The TV industry is finally learning what the gaming biz has known all along: kids like to take their entertainment with them. And the advent of portable video players targeted specifically at tweens has created a brand-new placement opportunity for kids content producers.

Hasbro was first to market in August 2003 with its black-and-white VideoNow system (US$49.99) that plays disks containing 30 minutes of content. Tweens went nuts for the product, driving sales of more than 1.2 million players and 4.5 million disks in the second half of ’03 alone. A new-and-improved VideoNow Color (US$75) with a 2.7-inch screen and higher resolution of 216 x 160 pixels just launched last month and is expected to exceed its predecessor’s sales.

VideoNow is currently supported by more than 100 disks of animated and live-action programming licensed from the likes of Nickelodeon, 4Kids Entertainment and Discovery, as well as in-house content featuring stars such as Hilary Duff and Tony Hawk. Disks retail for US$8.99 each, and Hasbro would eventually like to roll out a line priced under US$5. A lower price-point turns the disks into collectibles, says Sharon John, senior VP of marketing for Hasbro’s big kids division. Meanwhile, their 30-minute running time jibes really well with the natural breakdown of tween downtime – for example, they tend to spend roughly half an hour each day in transit by bus or car.

Though the initial launch software for the system skewed a bit girl, John says Hasbro plans to put more boy-targeted content into the market this fall, featuring sports celebs such as BMX biker Jamie Bestwick, surfer Taj Burrow and skateboarder Tony Hawk.

Video game producer Majesco spied an opportunity to tap into Nintendo’s North American base of 23 million Game Boy Advance owners, coming up with new patented technology for compressing 45 minutes of video onto a regular GBA game cartridge. Licensed content from Nick, Cartoon Network, 4Kids and DIC comprise the 14 SKUs of cartridges (two million units) that debuted in June. Majesco signs up content providers and handles the compression, while Nintendo manufactures the cartridges.

Liz Buckley, product manager for Majesco, says Nintendo will be releasing souped-up 90-minute cartridges that can support full-length feature films in late 2004 or early 2005. ‘Our initial content is targeted to the sweet spot of the GBA demographic [tweens] because younger viewers are more likely to watch episodic content repeatedly,’ she says. ‘But once the category is fully established, we’ll also be offering content that appeals to a more mature GBA owner.’ For the fall, Majesco will be releasing three more titles, including one based on Dragon Ball GT.

At retail, Hasbro initially concentrated on securing premium toy aisle space in mass chains like Wal-Mart and Toys ‘R’ Us in order to accommodate its try-and-buy in-store displays. The company has since expanded its distribution efforts into consumer electronics outlets, grocery chains and drug stores. Taking a completely different approach, Majesco tries to place its Game Boy Advance Video cartridges alongside the system they play on in mass-market chains Wal-Mart and Target and more specialized electronics stores like Electronics Boutique and Best Buy.

The deal model for both systems is pretty much the same as a video game licensing agreement, with royalty rates ranging anywhere from 8% to 20% depending on the product manufacturing margins.

Both Hasbro and Nintendo will soon have to fight a little harder for shelf space and market share as their biggest competitors prepare to jump into the portable biz. Although the anticipated high pricetag for Sony’s PlayStation Portable gaming system might exclude kids initially (in fact, Sony’s going after 18- to 34-year-olds as its core target), Nick senior VP of media products Steve Youngwood says content providers are familiarizing themselves with its capabilities anyway in anticipation that its price will eventually come down.

The PSP is certainly the most juiced-up of the handheld options, boasting a 16×9-inch, wide-screen LCD display with a resolution of 480 x 272 pixels and proprietary disks that can hold as much as 1.8 gigabytes of data – more than enough capacity for running full-length features.

Mattel remains tight-lipped about its Juice Box player, which will likely play three different lengths of content cartridges. Gearing up for the machine’s October launch, the toyco is still in the process of locking down content deals and system specs.

Portability is definitely a trend that’s here to stay, but the question on producers’ minds as they decide which system to support is whether there’s room in the market for all four players. While he’s not sure what impact the entry of PSP and Juice Box will have, Youngwood says GBAV and VideoNow are capable of co-existing quite peacefully. While their target demos overlap a bit, they are very different products (one a dedicated platform and the other an add-on application for an existing system) and are housed in different in-store sections.

Most producers seem to be hedging their bets and serving multiple platforms. Nick was a tent-pole partner for the launch of both the VideoNow and the GBAV, licensing out the rights to animated series such as SpongeBob SquarePants and Dora the Explorer, as well as live-action fare like The Amanda Show on VideoNow.

4Kids is also covering all its bases; to support the June launch of the GBAV, the company licensed two 22-minute episodes each of Teenage Mutant Ninja Turtles, Sonic X and Yu-Gi-Oh!, and 4Kids is in discussions with Hasbro and Mattel about licensing some of the same series. ‘We don’t necessarily have to pick the winner,’ says 4Kids CEO Al Kahn. ‘We want to be involved in all of them so that we don’t miss out on whichever one becomes the best or secures a better piece of the market.’

DIC is taking a more cautious approach, licensing out a few episodes of Strawberry Shortcake to Majesco for the launch of GBAV, as well as giving Hasbro access to episodes of Trollz (slated for release in fall 2005) as part of a larger merch deal with the toyco. The company is also concerned about the possibility of cannibalizing revenue from its home entertainment business. DIC has solved the problem by offering its portable partners 20-minute abridged versions of the full 40-minute episodes it currently has available on DVD.

John Friend, senior VP of Cartoon Network Enterprises, is not that worried about overlap between home entertainment and personal entertainment because he says watching a DVD at home with one’s family is an entirely different experience from watching a TV show on the road. Case in point: the net’s collection of four Cartoon Network series on Majesco’s GBAV outsold a second title of Codename: Kids Next Door eps on DVD. Friend believes that this shows kids on the go are looking for short, varied programming, rather than immersing themselves in one property for a long period of time.

Kahn adds that because handheld players are designed to let kids choose when to view, it means they have an opportunity to get invested in shows they may not be watching on TV.

In terms of what type of content works best for the portable medium, Kahn stresses that the hardware owners are really only looking at properties with an existing TV base. ‘It would be hard to put properties on these machines that don’t have any awareness,’ he says. ‘You can have exclusive material, but it’d better be coming from something kids already know.’ So far, 2-D animation is the easiest style to compress, while CGI and live action have proven to be a bit trickier simply because there’s a lot more information on the screen. The compression process itself is relatively inexpensive, but setting up the technology (i.e. picking up special equipment and writing the program) involves a large initial investment.