2.4 Market and Competition

A clear price structure and low entry costs in relation to the customer benefit should result in a relatively high turnover rate. With an entry fee of just 1,99 EUR/month (19,99 EUR/year) for the @Home version and 89,99 EUR/year for the @School version, the inhibition level for a purchase is relatively low. 

In Germany, there is a total of 8699 elementary schools with 121.791 classes with 2.837.737 primary school students – a fourth of which is in fourth grade. In Berlin alone, there are 502 primary schools with 7.126 classes and 166.060 primary school students, roughly a sixth of which is in fourth grade. The state of Brandenburg has 548 primary schools with 5.448 classes and 116.281 primary school students. The market potential in close proximity therefore totals 200.000 private households and 1050 schools.

In the globalized and interconnected world, education is becoming the key factor for the future chances of a child. Especially in countries that are poor in natural resources but highly developed, such as Germany, expenditure for education continues to increase. A worldwide trend towards learning enhancing toys is observable (example: Ravensburger tiptoi pen and countless gaming websites for children). LudInc addresses multiple needs and markets simultaneously: education, entertainment and leisure – both in school and at home.

2.4.1 Market Requirements for the School Version

“Professor S.” requires relatively little technology in order to run the game. Required is only a computer (PC, Mac or mobile device) and an internet connection. No software needs to be installed; all functions can be accessed through the browser. In our experience, all the schools are equipped differently. For example, there is a school that has all the latest iMac computers in every class room, as well as three extra computer labs and five smartboards. At the lower end of the spectrum, there is a school that uses 800 MHZ AMD PCs with 500 MB RAM, but will be equipped with 20 smartboards in the coming year. Most of the schools that are known to us have a central server system, which simplifies browser updates for administrators.

“Professor S.” has been applied successfully in class on all systems. Even with only one PC in the class room, the class can play “Professor S.”, since many of the tasks don’t require individual computer access as long as the film and message content is visible for all the children. The construction of the time portal will further lower the technological requirements, since the time portal in itself is a computer that has all the required functions.

All the schools we currently work with have internet connections at acceptable speed (recently all schools in Berlin were upgraded to 16 Mbit connections). When an expansion of the WiFi infrastructure was necessary, we made use of reasonably priced mesh routers. Open-Mesh has a expressed strong interest in making LudInc their lone distribution partner in Germany in the coming school year. Here is high potential for the development of an additional revenue stream.

2.4.1 2.4.2

The investments in new technologies and educational methods at German schools has increased noticeably within the last five years. Due to the German law for future investments (Zukunftsinvestitionsgesetz), an additional 8.7 billion Euros have been invested into the education sector between 2009 and 2011. A considerable amount of these funds went into the acquisition of IT infrastructure like PCs, smartboards and network infrastructure. In Berlin for example, the “eEducation Masterplan Berlin” is set to create the circumstances within our society of knowledge and information that will make current information and communication resources accessible to the learners. Classical forms of teaching and education have to be complemented with individual forms of learning. Learning in these new arrangements (eLearning) requires a broad media competence of the users.

The realisation of this strategy in the classroom requires further strategies and tools. The presence of computers, smartboard, iPads and notebooks does not mean that they are being used to their potential and with the right purpose and/or have a positive effect on the learning outcome. We want to fill this demand with “Professor S.” and other products.

2.4.2 Market Requirements for the @Home Version

2.4Like in the school segment, private households have relatively low technological requirements. A PC, Mac or mobile device is all it takes to play “Professor S.” Like in the school version, only a browser is required to play “Professor S.”
According to Statistisches Bundesamt, the percentage of German households with a PC has continuously increased in the last five years. Thus, 80% of all German households owned a PC in 2011. The number has therefore risen by 3% fom the 67% in 2005. That doesn’t seem to be much but it has to be considered that the percentage was already at a relatively high level before the research was conducted.

The fact that the use of PCs in the years 2010 and 2011 only increased by one percent, shows that there will not be any more significant increase. The German households seem to be sufficiently equipped with computers and a drastic rise of the number of computers per household is not likely. An increase of the number of PCs per household will more likely remain on the same levels as the previous years. Still, it can be ruled out that every household will own a PC. This is simply because the age average in the population rises and not every senior citizen is willing to deal with or acquire a computer.

2.4.3 Perspectives and Outlook

The market growth of PCs has stagnated worldwide and according to an article of German weekly newspaper Die Zeit, referring to a report by market research institute Gartner, the sales of tablet computers are expected to climb by 67% worldwide, compared to 2012. This would mean an increase from 120 million to over 200 million sold devices. This increase still has to be credited to fairly cheap gateway products, compared to high-priced premium models. According to Gartner, the market share of the iPad Mini is 60% of all sold tablets with the iOS operating system.

Furthermore, smartphone sales are expected to climb further, even though the growth rate of 4,3%, equalling close to 77 million additional units sold, cannot rival that of the tablet sales.

Gartner foresees dropping numbers again in the traditional PC segment this year. While the sales of desktop computers, notebooks and netbooks make up a combined 340 million units for the year of 2012, sales numbers are dropping to 305 million devices this year – a trend that is expected to continue through 2014.

Should the market reseachers be right about their predictions, especially Android is looking forward to a bright future in the section of operating systems, since especially devices with Google’s mobile operating system are expected to generate enormous revenue – the sales numbers are supposed to be over 860 million units. In 2014, these numbers are predicted to grow beyond the one billion mark. For this reason, our technology strategy has a major focus on HTML5 and mobile devices. But since we deliver the majority of our content through the browser, LudInc games will continue to be usable on ordinary computers.

2.4.4 Serious Games

According to an article from German daily newspaper Die Welt, the genre of so-called Serious Games is expected to experience a boom in just a few years. French market research institute IDATE is also optimistic. According to an analysis, the market for Serious Games will have a revenue of ten billion Euro worldwide in 2015 – and all of it with a yearly growth rate of 47 percent. The trend survey MMB Learning Delphi 2011 by the Institute for Media and Communication Research (MMB) also sees the sector among the top three of the upcoming eLearning trends. In 2010, the German providers of computer and video based learning games had a total revenue of 348 million Euros, based on a statistical projection.

2.4.5 Competitors on the Market

Currently, there is a range of competing companies who are active in partial sectors our products are in. There is, to our knowledge, not yet a company that offers a similar product to ours. “Professor S.” and other LudInc products bring together the traits that can only partially be found in other, competing products. That is why it is worthwhile to analyse our competitors by sectors.

1. Media distribution video
- Microsoft XBox
- Apple iTunes U
- Khan Academy
- Apple iTunes
- Sofatutor

2. Media distribution games
- Apple iTunes U
- Microsoft XBox
- Lernerfolg.de
- Goodbeans

3. Syndication
- Microsoft XBox
- Watchever
- iTunes

4. ARGs and transmedia games
- Time Machine
- Playducation
- Quest To Learn

5. Learning content
- K.lab Berlin
- Scoyo
- Lernerfolg.de
- Antolin

6. Organisational tools for teachers
- K.lab Berlin

7. User-generated content
- Draufhaber.tv
- Der Mathepirat

K.lab is a startup from Berlin, financed by Klett Publishing, which also offers the learning content on the platform. A technological partnership exists with Microsoft, who sponsor the online segment. The strength of K.lab’s product meinunterricht.net lies in the abundance of content and working material provided by Klett Publishing. Nonetheless, there is currently no function to edit the content or add individual self-generated content. Also there are no game applications or media content which could be used during class. In this segment, “Professor S.” has a clear advantage. Also, K.lab currently has no direct access to schools.

iTunes U is an educational platform by Apple, which distributes learning content through an iPad app. The content is generated by third-party providers like institutions or teachers and made accessibly to the students through the app. The advantage of iTunes U over “Professor S.” is without a doubt the size of its provider Apple and the integration of its hardware products like the iPad, iTunes and the Mac computer. At the same time, therein lies a weakness: Especially in the elementary school environment, the use of iPads is still quite restricted. This can change within the next five years; although the distribution of new technologies makes no sense without a specifically coordinated pedagogical concept. Educational scientist Andreas Breiter, head of the Institute for Information Management in Bremen observed: “In the first year, teachers and students may be excited, but afterwards, the equipment is being stored away unused a lot of the times.” (Der Spiegel 29/2012.) The target group of iTunes U users is considerably more multi-faceted than is the case with “Professor S.” Targeted are users of all age groups. That’s why the learning content of iTunes U is not curated or made to fit the framework curriculum of elementary school. Thus, the discovery of appropriate content by the students is limited to direct hints by the teacher in charge or even content created by the teacher. Unlike “Professor S.”, iTunes U does not contain trans-medial elements but solely focusses on computer-based content.

Khan Academy

XBox: Microsoft in cooperation with Sesame Street TV produces interactive learning games for its product, the XBox Kinect. These learning games are embedded in episodes of the show “Sesame Street”. Via the Kinect sensor, one can interact with the Sesame Street characters and thus vividly parttake in the events on the screen. XBox’s advantage is like in the case of iTunes U the strength of the brand and the connected distribution paths and also the partnership with the global brand Sesame Street. Still, the transmedial aspect of “Professor S.” is picked up only in limited form here. Like iTunes U, the use of XBox products is restricted to existing hardware that most schools are not equipped with yet. We see the existance of Kinect Sesame Street TV as a chance to develop our own product for the Kinect platform and thereby create an additional revenue stream for our “Professor S.” product.

Scoyo is a learning platform based in Hamburg. Scoyo has a large library of online learning content which is brought across within the framework of an entertaining story which is made up of animated video sequences. The learning content covers grades 1 through 7 and is made to fit the framework curricula of the German federal districts. The application is offered through a website and appeals to the home market; there is no existing connection to schools. Also, there is no transmedial content on Scoyo. An integration of tools for teachers and external video and game content does not exist. It is worth thinking about ways of licensing documentary films for distribution through the Scoyo platform.