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Xavier López Ancona, founder and CEO of KidZania believes he has a “win, win, win” business model. KidZania aims to teach kids about the world of work through play, at the same time providing a publicity medium for their corporate partners AND enhancing their local communities. Lofty ambitions but the concept is working spectacularly well as the KidZania “nation” now has 8 active parks with more in the pipeline worldwide, and is set to break into the US and onto the web.
Prior to founding the company, López (pictured left) was a VP at GE Capital’s Private Equity Group. The first KidZania, Cuidad del los Niños, opened in Mexico City in 1999, exceeding its target of 400, 000 visitors in the first year by 90%, and to date has “edutained” 8 million citizens.
The second phase of expansion took the KidZania franchise across the globe. There are active parks in Monterrey (Mexico), Tokyo, Jakarta, Osaka, Lisbon, Dubai and Seoul. Under construction are parks in Bangkok, Shanghai, Santiago, Sao Paulo, Kuala Lumpur, and Mumbai, plus a KidZania "Drive" park in Mexico City where kids can drive from point-to-point. Parks in Istanbul, Cairo and Saudi Arabia are on the drawing board.
Having honed the concept worldwide López is now keen to crack the US and the web. To help KidZania do this Cammie Dunaway (pictured right), ex EVP of Sales and Marketing at Nintendo, has come on board with a substantial job description: to lead the expansion into the US as well as setting up merchandising and internet divisions for the company.
López and Dunaway talk to Blooloop about KidZania’s unique formula for fun and learning that they hope will empower the next generation to be “great global stewards", combining business with doing good….
Xavier, your background was in private equity and management consultancy. Where did the concept of La Ciudad de los Niños come from?
López: A friend of mine approached me with an idea for a day care centre when I was working at GE Capital. He wanted to make a place with 2 or 3 small establishments like a hospital, bank and supermarket. It was one of those ideas that just grew.
Did people think that you were crazy when you left GE Capital to set up a radically new concept FEC?
López: Very crazy! For almost 8 months during the day I was working at GE, and at night and weekends I was working on the business plan and getting everything ready for Cuidad del los Niños. It was just a really cool idea and I pitched some companies and 8 or 9 said, “You go with it and we’ll go in with you “. So I thought “there is something here”. I took a plane and I went to my boss in London with the idea that she would give me one year and if it didn’t work out I would come back to the team. She gave me 6 months!
Secrets of Success
What do you think are the key factors that contribute to KidZania’s success?
López: I think it’s a solid business model: a win-win situation and I really mean win, win, win, win… everybody wins.
I think children love it because there is lots of role play. One of our key concepts is independence and empowering kids so they can make their own decisions with no parents telling them what to do. There is nowhere else where kids can play like this as they are always supervised and controlled by their parents or teachers so for kids, KidZania is really their place.
For parents, KidZania is a safe educational place where kids can interact with other children rather than playing on their computers. So parents are happy because their kids are socialising. The schools are very happy: things that are difficult to teach in school children get to learn and this practical play reinforces what they do at school. The shopping centre is also very happy. And finally the sponsors happy because they get a showcase.
Dunaway: KidZania is truly unique. It is about real-life experiences, empowering, inspiring and educating kids by showing them that life is about options and about reaching as high as they can dream. Our parks are real cities, just kid-sized. Kids get to pick from as many as 100 jobs, earn money in the form of kidZos, pay for goods and services, and have a debit card, just like real life. Kids love it and parents and teachers feel good about it. Not many entertainment activities hit that sweet spot.
Consulting with Kids
You say that it is “our guiding principal to have kids involved consulting them on their ideas, preferences and wishes”. How do you incorporate kids’ feedback in KidZania?
López: We do a lot of market research. Quite often we go into schools with say a drawing or essay contest. For example we did a drawing contest and asked, “What do you want to be when you grow up?” Number 1 for girls was a veterinarian so went to talk to a sponsor and showed them the research.
Also in every city we have a congress of 40-80 kids aged from 7 to 12, and we invite them to come to let us know what’s happening inside and, most importantly, outside KidZania: at school, the movies, with gadgets, vocabulary, to get a feel for what children want. We do a very detailed report which we share with the sponsors, and we use it when we design the next KidZania, because we open 3 or 4 KidZanias round the world every year, and all this content goes into the design.
Dunaway: One of the most exciting ways we do this is called our Kids Congress. Every year we select 20 kids in each market to serve in a special capacity as advisors. They spend time with Xavier learning about the history and story of KidZania, they go through a special swearing in ceremony and then we get them together every other month for a year to give us feedback on programs and just tell us what things are on kids’ minds. It is essentially an ongoing focus group of our most passionate users and trust me they are not shy about giving us their opinions (see right).
Staff excellence must be essential to delivering a high quality, educational, safe and fun experience for KidZania’s “citizens”. How do you achieve this?
López: Staff are very important to what we do. The children are going to be with the supervisor telling them what to do in their roles and getting them into the experience. We try to put together the best teams in our communities – we pay a lot of attention to selecting the right people. Then also training is very important, not just about the product and what they have to do, but also how to handle kids. Some very shy and some very outspoken so we have to give our staff skills around education, safety and the activities.
Competition from At-Home Entertainment
FECs are facing strong competition from increasingly sophisticated at home entertainment, eg the Wii, and ever more technologically advanced experiences at theme parks. How can FEC’s compete?
López: We are different than at-home entertainment and other FECs. For kids the physical place and our content is very important – if you want to be a fireman, at KidZania you can go extinguish a real fire (see below) which is something you can’t do anywhere else. I think for parents: they like our one price admission, everything is included in the price, also parents happy to see their kids being independent and getting out socialising and learning. Their kids are having fun learning about economy and about how money works – that it doesn’t come from ATMs and that it you want to have money you have to work. We’re teaching them about the world of work and all the different occupations and values.
Dunaway: FECs will succeed by providing fun, unique experiences that consumers can’t get anywhere else. KidZania is all about empowering and inspiring kids to learn about their options in life, all through the thrill of real life experiences in a kid sized environment. I can’t think of any company or product that does it as well.
KidZania’s missions is to “provide the best family edutainment through fun, realistic role-playing and constitute and effective interactive publicity medium for our partners, firmly committed in the enhancement of our community.” How do you ensure that you are delivering edutainment whilst at the same time allowing your partners access to “interactive publicity”; is there any tension between the two elements of your mission?
López: That’s a very good question. We have a very strong principal that what we do is to copy real life so when you’re walking down the street you don’t have say “supermarket” or “gas station”, you have Walmart or HSBC. We just copy everything that’s real we don’t put any more things in than there are in real life, just what children would experience every day driving to school or walking in their neighbourhood.
Our sponsors get much more than just the marketing aspect though. We do a lot of CSR with them, for example programmes with underprivileged kids or in schools, and I think that’s what they really value. If you went to most of the companies they are financing their contribution from within their CSR budget. It’s more about giving back to kids and creating an environment to teach them about real life.
Dunaway: The KidZania business model is two-fold: on one side we are a family edutainment center, where kids role-play and can get a sense of life as an adult. On the other hand, KidZania is a new marketing media for brands. I think it is a win-win-situation: marketing partners win because they can get their brand, products or services closer to kids and their families; children win because they have a fun and educational place to play, learn and have a good time and parents win because they see their kids having fun and also learning important life lessons.
Corporate partnerships are fundamental to your business model. How do you select and work with your partners to deliver your mission?
López: Well we first make sure that they are good for kids so we don’t have say coffee or cigarettes or alcohol! Second once we know what establishments we want then we go and ask the top players to get involved. We don’t know how to operate a bank or a newspaper so we are looking to get sponsors to help us get things right and this gives us a lot of content.
We have to customise between different cultures and backgrounds, for example in Japan or Dubai. First we select our local franchise partner who knows how to do business locally, and about the kids and local culture and business arena. Then we customise the establishments: in Japan they value education very much so not only do we have a school but also a university and a kindergarten – we have to target it.
Dunaway: We always like to work with the top brands in the market, whether they are local or global. Our content team works closely to really understand each partner’s business objectives, their brand essence and the attributes of their company that they are most interested in communicating. And of course it is critical that the experience be fun! So whether it is the TV station in Dubai using the most innovative new Sony cameras, the new Fiesta hotel experience in Mexico City or the Nestle Chocapic cereal making factory in Lisbon, each experience is uniquely crafted to be enjoyable for kids and beneficial for partners.
What are the criteria in choosing a franchise partner?
López: One important thing is local knowledge and experience in hospitality, for example restaurants, hotels, or other service orientated industries. Also they have to have good business skills and have done a lot of CSR in their local communities.
How involved are you in a franchise, from design to operations?
López: We do everything. We do all the design first of all, we have all the content here so we design first the activities then we do all the architecture of the design and the theming, and then the operations, the SOPs. They’re [the franchisees] handling our product so it’s important that they do it well.
How do you ensure that you protect the KidZania brand?
López: Strict contract with guidelines, but more importantly building relationships with them and getting involved a lot on supervising development and construction, and even when they’re open our team will supply guidelines – a win-win situation is very important.
Dunaway: First we chose franchisees with proven expertise in delivering quality entertainment experiences. And we have guidelines and extensive training that ensures that each KidZania delivers a great experience for kids and marketing partners. That being said, a big part of our experience is local relevance. So within each park you will find a different mix of establishments and brands, each designed to create as authentic an experience as possible.
Expansion to Date
How do you go about identifying potential new sites?
López: I think we’re kind of changing. Before we were taking orders so there were people calling us. We look at population size etc so at the beginning we were seeing where the opportunities would take us. About two years ago we put an office in the US to guide our business development. We have studied which cities we want to be in and we really understand now which order we want to go in. We are now targeting the places we want to be in.
Are you looking at Europe?
López: We have one KidZania in Portugal but we’re now talking to some partners: some in the UK and Russia, and potential opportunities in France. It’s a very interesting market for us.
Cammie and KidZania
Xavier, what does Cammie bring to KidZania?
López: Let me tell you a little bit about the strategy, first we financed, owned and opened our parks in Mexico. We wanted to try new ideas and get to know the customer.
Second, we have found new markets and expanded out.
Third is the US. It’s the biggest market and we want to find a strategic partner in the US. Looking at our model we have identified 14 cities that can accommodate KidZanias: two of them, New York and LA are so big and widespread that they could have 2.
Fourth: now we can reach kids in the parks, we want to start rolling out new formats – web based merchandising, maybe film in longer term.
So to get to the US, first we had to find someone to help us. We were able to find Cammie and were obviously very happy because all her background is in marketing and the children’s arena, so it’s a good fit. She is very passionate about KidZania.
Now were looking for our partner and we’re interviewing a dozen bankers to get the right partner for us. Then we have to find a location, and then we should be opening in around two and a half years.
Cammie, what excited you about the challenges offered by KidZania that persuaded you to leave Nintendo, and what have been key lessons you’ve learnt in your career that you‘re bringing to KidZania?
Dunaway: The opportunity to have a global leadership role building what I believe can become the world’s most successful kid’s entertainment brand was simply too compelling to pass up! The growth trajectory for KidZania tells the story. Already successful in 8 cities around the world and set to open parks in a multitude of global locations in the next 48 months! Xavier and the team have created something truly special and it was an honor to jump on board.
My new role is truly a culmination of all the work I’ve done in the kids space and all I envision doing in bringing together education, entertainment and inspiration. From Doritos to Yahoo! to Wii, I will be drawing heavily on all I have learned about the passions of kids and the needs of marketers. But I won’t just be resting on past lessons; to stay relevant with kids will require learning new things everyday.
The US is a very different market to KidZania’s current locations. What are you doing to ensure that you will be successful in bringing KidZania to the US?
Dunaway: The first thing my team and I are doing is getting out to all the sites, talking to employees, talking to kids and parents, working to make sure that we fully absorb and understand the essence of what makes the KidZania experience so fun and unique. Our current markets are quite diverse – Tokyo is very different from Mexico City or Dubai for example- and yet KidZania is working well in all of them.
Next we are building out an advisory board in the US made up of educators, parents, child development specialists and marketers who can ask the tough questions and make sure we are thinking through any adaptations we need to make here.
Third you can count on the fact that we will do plenty of research with kids to ensure that KidZania US will be a place they will want to go time and time again.
It is amazing but I already have marketers calling me, reporters calling me and lots of parents saying, “when are you opening, we can’t wait to be involved.”
How are you looking to”build new global revenue streams through merchandising and the web”?
López: In the short term the web piece will take the experience of KidZania onto the web get the interaction between the real and virtual world. Cammie’s getting the team and putting the business plan and the strategy together.
Secondly, we have so many parks and 13 or 14 under construction that we have economies of scale to get our products merchandised. This will be part of US so Cammie will be putting together a merchandising division.
Cammie will also be our global CMO – developing guidelines for marketing and how to deal with social media. We don’t want to go too much into games. We don’t want kids to spend too much time in the virtual world – we want them to go to the virtual world to make them want to go to the real world. We’ll have lots of interactions with home and local societies. Not more than half an hour on the computer!
Dunaway: We want to see KidZania move beyond physical locations and into kid’s worlds.
I believe we have a tremendous opportunity to bring the KidZania experience online with a website that can extend the experience beyond the park and even enable kids who can’t get to a physical KidZania to participate in our unique form of fun and learning.
With merchandise, we have a great brand, characters that embody our values (and are also really cute) and a category – role-playing merchandise- that I don’t think anyone has really fully leveraged.
We've read a lot recently about how elements of gaming mechanics will increasingly be part of everyday life for everyone. Where do you see “gamification” going in the future?
Dunaway: One of the trends I find most exciting is when you can use game mechanics – achievements, unlocking content, etc to encourage and reward positive behavior. Wii Fit was a fantastic example of this. Imagine, a game that makes you want to exercise! Certainly as we develop our KidZania website we will look to incent kids to learn, exhibit positive behavior, maybe even take actions that benefit the world. At its heart though, it has to be fun!
What are your ultimate ambitions for KidZania?
Dunaway: To become the most well known and respected kids brand in the world. It is clear to me that there’s a true market for entertainment that empowers and equips kids to be great global stewards. KidZania wants to be that brand.
López: I want it to be a very good product. The thing I most like about KidZania is really that we’re empowering kids to be better citizens. We’re here for the long term, not just to grow and sell. My dream is to make a difference doing good and doing it well: performance with a purpose – KidZania can combine business with doing good.