GamesBeat: It doesn’t seem like an easy leap for you to expand from tablets to all smartphones. It seems like that might take different products than the ones you’ve had.
Sharma: That’s true. Our focus so far has been on five to 11-year-olds, on playful learning, on the iPad. Let’s prove we can create interesting content and get people excited and engage them. That’s been the mantra so far. We’ve done a good job proving that out. From there, we have many ideas with which we’re going to scale. An obvious way to scale is going from iOS to Android. We can go from playful learning to other categories in children’s lives. We can go from the U.S. to the global market.
We already have plenty of ideas for scaling the company. Once we’ve built that master brand for five to 11-year-olds, we can go to other demographics. We can hit teenagers or adults. We’ve made the device popular, and now we can build experiences that are customized to a different audience. Fundamentally, though, we want to focus on hands-on activities. If it’s not hands-on interaction, it’s not Osmo. But the iPhone experience will be different because of the screen size. The demographic that carries the device is different.
GamesBeat: For things like augmented reality glasses, it seems like that technology is imminent. Are you thinking about how to translate to that?
Sharma: I think it’s going to be an even better experience with glasses for us, a much better experience. Imagine just playing a tangrams game. First of all, I can move around how I want. I don’t need to be next to an iPad. I can play the game standing up. It’s going to be much more mobile than the iPad.
There are other consequences, of course. You can’t share the experience as easily. But I think it’s going to be amazing for us. It’s a bigger screen, and our experience will be much bigger. You aren’t limited by screen size at all. The field of view could be much larger, because I expect most of the glasses will have cameras looking down and in front of you.
That said, I do feel that—I can’t imagine you’ll wake up in the morning and put on the glasses. I don’t see it as a lifestyle. I see it as one of the use cases. There is going to be an audience and demographic that will use glasses to interact. Every family waking up and saying, “Hello Alexa, how’s the weather?” That seems natural. But I can’t imagine they’ll wake up and instantly put on the glasses, all four members in the family.
The idea of devices, of technology that’s not on your body, is here to stay. It’s going to be more important than the technology that you put on your body. But both, to me, are relevant to Osmo. We’re very much open to what we can learn. The real deal, though, is that there are 200 million iPads on the market right now. I’m not betting on anything comparable to that for glasses.
GamesBeat: How many people do you have now?
Sharma: The team is 60 people now. About 65 percent of them are product people.
GamesBeat: What do you see as your next milestone? If it took you this much time to be on a million iPads, what’s next?
Sharma: Our next big milestone—I use the word “mass” a lot. We want to become a household brand now, for that five to 11-year-old demographic. Everyone in the country knows what Osmo is, knows what it stands for. It has content that is used every single day. We want to reach mass content, mass awareness, and mass distribution.
We’re focusing a lot on distribution right now. We’re mostly on Amazon – largely Amazon, Best Buy, and a bit at Target. We want to go from that to much bigger chains like Wal-Mart, Costco, Target, and others. The combination of mass distribution, mass awareness, and content optimized for the masses will make Osmo a mass brand for that demographic. That’s our next milestone. At that point we can start thinking about a new demographic to scale the company, and developing content for that demographic.
The same applies to schools. My goal is to have much deeper penetration into schools – not just one or two in a school, but schools using Osmo on a daily basis in all their classrooms. That’s the level of penetration we want to work toward now. It’s not as exciting as some of what we’ve been doing, but I feel like this is the next natural step.
GamesBeat: As far as the kind of partnerships you’re looking for, it sounds like you don’t want to be acquired by anybody. But what kind of partnerships, short of that, do you actually want?
Sharma: One of the most interesting things we’re thinking about, let’s say you have a property that is everywhere, and our demographic follows it? If you can use Osmo to make that property more engaging and exciting, and we can allow you to integrate the Osmo experience into your product, that can help us grow very quickly. Now everyone who uses your product knows Osmo and you get the advantages of Osmo in your product. If you have a property, if you have a physical product you’re distributing, we can help you make a better experience for your users. That’s the most exciting kind of partnership for us, and the one we’re exploring now.
Over time, I’m sure we’ll have different segments. But two or things things apply right now. We really care about hands-on experiences, because that’s good for kids. That’s critical. We care about digital. We’re a digital brand, and we think digital has so many benefits for building amazing properties. And we care about schools. As long as we can have a hands-on experience that’s digital and schools are part of the solution, we’re making progress in our partnerships.
GamesBeat: It seems like the entry point for most other digital products right now is lower compared to where you guys are. Free-to-play has taken over in games. Figuring out where that point is seems like a challenge.
Sharma: The way I understand it is, ultimately everyone needs to monetize. The question is how to monetize. The monetization expectation of pure digital is quite different from the monetization expectation of pure physical. For example, people don’t mind paying $500 for an iPad, but an app on an iPad, even though you can’t use the iPad without apps, nobody will pay for that, because it’s psychologically different.
Osmo is at an intersection. We believe we can make products at the right price, that are good for consumers, and will help us grow the company. I don’t think those will be free products, because physical things, you can’t just afford to make them free. But they don’t need to be expensive either. Because we’re able to take advantage of the device’s camera, the physical objects in our product are not very complex. Over time, and as we grow, we’ll have experiences that are closer to $10-15. They’ll have very simple physical components. We’re going to invest there.
Our audience doesn’t question why we charge them for our products. They don’t think of us in the same category as pure digital. Pure digital, the expectation is, “I can always find something else that’s free, so why are you charging me?” That’s what drives prices down to zero. It’s the same as how charging for a website is hard. If Priceline decides to start charging me, well, I just go to Expedia, which is free.
In the kids category, it’s a very interesting question. Monetization almost never happens. It’s a very risky game that we’ve seen, pure apps in the kids category. We’re trying to stay away from that. That’s a very lopsided situation. The companies can’t make money, they lose value, and they can’t find a way further.
GamesBeat: What have you learned so far about creating original properties?
Sharma: A ton. One thing is that making great content is a non-trivial amount of work. It just takes a long time. Every medium is good for certain types of content. For example, the content that works really well with a keyboard and mouse is very different from the kind that uses a touch screen. Three years ago, we didn’t know what would be great content for Osmo. Now I think we know what that is. That’s why I gave the example of Monster. This is the pinnacle of great content native to Osmo, where there’s a character on a screen engaging you, and you do something in front of it to interact. It becomes a holistic experience.
I think we’ve learned a lot about the medium now. Building this content is expensive, it’s an art, and it takes time. Three years ago I had a lot of ideas that, looking back now, I know we couldn’t do. It’s just too hard. That’s partly because the medium is so new. If you have a familiar medium like TV or the theater, the format is so well-understood. TV is more than 50 years old. The physical-digital medium is very new and very unique.
What we’re doing isn’t limited, by the way, to five to 11-year-olds. The hands-on experience can be tailored for adults and a lot of other people. We do a lot of different things in our lives – crafting, cooking, fixing things around the house, playing music. Osmo can be used for all kinds of things outside just that one category. As a company we’re starting to think about what it will mean to open up the platform to a much larger demographic. What does the hardware and software and platform look like? If these hands-on experiences are not just for kids, what does that mean? We’re working on that now. It’s very exciting for us and for the future of the company, because there are so many possibilities.
GamesBeat: Kind of like a Diner Dash experience? Cooking on demand?
Sharma: We can’t talk about the experience right now, but I would say that a theme that’s common is making things with your hands. That’s what we do today. Drawing in Monster—kids are already drawing. Now we can add to that. A phrase we use internally a lot is, “I can see what you’re doing. Let me help you.” If you’re doing something like trying to fix your television, someone comes over and says, “I can see what you’re doing. Let me help you.”
That’s the role Osmo, I think, is going to play in the future as a technology. It can see what you’re doing and it can help you. Right now we’re focused on kids. But that idea can go way beyond children.
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