Startup of the Week / The Factory for Kiddie Apps That Parents Can Live With

At any given time, Israeli TabTales is working on 30 new applications for kids.

Ten games a week. That's the speed at which the Israeli gaming studio TabTale is publishing new games.

At any given time, the company is working simultaneously on 30 new applications - kids' games, interactive books, educational games, digital coloring pages, musical instruction and children's songs.

In an era where companies that develop blockbuster games for mobile devices are getting staggering valuations, TabTale wants to be the King Digital (the Canadian company behind Candy Crush Saga) of digital content for children. To date, it has brought out 250 games and applications, a respectable number.

TabTale was founded in 2010, when founders Sagi Schliesser (CEO), Oran Kushnir (chairman) and Nir Bejarano (CTO) failed to find suitable games and apps for their children on App Store, Apple's online applications store. The trio are computer science graduates who also have a background in education and psychology.

Many parents look down their noses at apps and games that will their children glued to digital screens rather than reading books or playing with toys. But in many families, the war has already been decided. TabTale wants to be the company that will provide content for children that their parents can live with.

Not the ABC's

The company began with electronic books and educational apps with gamelike elements. "We don't teach children the school curriculum, but rather informal education, the development of motor and cognitive skills, wrapped in a lot of content. When you can give something that is both high-quality and attractive to children, it's a 'win- win,'" Schliesser says.

The company's applications target specific audiences, and TabTale's first product testers are employees' children. The company's most popular game series is Baby Heroes, which is something like Tamagotchi with a twist: The user is responsible for taking care of a baby and guiding its development.

The series' games have racked up 50 million downloads.

Most of TabTale's games are geared toward children, who tend to lose interest quickly. "When a child develops, they are hard-wired to the idea of innovation. Kids are made in such a way that they are easily bored and want to do new things. That's why we bring familiar characters from one game to another, that give them a sense of security. That's why we cut each game into small segments of content that are suitable for children," says Schliesser.

Developing kids' games is also an economic challenge. The issue of monetization, that is generating revenue generation, becomes more difficult when the game's target audience doesn't have a credit card, a bank account and might not be able to read and write.

In addition, as a company that targets children TabTale is subject to strict regulation, for example prohibitions against sharing on social networks or blocking the possibility of sending emails from within applications. The company recently started a development studio for games that target children aged 13 and up, the age at which children are permitted to join social networks, that will offer options for integrating the games into social network sites.

The company's business model is "freemium," meaning its applications are free to download, with options for in-app purchases in order to advance more quickly or to obtain additional gaming capabilities. Users who do not make in-app purchases see advertisements while playing, in accordance with regulatory restrictions.

"The goal isn't to squeeze kids like a lemon, but rather to give good value. Instead of a toy at Toys "R" Us you can buy a game. Everyone will decide for themselves whether it's good or not and whether their children will play or not. That gives value to the parents as well," he says.

Taking on Disney

Gaming is a relatively new field in Israel, and most of the activity is by companies that have developed casino games, such as poker or casino. Among the most prominent companies in the field are Fliitika Playtika, 888, Dragon Play and Flarium.

TabTale, in contrast, chose to focus on a target audience of children aged 2-13.

Today, every month 25 million children around the world play one of the 250 games released by the company, for a total of 300 million downloads to mobile devices.

Last October the Tel Aviv startup advanced to the next level, raising $12 million from investors that included Israeli venture capital fund Magma Venture Partners and chip company Qualcomm, which is focusing on the mobile world.

"We decided to try to build a big company that can compete with Disney and become number one in the category," says Schliesser. The company is using the capital it raised to expand, and recently moved to new offices where 100 employees work. The company also employs 70 people in Macedonia, Bulgaria and Ukraine, who help to develop its games. TabTale's expansion plans for this year also include the acquisition of smaller companies. The company's growth is also reflected in its financials: It is profitable, with $15 million in revenues in 2013.

TabTale recently announced the establishment of a hothouse for game developers: Developers and young companies can come to headquarters for a four-month stay, during which they work closely alongside the staff of the experienced company. The company's goal is to give back to the community in which it grew and to help compensate for the dearth of big game developers in Israel. At the same time, TabTale can get to know the next generation of Israeli game developers.