It’s official. Acquisition season in the children’s social networking world has begun. Moments ago, Disney acquired the wildly successful children’s social networking site Club Penguin for $350 million dollars. Club Penguin launched its unique online service for children in October 2005, just six months after another wildly successful social networking website for children, Webkinz. This past June, Club Penguin reached 4.7 million unique visitors to it site according to comScore Media Metrix.

While the folks at Club Penguin have recently been in discussion with Sony regarding the sale of the company, negotiations broke down just a few short weeks ago with the technology giant.

There has been a buzz of activity related to social networking in the last year and we’ve yet to hear the end of it. What’s noteworthy about this particular deal? Here are a few of my predictions:

• This is the first major acquisition in the children’s social networking space. Plan to see similar acquisitions soon.
• Many more social networking site for kids have launched in the last two months, with many more yet to be announced.
• So much activity is occurring in the kids’ social networking environment, that this specific online activity for children is positioned to become very crowded over the next six months.

Stay tuned for lots more activity and news in this space! (For related blog articles, see my posts in April and May of 2007.)

Robin Raskin, featured columnist for Yahoo Tech and youth technology expert for many nationally syndicated newspapers and magazines, was recently in my area speaking about Internet safety and kids. There were about 300 people at the presentation. Half of the group were sixth graders (ages 11 – 12), the other half were parents. The event was held at a local university just outside the Boston area.

I’ve heard Robin speak many times about technology. Her latest presentation, as always, was great. She pointed out all kinds of Internet safety tips of benefit to both parent and child. Robin did not shy away from the tough topics to discuss with kids like online predators, scams, identity theft, and pornography. She offered some excellent advice about what kids and parents can do, both together and apart, to avoid being taken advantage of or exploited in this ever changing digital world.

One part of her presentation left me thinking long after its completion. It started when Robin asked the kids in the audience a few questions. The first was “How many “texters” do we have here in the audience?” (Or how many kids communicate with text via instant messaging or by cell phone?) Practically no parents raised their hands but more than 60% of the kids responded yes. This first question made it quite clear that computers and cell phones are common communication tools for both young and old, but each group uses these technologies to communicate in significantly different ways.

After the show-of-hands about texting, a couple more questions were offered. “How many of you use the social networking site Club Penguin?” Surprisingly, only about 8 hands went up in the audience. This question was followed up by “How many of you use Webkinz?” This time, only about four kids raised their hand.

In this day, it’s pretty hard not to know about these two successful social networking sites for kids. Club Penguin first came on the scene in 2005 and states that it’s an online service for kids ages 8 – 14 ( grades 2 – 8 ). Webkinz also started in 2005 and claims it’s target audience is for kids 6 – 13 ( grades K – 7 ). Social networking sites for kids are growing very fast in their appeal. Other kids’ social networking sites beyond these two include such destinations as imbee, Runescape, StarDoll, BarbieGirls, and Whyville. (Whyville being the strongest educational player of the bunch. To read additional thoughts I have about Whyville, take a look at a recent interview I had with a Boston area online magazine for tech saavy women called Misstropolis.)

The number one most popular destination for kids online today is Webkinz as reported by HitWise (HitWise is one of many different web research services available to businesses). Nieslen//NetRatings, another web research firm, reports that Webkinz had 3.6 million unique visitors in April 2007 with Business 2.0 Magazine reporting an average visit length of 128 minutes long. Those are some pretty impressive stats! As for Club Penguin, their numbers are equally impressive. Nielsen//NetRatings reports Club Penguin as having 4 million unique visitors in April 2007, with the Business 2.0 Magazine article also citing the average visit being 54 minutes long. Not too shabby!

So, if these two extremely popular websites for kids overlap nicely with the sixth grade demographic in the audience, why weren’t more hands raised? I found the response by this group of kids fascinating. Assuming that all the students heard the question, and I believe they did, here are a few theories:

• As these social networking sites begin to age, the target demographic shifts younger, from tweens 8-12 (grades 4 – 6) to kids ages 5 – 9 (grades K – 3). This may imply that when a new kids’ web destination first becomes available, an older demographic will lead in the use of these sites more often than their younger peers. As more and more younger users discover the product, the older crowd moves on to find the next new destination.
  

• As older tweens enter into their early teen years, it’s possible there’s a negative stigma attached to publicly admitting the use of these sites even though privately this older audience will continue to spend time at these destinations.
  

• It could be that sixth graders in urban areas may not be using these specific social networking sites as much as those in suburban areas. I wonder if it’s possible that the likes and dislikes of kids from the same age group in urban versus suburban areas or coastal versus heartland parts of the country differ from one another.
  

• It’s possible these sites never did have much appeal for an older audience as originally claimed by the owners of these companies (though I doubt this.)
  

• Or maybe the answer lies in some combination of the above or other possibilities yet to be defined.

Whatever the answer, it’s amazing to see how the responses of kids answering as a group might differ from that of carefully analyzed web data and claims from many individual users of the same demographic (in the same geographic location).

My company, 360KID, watches over trends in the kids’ space very closely; it’s one of the things we do best. We know our end users, and we follow the research that helps support new trends yet to be pioneered. 360KID also keeps a close eye on technology, gaming, education, and generational trends because what happens in these additional areas also has an impact on children’s lives. What trends are we currently watching and projecting five years out? Specific trends in the technology space include: social networking, toys, video games, education, and computing.

Social networking sites are currently the biggest and hottest trend for kids today. They’re great destinations for growing virtual communities. A few of the most popular online destinations include Club Penguin, Star Doll, Barbie Girls, Webkinz, and Runescape to name a few. As social networking services and products continue to evolve, and specific kid-focused enterprises use social networking technologies as a powerful tween connector, new social networking capabilities yet discovered will be combined to create even more engaging, lasting, and sticky experiences for kids. Currently, social networking is confined to a computer/Internet experience, but it could be possible for this form of entertainment to migrate to cell phones. More than 27% of kids ages 8 – 12 have their own cell phone. That number is expected to double by 2010. However, due to a lack of cell phone technology standards within the US, social networking technologies may not become commonplace on all cell phones unless the technology landscape shifts. For example, if the FCC made analog television signals available for non-emergency network uses through wireless everywhere initiatives, this could ultimately benefit not just computer experiences, but also cell phones and other tech devices.

The toy industry within the US will continue to hover at the $22 billion mark in the years ahead, but what will change is one specific segment of the toy industry, that being the youth electronics category. This year the NPD Group, a leading research firm in the video game and toy industries, projected a 23% growth in youth electronics. (Youth electronics is just one of 11 different “supercategories” in the toy space. Other supercategories include action figures, arts & crafts, dolls, vehicles, etc.) Many experts in the toy industries, as well as the electronics world, believe the toy industry is transforming into its own unique consumer electronics industry. While it’s expected that many popular technology toy products like digital games and plug-and-play TV toy devices will continue to deliver their “toy” magic, microprocessors are finding their way into My Little Pony dolls, Hot Wheels toys and many other traditional, non-technical toy products. Those in the toy industry often refer to Moore’s Law, the idea that microprocessors double in computer processing power every 24 months, as being on steroids in the toy space. An “echo” of this law, starting with the oldest and cheapest microprocessors, is working its way into everyday technology kids use every day.

Another technology trend that will have significant impact on computing, technology toys and technology used in the classroom is the One Laptop Per Child (OLPC) initiative, sometimes referred to as the $100 laptop. This has been spearheaded by Nicholas Negroponte at MIT’s Media Lab. The goal of OLPC is to put a low cost laptop in the hands of every child on the planet for educational purposes (every child that is except those found within the US.) The number of laptops OLPC wishes to give away is 150 million units. By this coming fall season, the first 3 – 5 million, low cost laptops (averaging $175 per unit) will begin shipping to early adopter countries around the globe. Even if the OLPC initiative only partially succeeds, its boldness is forcing many companies (Microsoft with the Student Innovation Suite, Intel with the Classmate PC, Dell, Gateway and others), institutions (US Department of Education and other education institutions and ministries around the globe), and even toy companies to rethink everything. For example:

• Will OLPC create consumer demand for powerful computers that cost less than $100?
• Since education within the US is in drastic need of an overhaul, how will the constructionist learning approach surrounding OLPC laptops influence the institutionalized instructivist conversation within the US?
• Since OLPC is an open platform relying primarily on an open source operating system and software, how will this influence consumer-based operating systems and consumer software as we know it?
• If a reasonably powerful computer can be created for $100, can an electronic toy manufacturers create a powerful toy computer for $50? Could there someday be such a thing as Winnie the Pooh’s first computer that’s affordable and actually works like a real networked computer?

The video games industry, and specifically momentum currently being experienced in the Learning Games or Serious Games sector of the video games industry, is an important trend to follow. Many noteworthy academics and consumer video games experts are all exploring video games as a vehicle for learning. While great strides have been achieved in the last three years, this movement is still relatively young in it’s history. What’s exciting to watch is the number of video game companies exploring new ways to deliver learning messages and educational content. What is learned in this specific video game sector has great implications about what kinds of learning material might more easily be learned in the future. And as kids young and old spend more time playing video games with every passing year, this movement suggests how future tech savvy youngsters might be spending their free time.

The education sector continues to feel accountability pressure from the No Child Left Behind (NCLB) mandate. Even if this mandate is not reauthorized this year, 33% of the teacher work force (aging baby boomers) are planning to retire within 5 years, and the attrition rate for new teachers continues at its current level of 50% within 5 years for all new teachers. If these two trends are combined with the small projected spike coming in the student population, class sizes will grow as the availability of experienced teachers shrinks significantly.

In order for teachers to help each of their own students learn according to their own individualized needs, technology in the classroom will prove to be an essential component of everyday instruction. Future products will not just provide individual, classroom, school and district wide achievement data, but it will also allow for a level of customization and individualized instruction that is badly needed in today’s education environment.

One thing becomes clear when developing innovative and creative ways to engage kids. Kids have always been the same. Throughout the years. Throughout the decades. Throughout all time. It’s the society around kids that changes constantly. Changes in communication, government, education, places of worship, healthcare all have an impact on the experience of childhood. Watching these and many other trends is one of the best ways to create products that can really make a difference in every child’s life.