Children's computer tablet maker Fuhu has about 2 million registered users. Now the El Segundo start-up is looking to tap them for some steady income.
Fuhu launched on Thursday a $4.99-a-month subscription service that gives children access to a curated selection of Disney songs, National Geographic videos produced for kids and stories about Garfield.
Amazon, Netflix and Sesame Street offer similar subscriptions aimed at children. But Fuhu said it's not only the first to package such a wide variety of content – learning tools, videos, music, games and books – into one deal, but also to have most of the content be educational in nature.
"We're trying to deliver a differentiated subscription service that's good for the brain versus being a boob tube," said Fuhu founder and president Robb Fujioka.
The service, called nabi Pass, requires ownership of a Fuhu nabi tablet. Nabi Pass is meant to complement a subscription to Netflix or Amazon Prime, Fujioka said. The selling point is Fuhu's educational software that includes 16,000 lessons designed to supplement what students from pre-K to sixth grade get in the classroom.
"If you look at supplemental courseware and the competitive landscape, it far exceeds $5 a month," Fujioka said. "We're trying to make it available at a more attractive price point through cloud technology."
Active users already spend six times as much as the monthly subscription price, he said. And the content available through nabi Pass can still be purchased piecemeal, but at higher costs.
Content will be swapped out regularly with the idea of keeping 80% of it educational and 20% for pure entertainment. It will also be deeply curated. For example, instead of allowing streams of 16,000 Disney songs, users will get a selection of 1,000 to focus on each month.
Profit margins from selling tablets are slim to none. But subscriptions should change the economics even after accounting for licensing costs, Fujioka said.