content companies do, but the problems are exacerbated. The problems are not necessarily different in nature, except for the safety area.

The first and biggest challenge is the Internet itself, which is not necessarily an effective medium for young children aged 2 to 12, especially for those under 10. The bandwidth constraints pose one of the most significant problems. Even at broadband speeds, children find content coming over the Internet frustrating. Adults do, too. If you try to watch a video or animation, especially over a dial-up connection but even over broadband connections, the experience is not pleasant. It is tolerable for adults but becomes intolerable for kids. This is a business challenge because of the competition. You are competing with TV, video games that perform extremely well, and PC software that works well. When you click on a PC game, something happens right away; the same cannot be said for content coming over the Internet.

A snowballing series of other business challenges arise out of these bandwidth constraints. There are creative limitations on what you can do in a space. If you want to do something that works well over the Internet, chances are you will make creative sacrifices that make your content fare worse than your competition. This applies to entertainment-based content and educational content. Our product was somewhere in the middle, in the edu-tainment space. The creative trade-offs pose real challenges.

Many companies have tried to develop original educational content and deliver it exclusively over the Internet. For example, MaMaMedia in New York tried to create bandwidth-intensive educational (but fun) content for kids. They were challenged from a business perspective because they spent a lot of money marketing this product. There was a major mass-advertising campaign of which my kids were well aware; they asked me if we could buy Fruit Roll-ups so that they could get the secret code for a game on a MaMaMedia site—notwithstanding the fact that they are not allowed on the Internet and have never seen MaMaMedia. This was a successful campaign and it drove millions of unique visitors to the site. But from a business perspective, those kids did not visit the site often or stay very long, and the performance results were probably among the worst in the industry of the companies that I am aware.

At Passport, we tried to address this very issue by bringing the content off the Internet and making it perform well. As a consequence, we did not have the same problems. On average, our kids visited 10 times a month and stayed 25 minutes each time they sat down, about 10 times the industry rate (kids visiting less than twice a month and staying maybe 25 minutes during the entire month). We had other problems, but bandwidth clearly is holding kids back from embracing the Internet in important ways.

The other major limitations of the Internet include the safety and pri-



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