Not satisfied with selling content to adults only, Amazon (
) has now ventured into content for kids. The company recently
announced the launch of of "Amazon Kindle FreeTime Unlimited" aimed
at kids of ages 3-8. The service gives unlimited access to
thousands of titles including exclusive to Amazon Android apps and
games. The prices for the services are low at ~$3 per month per
child or ~$7 per month per family for Amazon Prime members.
Customers who are not Prime members pay a monthly price
of $5 per child or $10 per family.
A study estimates that nearly 70% of the tablet owners with
children under 12 allow their kids to use the devices for gaming,
studying and entertainment. With an estimated 2.5 million tablets
shipped by Amazon in Q3 2012 and more expected in Q4, the potential
market for the offering is huge. Though the package pricing of the
product limits the revenue potential, we expect it to instead make
up by attracting large number of families looking for a way to
curate content their children are exposed to while saving at the
same time. The content bundling could boost sales for the Kindle as
the preferred tablet instead of an Apple (
) iPad or iPad mini.
See our full analysis for Amazon's stock
The service offers a bouquet of curated, kid-friendly
movies, games and books. It lets kids create their own profiles and
control their library. They get to explore content on their own and
use their imagination without being dependent. They also get access
to separate home screens which isn't shared and won't lose their
place in a movie/TV show when someone else uses the device.
Parents' worries have been attended to as they get to curate the
content, impose time limits and thus limit their kids' screen time.
The service also does away with advertisements and links to social
media which track data and might have led to age inappropriate
content. We believe that the bouquet pricing of the service is a
clever way to get people to spend more money and free unlimited
content will get parents addicted to the device and service.
The company will face competition from Barnes & Noble's Nook
which is popular among parent because of its wide catalog. Apple
too would be a competitor as the company through a Netflix (
) app on its devices offers kid-focused films.
We have a
estimate for Amazon
which is 12% below the current market price.
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