Why Leapfrog Needs to Jump Online

Leapfrog (LF) seems to be in desperate need of a turnaround. Given how good a brand it has, this is a sad state of affairs. The company has had a recent CEO change and I am happy to see that the new recruit comes from the Online world. My own thesis on Leapfrog is that the company needs a massive turn on its heels into the Web 2.0 world.

Like many companies before, including Apple (AAPL), Leapfrog has made the mistake of banking on a proprietary platform, ignoring the potential of the Internet. Children today, however, are almost being born on the Internet! Well, not quite, but you know what I mean …

So why would a company continue to deliver content in a mode that is archaic and inefficient? Instead, why not take advantage of their WONDERFUL brand and make the Internet the primary medium of marketing and distribution?

While with their infant, toddler and pre-school markets, there is at least some case to continue positioning as a “toy” maker in the 8-18 age groups, I would say there is none. In fact, the very fact that they segment these markets as 5-11 and 11-18 already makes little sense. Instead, these should be elementary, middle school and high school segments.

Once the segmentation is adjusted, I would start looking into the product mix and examine carefully what companies like Neopets have done with immersive virtual experiences, as well as what Second Life has done with their virtual world.

Web 2.0 has brought to us a rich environment online. Ubiquitous broadband has made this richness accessible without hiccups. Especially for a company that is fundamentally positioned in the children’s market, it is critical that these trends - web 2.0, rich media, social media, etc. - are drawn uponto build a strategy that is both compelling and contemporary.

Of course, this is going to be a painful transition. It remains to be seen whether Leapfrog can leapfrog itself!