bricks-and-mortar retailers, LeapFrog officials said. Targeting 6-13-year-olds, the TicTalk allows parents to control incoming and outgoing calls, limit calls to certain times of the day and post reminders via the Internet. The phone, which operates via the Cingular network, started with online sales in Aug. and was expected to hit national retailers in the fall. “It’s just taken longer than expected for them to get retail distribution,” said LeapFrog Asst. Brand Mgr. Patti Lew said.

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Snap TV is readying a new version of its NCAA Football DVD trivia game that will be more interactive, allowing the user to make in-game decisions such whether to attempt a field goal, Tenenbown said. The current version ($24) focus on trivia questions that are mixed with 500 highlights. Snap also will have a new NCAA basketball game timed to coincide with the 2007 NCAA tournament, Tenenbown said. Meanwhile, Snap expects to ship the first 3 titles under a new distribution agreement with Scholastic Media for DVD-based games by early fall. The titles, which were developed by Scholastic, include Clifford Phonics, I Spy Spooky Mansion and I Spy Treasure Hunt ($24 each). Snap also is readying a new assortment of DVD travel games ($9.99 each), including Kids Trivia, Family Showdown, Pop Culture and Gender Wars. The titles feature larger graphics for display on portable DVD players and internally developed content that helps lower the retail to $9.99, Tanenbown said. Other Snap TV DVD games, like Eco-Rangers: World Adventures, contain film footage licensed from the BBC and National Geographic, which drives up the title’s price, Tenenbown said.