GROUP NEWS

Penguin Fairytale Raised 40 Million Yuan in Series A Funding, will Further Invest in Content Creation

Recently, Penguin Fairytale, an open platform for children’s content of China’s Tencent has completed a RMB40 million series A round of funding.

Date 2018-05-21

 Penguin Fairytale raised 40 million yuan in this series A round of funding led by Zhongyuan Capital and followed by Sheng jing 360.com.

 

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 Penguin Fairytale focuses on the selection and distribution of digital children's content, providing a wide range of content options for preschool children. When the company was originally established in 2013, it was just a project in Tencent's internal incubator. It was set up to take advantage of the abundant content resources provided by the group. 

 In August 2016, it was officially spun off from Tencent and received 12 million yuan in funding from MFund and Leyo Capital. In July 2017, Penguin Fairytale announced its RMB10 million Pre-A round of financing from Yi Fang Group, Suning Youth Pioneer Fund, MFund and Tencent.

 

 With the advantage of platform resources, the total number of users for its 2 applications has exceeded 35 million. 

 

China implements the two children policy

 

 People who were born in the 1980s and 1990s are starting to become parents and this has given children content market a huge opportunity. The Chinese are increasingly getting used to pay for online content and the penetration rate of smart devices has increased largely. Under these circumstances, many professional content creators have developed their own unique business models. 

 

 Penguin Fairytale started to explore the model of making profit with paid content and began to develop merchandise for stories in 2018. Currently, content (paid content + content royalties) and story merchandise each contributes half to the company's revenue.

 

Platform advantage obtained 35 million users

 

Penguin Fairytale is a platform. It collects new IP in the upstream, processes and distributes stories in the mid-stream, and cashes out in the downstream.

 

 In the upstream, the platform attracts international IP, publishing houses, studios and individual creators to obtain a wide array of digital content. Its content cooperators include QQ family, Disney, Altraman, Bieber doll, Thomas & friends, Peter rabbit, Octonauts, Cao Wenxuan Children's Literature & Art Center, and Children's Fun Publishing etc. 

 

 In the mid-stream, the Penguin Fairytale team pursues the full potential of a story and creates videos, audios and books to satisfy the various demands of parents and children.

 

In the downstream, the company distributes content to multiple channels and makes profits with its advantage in channel resources. These channels include: proprietary applications, early education audio platform baby tingting, interactive picture book platform baby fairytale; Tencent’s QQ reader, Tencent video, Penguin FM; IP derivative story machine, Tencent tingting, Rokid home robots and other hardware products.

 

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 As of now, the total number of users on Baby tingting and Baby fairytale has reached 35 million with about 400,000 monthly new users and 500,000 daily active users. Baby tingting now provides over 50,000 different audio stories and Baby Fairytale offers more than 5,000 digital picture books. 

 

A combination of software and hardware products, and the habit of paying for online content

 

The company's revenue comes from content payment, content royalties, and the sales of derivative story machines.

 

 Stories on Baby tingting target children between 0 and 12 years old, and the platform is available on smart phones. Payments are made for story packages.

 

The baby fairytale platform targets children over 4 years old who have certain reading capabilities. In order to facilitate systematic use of content by parents, the system charges monthly, quarterly or yearly subscription fees.

 

 As of the end of December 2017, the total number of paid users on these two APPs had exceeded 70,000, with 50,000 on Baby tingitng and more than 20,000 on Baby fairytale.

 

The contents of Penguin Fairytale are also available for cooperator platforms such as Penguin FM and Tencent tingting with a certain amount of royalties.

 

 While traditional story machine manufacturers create IP themselves, Penguin fairytale buys from major content creators. Its story machines create derivative stories based on the IP and enable users to build a story collection and buy story merchandises. 

 

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 In addition, Penguin Fairytale also publishes books. That is to say, it covers the whole value chain of children’s content. The company has a team of about 50 employees, including product development, content, operation and marketing among other departments. 

 

 With the rise of China’s middle class and the improvement in people’s education background, young parents are paying more and more attention to the cultivation of children’s interests and personality, and thus have boosted the demand in the early education market.

 

 Over the past two years, in addition to providing content, the supply side has been expanding to parent-child e-commerce and smart devices. For example, Kaishu Story has received a total of 260 million yuan in funding. Himalaya FM and Dedao are also providing audio books for children. This means that the competition for upstream content IP will become even more intense.

 

 He Liang, General Manager of Penguin Fairytale, said that after this round of financing, the company will increase investment in supporting content creation. It will continue to take advantage of the platform and strengthen strategic cooperation with large IP companies, publishing houses, creation studios and individual authors to provide parents and children with better content and knowledge.

Yi Fang Investment participated in the Pre-A round of funding of Penguin fairytale and the company has always focused on education, medical care, sports, and modern service. It holds major stakes in a number of promising companies including Keyuan Education, a K12 Ivy League International School, Yi Fang Xingren Clinic, Etong Health, Shanghai BIZVANE, Fadada.com, and Astro Air. Yi Fang is a major shareholder for Wanda Commercial Real Estate, Wanda Cinema, Jiang Zhong Group, AEON Life and Dalian Bank.