Start-Up Plays Offline
Company Seeks to Bridge Online Divide With Game
The Wall Street Journal
August 25, 2009
A Seattle-based start-up led by toy and videogame veterans has raised $29 million to back its plan to court children by bridging the online and offline worlds.
An initial offering by Smith & Tinker Inc. lets children collect downloadable monsters called Nanovor that they will be able to pit against each other by linking together pocket-size devices. The multifaceted effort -- which includes online currency, weekly animated episodes on the Web and forthcoming TV ads -- reflects changes in play habits caused by the Internet.
The Nanovor game, which can be played on computers now by downloading software, is targeted at 7 to 12-year-old boys.
"The toy industry is realizing that they are losing kids at a younger and younger age," said Jordan Weisman, Smith & Ticker's founder and chief executive. Children love to play together face to face, he added, but some are accustomed to interacting with computers and videogame consoles.
There have been other links between physical and electronic gaming. Webkinz, owned by toy and gift company Ganz USA LLC, established an online community for children that is accessed using a code that comes with the plush toy animals the company sells. The hit Pokémon franchise, popular on Nintendo Co.'s Game Boy device, included a variant based on playing cards that features battles between creatures that users collect.
Nanovor also is designed to promote game play by multiple children in the same room. But Smith & Tinker -- which gets its name from minor characters in the "Wizard of Oz" books -- wanted to offer animated effects while children are away from the computer or TV screen.
So the company in October plans to begin selling $49.99 accessories called Nanoscopes. Children can transfer Nanovor from their PCs to the devices -- using a USB connector -- and choose moves their creatures will use against rivals. They then can snap up to four of the devices together, watching a short battle sequence that may move across the screens. A defeated Nanovor explodes in green goo.
While wireless connections between the gadgets were a possibility, "we made it so the players have to physically connect the toys together," said Gilman Louie, a former videogame industry executive who co-founded Alsop Louie Partners, a San Francisco venture capital firm that was the first to fund Smith & Tinker when it was founded in 2007.
Smith & Tinker on Tuesday is announcing the money it has raised to date, which includes an unspecified infusion in July from investors that include Alsop Louie, DCM (a firm formerly known as Doll Capital Management), Foundry Group, Leo Capital Holdings LLC and Vulcan Capital, the investment firm of Paul Allen, co-founder of Microsoft. The announcement comes as many venture-capital firms have pulled back on new investments because of the recession.
But Mr. Louie notes that start-ups in the toy category -- while frequently a business of hits and misses -- have sold for substantial amounts. Hasbro Inc. in 1999, for example, paid $325 million for Wizards of the Coast, maker of the Pokémon card game.
Smith & Tinker launched a free downloadable version of the Nanovor online battle game earlier this month. Though Nanoscopes will carry the highest price tag among its offerings, Mr. Weisman expects the company will make most of its money as children buy booster packs to acquire more monsters -- using "Nanocash," which can be purchased in $10, $15 and $25 increments.
His experience in the field includes running Virtual World Entertainment and Fasa Interactive Technologies.
Smith & Tinker's president and chief operating officer is Joe Lawandus, a former executive in Walt Disney Co.'s consumer-products business who later became a senior vice president at game maker Cranium Inc., which was purchased by Hasbro Inc. in 2008.