How to get your video game into retail stores

May 28, 2009: 2:04 PM ET

Have a hot idea for an educational software product? Here's how successful entrepreneurs have cracked the market.

Ernest L. Leisner, Buffalo
I have created a word game that I would like to transform into an educational video game. I believe it can go a long way to help improve the dismal illiteracy rate in our schools. I have many aspects of a proposal in place and I'd like to find a government grant to help. I have tried searching the Internet, but there are scams all over the place.

By Kathleen Ryan O'Connor, CNNMoney.com contributor
Finding a grant to develop a business idea is nearly impossible. Scams abound, and legitimate grants from foundations and other philanthropic groups are almost exclusively for non-profit groups or educators, not private inventors. The only genuine place to search for U.S. government grants is grants.gov, but those rarely go to sole proprietors. (See "Business grants: Sorting out the scams.")

But there are still ways for a novice with a great idea to crack the educational software market. The first step is to get your product or proposal in front of people who know the market and can help you sell it.

There are two options: Create, publish and market the software yourself, focusing on either the retail or education market, or license the product to an established company.

Entrepreneur Margaret Johnson chose the do-it-yourself route for ItzaBitza, a computer game that helps kids learn to read through interactive art.

Johnson knew plenty about kids and software: She's a mother and spent nearly two decades at Microsoft. But what she didn't know was retail, which turned out to be the name of the game.

"For an entrepreneur, retail is tough. You are sitting on inventory ... it takes a while to ramp up awareness," says Johnson, who left Microsoft to sell ItzaBitza through her educational games firm Sabi Inc. "Awareness is huge. That's tough for a little guy to get."

First, make a list of all the publishers in the educational game space - Johnson mentioned Microsoft (MSFT), Sesame Street and Nickelodeon, but look on the shelves at your local Best Buy or a similar store for more ideas. Then, make it a point to attend their conferences or find them at trade events. You won't need an appointment, but this is where shyness is not allowed.

"I basically stalked people," Johnson says with a laugh. She'd sometimes wait as long as two hours to talk with the right person. "I showed them the game right there." Johnson ultimately made the decision to self-publish - a riskier move, but a more profitable one if you are successful.

If you self-publish, the next step is to get your game into stores. That requires making contact with buyers. At small, local stores, you can approach owners directly, but if you want to crack a national chain, they won't usually field calls from unknown businesses. They work with major retail distributors - who also prefer to deal with larger companies with established sales histories.

Johnson had little luck approaching major distributors abut ItzaBitza, but from them she was able to get the names of several reputable distribution aggregators. Aggregators are companies that take on several smaller clients. Johnson used Channel Sources Distribution Co. of Brookfield, Conn, but there are plenty more out there.

Distributors will take care of logistics and paperwork for you, but their biggest asset is their network. "They have a sales force, and they call on Toys R Us," Johnson says.

ItzaBitza is now available on retail shelves in stores including Best Buy (BBY) and Office Max (OMX).

Despite the recession, the educational software market is poised for growth. Educators staring out at classrooms filled with kids raised on Nintendo and Xbox are more open than ever to incorporating software and video games into their curriculum.

John Rice, an educator specializing in instructional gaming who writes a blog devoted to the industry, points to games that started as purely entertainment that have been repurposed for educational use. The Civilization series, for example, has been adopted by teachers for sociology and history courses.

"Likewise, The Sims can be used as a language-acquisition tool when students play it in another language," Rice says.

That opens the door for direct sales to schools and other educators. Like the retail channel, though, that market has its own challenges and quirks.

"Education, as a market, is extremely homogenous - [schools are] structured roughly the same, with the same purpose - which is good from a business point of view," says Mark Jones, president of Echo 360, which offers technology for recording lectures. Jones describes his product as "TiVo for the classroom."

He recommends you find the early adopters or "visionaries" among educators or education institutions. Is there a school that consistently seems to be in the forefront of new technology? They might be more receptive to a pitch than a place still in love with the chalkboard.

If you can get them on board, "they will become a viral network for you," he says. Education is a very peer-driven field; administrators often rely on colleagues at other departments or schools for product recommendations.

If you're really strapped for the up-front capital to create your product, licensing could offer you the most bang for minimal bucks.

"Think about what kid brand is out there with established credibility and pitch the game as an extension of that brand," suggests Andrew Mininger, CEO of Mada Design, a New York-marketing firm that works with clients in the games, education and licensing arena.

The best and fastest way to reach representatives of major brands is through expositions like the International Licensing Industry Merchandisers' Association's annual conference. This year, it's set for June 2-4 in Las Vegas. You'll have to pay for a ticket to the show, but it's open to anyone. Prices range from $180 for a basic floor ticket to a full package for $1,170 that will allow you to attend seminars such as "Basic Training for First-Time Licensees" and "Getting Your Brand Ready for Licensing."

Before you approach someone, do your homework. Have a pitch ready about exactly how your game can extend their brand. Do they already have educational books on the market? A software component could be a natural extension. Are they lacking an educational tie-in their competitors already offer? That's also an excellent way to get attention.

You might also want to take a look at developing the game for a particular platform like the Nintendo Wii or Sony's PlayStation Portable. "Everyone is trying to get more exclusive, like Microsoft with Xbox," Mininger says. Everyone wants to make their product the hottest one around, and "education is integrated into that experience."

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