Last week, India’s ed-tech startup Byju acquired Osmo, a kid-focused augmented reality games for iPhones and iPads, for $120 million.

That was a big move that signals the global ambition of Byju, which recently raised a $540 million war chest from South Africa’s Naspers Ventures and Canada Pension Plan Investment Board.

I’ve followed Osmo since it launched its first product in 2014. Jerome Scholler and CEO Pramod Sharma started the company in 2013. The Palo Alto, California-based company created a clever mirror that could direct an iPad’s camera to the surface in front of it. If you tossed little blocks such as letters in front of it, it could recognize the letters, thanks to computer vision technology. It was a simple way to use augmented reality and content created for children to create a magical entertainment product.

From there, Osmo expanded to create a variety of educational games, enabling it to get into tens of thousands of schools in the U.S. It has cut deals for games with Mattel’s Hot Wheels and Sesame Street.

That, in turn, helped Osmo sell more than a million AR games and raised $32.5 million in funding. That success drew the attention of Byju Raveendran, founder and CEO of Byju’s, which has been focused on the Indian market and offers a popular K12 learning app that contains study material for students in elementary school and high school and those preparing for engineering and other graduate-level exams.

The app has 30 million registered users, and two million are paying customers. While Byju’s has 3,200 employees, Osmo has stayed lean at about 60 people. I spoke with both Sharma and Raveendran about the deal in an interview.

Here’s an edited transcript of our interview.

Above: Osmo CTO Jereme Scholler (left), Byju CEO Byju Raveedran, and Osmo CEO Pramod Sharma.

Image Credit: Byju

GamesBeat: What was interesting to you about acquiring Osmo?

Byju Raveendran: If you’re familiar with Byju’S, we have a learning app that’s used by students in age groups from nine to 17. We launched this several years back. We’ve had a good response from the beginning. We have about 32 million free users, and about 2 million Android Pay subscribers. But most important — these are good business numbers, but students spend an hour on the application every day. We have a lot of engagement. More than 80 percent come back year over year, which is a good validation of its effectiveness.

When started building products for age groups from three to eight — which will take our products all the way from three to 17 — we started looking out for options where we could connect some of their offline learning experiences back to online learning. Today we have a platform that offers content in the form of movie-like videos and game-like interactions.

Osmo has a format that I’ve seen prove to be the most powerful offline to the online input format. You can compare other input formats that are using keypads and mouse, or formats that have moved on to where kids are more comfortable interacting with the screen directly. But the most natural of learning experiences — kids still spend a lot of time on worksheets and books. If we’re able to capture their offline learning back into an online application that will help us to personalize the next lesson that will be delivered to them, that will add one more dimension into our product offering.

I have a five-year-old son, and he’s been using it more than 10 months. I started speaking to Pramod after the first three months. It’s a perfect fit in terms of brand. If you look at our brand, for the last two to three years, we only talk about love for learning. Osmo is all about playful learning. Though the words are a bit different, the message is exactly the same. It’s very complementary.

Osmo as a platform will become more powerful once we add more content on top of that platform. That’s our goal. We want to create content that’s relevant and engaging and very contextual, that’s enjoyed by students in all age groups. We’ll scale up Osmo as a platform and as a stand-alone business, and that’s also very complementary to what we want to achieve in the middle to long term, which is using Osmo as a strong format for education. Today they have 12 very interesting experiences, learning activities. In the next few month,s we’ll be able to scale that to hundreds of learning activities. It will create comprehensive categories of learning for kids in that age group. They love Osmo as a platform, and we’ll have more content for them that’s highly engaging. In short, it’s an absolute fit in our global expansion plans.

Above: Osmo and Byju are teaming up.

Image Credit: Byju

Pramod Sharma: When I met Byju for the first time — as you know, I grew up in India. I came to the U.S. many years ago, more than 50 years ago. Byju and I come from very similar upbringings. We grew up in small villages and did a lot of learning on our own. We have this fascination with education. It’s part of our DNA now. How do we get this same love for learning to every child, globally? Not just in India or just in the U.S. That was a significant factor in my decision process. We’re going to work together for decades, and it’s very important that we share a deep-rooted appreciation and love for learning. For me, I’ve been very inspired by that.

Raveendran: That love for learning, fascination for learning — we didn’t have any other option than that. We became self-guided learners. What people take for granted is still invalid in most small Indian villages, the kind of villages where both of us come from. We faced all these challenges first-hand, and that’s the most satisfying thing. This is one segment where, today, the two applications we offer, they’re not just making learning more effective, but more important, we’re making it accessible to millions of students who couldn’t think of having access to this kind of education.

That’s where using the smartphone as a medium comes in. Even in India, more than 70 percent of students have access to a smartphone. This is one situation where parents don’t mind giving smartphones to their kids, when they know that they’re using it for learning. Content that’s used by students, useful for students, that’s something we’re focused on across age groups.

There was an immediate connection when we met. We took the decision very fast on both sides. Neither of us were looking to be acquired. Osmo was almost about to close their next financing round at the time I met them. But we found that working together would allow us to do things faster and bigger, to create a comprehensive global education company. The largest education companies have to come from markets like India or China, where there’s a large student population with all these challenges in education.

Above: Osmo Hot Wheels is for both boys and girls.

Image Credit: Osmo

GamesBeat: This helps you get a good foothold in the U.S. in particular, I’m sure.

Raveendran: This gives us a head start in the U.S., going with Osmo. But more important, this will also add a strong format in our product offering, even back in India, especially for the groups where we’re focusing our next product. English-speaking markets are where we look at first, but there’s a large, growing percentage of students who want to learn in English everywhere. It’s becoming very aspirational in the developing world.

This happened maybe 10-15 years back in India. The reason why most of us speak English isn’t because of what we learned in school or at home. It’s all learned through movies and listening to sports commentary. That’s happening in more parts of the world. The U.S. is going to become an important market, but we also expect that a lot of countries with a large young population – parts of Asia, parts of Africa – to also benefit from the products you’ll see us launching in the next few months.

GamesBeat: How many people do both companies have now?

Raveendran: We have more than 3,000 people, most of them in our head office in Bangalore. Osmo has around 60 people.

Osmo Monster lets kids create their own characters.

Above: Osmo Monster lets kids create their own characters.

Image Credit: Osmo

GamesBeat: Are you going to be adding new people to Osmo?

Raveendran: Yes, yes. We’ll be scaling Osmo as a platform and expanding the existing stand-alone business model. It’ll be supported by a large content team that’s creating more learning activities through the Osmo platform. That team will be based out of India.

GamesBeat: The existing licensing relationships, will those continue?

Sharma: Yes. On the Osmo side, we’re pretty much going to keep doing what we’re doing, but we’re trying to do it bigger and faster. That’s the road map. We’re not planning any actual changes to the kind of products we’re building, the kind of partners we’re working with. We’re going to keep everything intact.

Raveendran: The main reason for that — the existing investors had the option of taking a cash exit. Most of them are staying with the acquisition. They believe in the combined plans of Osmo and BYJU’S. They’ve moved on to become investors in BYJU’S now.

GamesBeat: What are some big things that will happen this year? Is the Sesame Street project still coming?

Sharma: Even right now, we’re really leaning hard on looking for opportunities to scale our content. You’ll see a lot more content coming up. The platform will remain intact, but with a lot more content. In the past you’ve seen us regularly launching new activities. Our plan now is to do that much faster.

Above: Osmo’s games use a mirror to view blocks in front of an iPad’s camera.

Image Credit: Osmo

GamesBeat: How many active users does Osmo have now?

Sharma: Osmo is in about a million households now, mostly in the U.S. at this point. We believe this is very early. It’s a very small fraction of what we eventually want to grow toward. This year we’ve started working on Android. Kindle Fire was the first launch we did. We’ll think very hard about how to make Osmo accessible to every single child globally. That will definitely involve expanding content and the entry points into the ecosystems.

GamesBeat: The price is pretty high. What does that tell us? Is there some context you could add to that?

Sharma: I will say two things. Education content has a very long life. If you succeed in building an amazing body of education content, that will have a much longer life than, say, entertainment content. There’s a lot of value there. Also, education is a global need. The opportunity in front of us is really big. The potential in how much value we can create is extremely high.

You cover a lot of the gaming industry as well. You’re familiar with engines versus content. What the BYJU’S team has done so far is create an engine to build high-quality content, but for education. That’s the initial large investment, but it has a very long life. That is the power of the engine BYJU’S has created. We think all of that can be brought into scaling Osmo. That’s where we see a huge upside. We can significantly scale and create value on the platform we’ve built so far.

I come from Google, as you know. We’re tech people, platform people. We’re focused on building a platform. But the real value, to me, is going to come through content.

Above: Osmo Words

Image Credit: Tangible Play

GamesBeat: Is there anything else you’d like to add?

Sharma: We’ve talked about this a bit in the past, as far as where the industry is headed, but I think there’s going to be a company — I’ll call it an Apple of education — and while these are very early stages for both Osmo and BYJU’S, in education as a vertical there’s a need for a massive, high-quality brand that delivers a comprehensive offering. I see this as the start of that. To me personally, it’s very exciting.

Raveendran: Our aspiration is to build the largest education company in the world. If you think about that, it’s actually not that large. The large education companies are only so large, because most of them are offline. It takes 20 or 30 years to build a sizable business in that area. A product-based approach that will help students learn at home, globally, that’s an opportunity to be very big.

The importance given to learning in these markets — one thing to keep in mind is the difference between the ability to pay and the willingness to pay. The second of those has a higher rate in this case. We see that trend because more than 60 percent of our user base in India, they come from very small towns. It’s very aspirational. Education is still only available to a smaller number of people – not just in India, but in most parts of the developing world.

Now there’s a platform, a way to reach out to millions of students. The smartphone is changing the way people consume content. It’s changed entertainment content, and I’m sure there’s an equal or bigger opportunity when it comes to creating a similar company in education. What Netflix can be for entertainment in the developed world, there’s an equal or bigger opportunity across the developed and the developing world in education that’s yet to be taken.

Some of these large companies, and not just one — you’ll see it coming from these large Asian markets. Studying in India and similar markets is a big advantage. There’s a huge impact. India has the largest school-age population, with 270 million students in schools right now, and growing faster. In the next three or four year,s we expect that to become 330 million. There’s already a lot to be done before we start this revolution. I can only say that we’re on the right path.