Brainier Babies? Maybe. Big Sales? Definitely

It's as if a baby who was once the center of the universe suddenly has to share space with a new sibling, then another, and then another. Walt Disney Co.'s (DIS ) Baby Einstein, the dominant brand in the burgeoning market for videos that supposedly make toddlers smarter, is finding itself saddled with several new cribmates. Rival studios Warner Bros. Entertainment (TWX ), Artisan Entertainment (LGF ), and Universal Studios (V ) have realized there's gold to be mined selling educational videos to parents determined to have little Johnnie or Suzie lead the Harvard University debate team one day.

Racing into the so-called kidvid market seems like a no-brainer. Over the past two years, sales of developmental videos such as Baby Einstein's Number Nursery or Brainy Baby Co.'s Left Brain, have tripled, to $700 million, according to industry execs. And kidvids, targeted to children from six months to five years old, were once again hot sellers this holiday season. With some 4 million babies being born in the U.S. each year, "you can mine this market forever," says Stephanie Prange, executive editor of Video Store Magazine in Irvine, Calif.

Of course, educators have long debated whether kidvids really help toddlers learn or are merely a baby-sitting device for overworked parents. Indeed, some videos being marketed as educational are little more than images of stuffed animals or toy yellow bulldozers set to classical music. "Consumers are becoming more discerning about entertainment with a so-called educational theme," says Dennis Fedoruk, chief executive of Brainy Baby, whose eight-year-old line of kidvids has won a dozen awards for their educational content. Fedoruk adds: "A lot of studios are jumping in to cash in without a lot of thought or foresight."

That may be wishful thinking: Analysts note that Hollywood is hooking up with partners that have plenty of experience selling products or services for toddlers. Warner Bros. Home Video teamed up with LeapFrog Enterprises Inc., maker of the popular LeapPad e-learning devices, to offer a line of developmental videos that feature popular LeapFrog characters teaching kids letters, phonics, and listening skills. It debuted on Dec. 9. Universal Studios Home Video has joined with DIC Entertainment Corp.'s Mommy & Me unit, a pioneer in setting up children's playgroups, 350,000 of which are held each week in the U.S. The Mommy & Me series is due on Jan. 20. And Artisan, which was Einstein's first studio partner before being supplanted by Disney, has enlisted Mattel Inc.'s (MAT ) Fisher-Price toy unit to create a Baby Development Collection, due out on Jan. 27.

To hawk their products, Universal and Artisan are trotting out the PhDs. Mommy & Me founder and child-development expert Dr. Cindy Nurik will make lunchtime rounds of corporate cafeterias to tell working parents that their kids can learn everything from language skills to physical coordination by watching the company's videos. Says Glenn Ross, president of Artisan's Family Home Entertainment unit: "You need to grow your business in a way that's not off-putting to new parents. You can't appear to be overcommercializing it." For example, he says, Artisan will deliberately refrain from putting Fisher-Price toys in its videos.

With three deep-pocketed studios entering the kidvid arena, one thing is certain: The battle for young kids' hearts and minds -- and their parents' wallets -- is sure to heat up.

Corrections and Clarifications In a story on developmental videos for babies, we overestimated the size of the market. ("Brainier babies? Maybe. Big sales? Definitely," News: Analysis & Commentary, Jan. 12, 2004). We believe the market is approximately $100 million in annual sales rather than the $700 million we reported.

By Gerry Khermouch in New York

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