A lesson in profits – Hot Opportunities in Educational Software

In the 1980s, educational software revolutionized the way children learned. Today, with the mainstreaming of the PC, the boom in the CD-ROM market, and the skyrocketing growth in the techno-hungry home-schooling movement, educational software is poised for a second wave of growth. Analysts predict the home educational software market could grow from $300 million to more than $1 billion in the next two years. Opportunities abound, from developing school curriculum products to creating educational networking for the Internet.

Davidson & Associates

To help her students excel on their college entrance exams, Jan Davidson developed educational software on her Apple computer.

Inspired by the positive results, she decided to start her own company. In 1982, she launched Davidson & Associates Inc. with $6,000 she borrowed from the college funds of her three children. The company soon rose to prominence with a series of ground-breaking educational software programs, such as Math Blaster and Word Attack.

Now, Davidson wants to serve as a bridge between the nation’s schools and textbook publishers. She recently formed an alliance with Simon & Schuster to transform one-dimensional textbooks into exciting, graphically enriched software programs.

“My initial thought was that we would never be able to compete with the Prentice Halls,” Davidson says. “Well, it turned out that their business models just didn’t work. I said, maybe it’s time to change my view here. Maybe I can work with these people.”

Her vision is paying off. With more than 500 employees, Davidson & Associates generated approximately $90 million in revenues last year.


Maxis Inc. rode to fame with SimCity, an imaginative adult computer game that lets you “play God” over a simulated society. But Maxis CEO Jeff Braun discovered that kids were playing the game more than their parents.

Braun is betting that the same 25- to 40-year-old adults he targeted for SimCity will buy educational games for their children. He recently launched his first titles for kids: SimTown and Widget Workshop.

“Parents have a deep commitment to improving their children’s education,” says Braun, whose company revenues swelled from $3 million in 1989 to $23 million last year. “One of the main reasons they purchase computers is to provide supplemental educational material, because schools are so bad with that.”

Most educational computer games merely require children to fill in the blanks. Maxis invites kids to create their own world from a blank slate. “You can decide if you want a happy town or a police state,” says Braun.

He isn’t worried that the success of the educational software industry will edge out the entrepreneurial pioneers. “None of the big players have produced any hits,” says Braun. “We’re hungry, they’re not. Hunger creates drive, and that’s what the entrepreneur has going for him.”

Knowledge Adventure

Bill Gross, CEO and founder of Knowledge Adventure Inc., believes the future of education lies somewhere between Hollywood and the Internet.

Last year, film mogul Steven Spielberg became an investor in Knowledge Adventure and spearheaded the development of software that combines the fundamentals of education with the visual thrills of Jurassic Park. In May, the four-year-old company will roll out an educational program to coincide with the release of Spielberg’s Casper, a feature film about the friendly cartoon ghost. Spielberg is also directing footage for his own educational CD-ROM program, to be released by Knowledge Adventure this Christmas.

Meanwhile, Gross has longterm plans to launch on-line versions of two current products: Jump Start Kindergarten and The Random House Kid’s Encyclopedia. In a virtual classroom, kids from around the world will be able to study and work together. And thanks to computer compression technology Gross developed, grade schoolers who want to learn about dinosaurs will be able to look at articles on the subject and watch real-time videos of a dinosaur dig.

“We want to be a pioneer of educational software on the Internet,” says Gross. “If you wait until it takes off, you might miss it. And this is going to be big.”

COPYRIGHT 1995 Success Holdings Company, LLC

COPYRIGHT 2004 Gale Group

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