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Maker of Tablets for Kids Sizes Up Future Strategy

This story has been corrected to reflect that Fuhu Inc. does not have a deal with Wal-Mart Stores Inc. and that the release date for its connected devices is planned for later this year.

Fuhu Inc., L.A.’s fastest-growing private company in each of the last two years, wants users of its kid-friendly technology to play nice and share with the rest of the family.

The company’s whopping 158,000 percent revenue growth from 2011 to 2013 has been fueled by sales of its 7-inch nabi tablets to the 6-to-9-year-old set. But no one stays 9 forever, so the El Segundo company is preparing to unleash a host of devices, from huge tablets to cellphones, that can age with those kids and engage the rest of the family.

Chief Executive Jim Mitchell said what’s driving many of the new products is a focus on increasing family interaction with its products, creating what he refers to as “digital families.”

First out of the box were 20- and 24-inch nabi tablets, which debuted in October. They will be followed this holiday season by extra-large tablets with 32-inch screens, to be followed by devices with 43-, 55- and 65-inch screens. They will offer games such as tick-tack-toe and ice hockey, movies as well as software to draw, paint, animate and edit video.

“We created them because kids get myopically focused on their tablet and device and it’s a one-on-one experience,” Mitchell said. “We want to expand it and create experiences so that kids are using the device and experience to play with other kids, friends, family members. We achieve that by increasing the size of the screens so more people can gather around it and play with it at the same time.”

Fuhu’s plan is to have its massive screens become the focal point of a family game night the way Life, Uno and Monopoly were in the predigital age.

Over the next two years, Fuhu plans to introduce nabi tablets with screens more than 5 feet long, or nine times larger than its original product, which was smaller than a sheet of notebook paper.

The company topped the Business Journal’s list of the Fastest Growing Private Companies in each of the last two years.

Expanded appeal

The new tablets will be preloaded with board games, particularly those for multiple players, and Fuhu is striking content deals to bring family-friendly entertainment to the tablets as well. One deal already in place allows users to stream Food Network programming.

Fuhu has introduced a $4.99 monthly subscription service called nabi Pass that allows 3- to 14-year-olds to buy educational and entertainment videos, games, apps, music and books from Walt Disney Records, National Geographic Kids, Discovery Channel and DreamWorks Studios, all with parental control. Fuhu said it plans to bring in new partners later this year.

Also in the works is a line of original Fuhu-created programming developed in partnership with “CSI” creator and executive producer Anthony Zuiker. First up is an animated series called “Mysteryopolis” and accompanying games.

“I think we will continue to work with folks to have exclusive content on nabi Pass,” Mitchell said.

A Fuhu smartphone is planned for later this year, he said. Kids will be able to make calls to people and access websites that have been preapproved by parents. The controls are a key selling point, he added.

“The child wants it, but parents still need to buy it for them,” Mitchell said. “Parents, through our Facebook page and social media website, have said they want these controls in order for them to buy the products.”

The company is also in talks with telecommunications companies to offer tablets with data plans that aren’t limited by Wi-Fi connectivity, but Mitchell wouldn’t give any further details. All the Fuhu products will operate on Google Inc.’s Android platform.

For a company that makes tablets, offering a smartphone is a natural extension, said Shawn DuBravac, chief economist at the Consumer Electronics Association, an industry trade group in Arlington, Va.

“A smartphone is a hub device for this broader ecosystem,” DuBravac said. “The transition from tablet to smart hone happens very easily; the technology is very close from an engineering perspective and from a use-case perspective.”

Kids use smartphones and tablets more than any other consumer electronic device, according to a recent report by market research firm NPD Group. It said that 43 percent of kids owned a tablet last year, up from 21 percent two years earlier.

Tablets and cellphones hold the same place in the American home that toys and games once did, the firm reported. Widening the marketing of smartphones and tablets to the whole family will enable consumer electronics companies to engage families even more.

Another new product Fuhu plans to introduce this summer is the nabi Go, a kid-targeted version of San Francisco-based Fitbit Inc.’s fitness-tracking watch. It will be “gamified,” Mitchell said, so kids can be rewarded for staying active. Parents will also be able to keep track of their children’s activity and sleep patterns.

Fuhu might see potential in such products because the market is hot now and still maturing, DuBravac said, and it’s only natural that more manufacturers introduce products targeting specific users to distinguish themselves.

“To see companies looking to address needs of pet owners or children isn’t surprising given where we are in the life cycle or evolution of these products,” DuBravac said.

Culture of technology

In the last month, Fuhu appointed two senior executives with deep industry experience to help with the effort.

Douglas Woo, who headed up Fuhu’s smart display division and led its foray into large-screen tablets and kid-oriented subscription services, was named the company’s first chief operating officer. Before joining Fuhu, he helmed Westinghouse Digital Electronics as it entered the flat-panel TV market.

The company also brought in Rob Palmer as chief creative officer. Palmer, who helped launch Bing and Windows 95 for Microsoft Corp. and iMac for Apple Inc., is charged with building an internal ad agency and beefing up the company’s creative department.

An internal agency is necessary for Fuhu if it wants to keep up with the competitiveness and fast pace of the consumer electronics market, said Palmer, who called outside ad agencies “a big speed bump.”

“Typically, what happens in agencies in a month we do in three days here,” he said. “Fuhu worked with good agencies in the past, but at the rate it’s innovating and going, only an internal agency can keep up with the pace and bring its soul to life.”

Palmer’s overarching job is to develop the agency’s mission and purpose and eventually expand beyond the current 55 people as needed, he said. One of the things that the internal division plans to do is produce its own TV commercials, he added.

“I’ve been associated with very big brands that have had huge impact on culture and helped shape culture,” he said. “I think Fuhu has the potential for that.”

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