The KidTech industry has evolved to engage young audiences through age verification, locked features, and cabin mode, opening up new opportunities for monetization and breaking down barriers in professional content creation.
UEFN has the potential to become a platform catering to the Fortnite community with tools, distribution, and console penetration, surprising and solidifying its place in the industry over time.
Roblox's longevity and impact make it a fertile ground for the next generation of startups, with potential for one or more of the top consumer companies to emerge from experiences and processes developed on the platform.
Deep dives
Current state of KidTech: Moving beyond tick boxes
In the past decade, the KidTech industry has evolved from simply implementing age gates and parental consent to now giving actual thought to engaging young audiences. There has been a shift towards age verification, locked features, and cabin mode, allowing for better user experiences. The combination of user-generated content (UGC) and the unique Gen Z and Gen Alpha audience has opened up new opportunities for monetization and breaking down barriers in professional content creation. The rise of UGC platforms like Roblox and Fortnite has created a confluence of factors that make this industry fascinating and promising.
UEFN: Early impressions and long-term potential
UEFN, while still in its early stages, has potential as a platform that caters to the Fortnite community. Comparing it to Roblox is not ideal, as UEFN's focus is building titles for the Fortnite audience, much like Steam does. It would be unfair to underestimate the platform's future potential, particularly given the tools and distribution it offers, especially its console penetration. Advertisers may also be drawn to the opportunity to appear on big screens, ensuring a unique exhibition stage. While UEFN's true value may not be immediately apparent, the platform has the potential to surprise and solidify its place in the industry over time.
Roblox's long-term viability and emerging opportunities
Roblox's longevity and impact cannot be underestimated. The sheer amount of time that Gen Z and Gen Alpha spend on Roblox showcases its ability to aggregate various activities and habits of its users. In the next decade, it is highly likely that one or more of the top 20 most valuable consumer companies will emerge from the experiences and processes developed on either Roblox or Fortnite. These platforms have the talent, density of activity, and distribution to foster the next generation of startups. Roblox, in particular, could become the perpetual home for founders to come together and shape innovative companies. Advertising on both platforms also presents intriguing opportunities that warrant further exploration.
Challenges in KidTech Investment
Investors have historically been hesitant to invest in KidTech due to challenges in building a revenue model around it. The disconnect between identifying the audience but lacking forthrightness about the economics has deterred investor interest. However, in recent years, the space has seen more investor attention, with around $200 million annually being invested in KidTech and SafetyTech. Successful outcomes from companies like Moonbug, SuperAwesome, and Roblox have driven more optimism and interest in the space.
Unresolved Problems in KidTech
There are still key problems to solve in KidTech, including the need for commercially sustainable kids app stores, better tools for parental involvement and management, and the development of a universal age API to authenticate user ages without relying on age gates. App store policies often hinder developer participation, and parental confusion and lack of trusted digital brands add to the challenges. However, progress is being made, with companies like Epic introducing innovative features to support young audiences, and increased investments indicate growing interest in addressing these problems.
Serial entrepreneurs that always win are a rare breed worth learning from, and we’re hosting one of those special people today as our guest. Dylan Collins is currently an investor but was the founder and CEO of DemonWare, Jolt, and SuperAwesome, which sold to Activision Blizzard, GameStop, and Epic Games, respectively. In this conversation, we explore a few of Dylan’s lessons learned from running and selling so many companies. We then take a detour to discuss the current and future state of the kid-tech market, including what video game companies should consider in the coming years. Lastly, we touch on the early days of UEFN, Roblox’s expanding moat, and what the next generation of founder-creators could bring to the table within UGC, before closing with some exciting trends and book recommendations.
We’d also like to thank Nexus for making this episode possible! Nexus’s creator program in-a-box makes it easy for game devs to build and manage a world-class creator program, driving significant growth in conversion, ARPPU, retention, and LTV. To learn more, go to http://nexus.gg/naavik
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