SmartyCard is a startup focused on the educational market for "tweens" with games that allow them to collect virtual cash they can use in virtual worlds such as Club Penguin, or to buy toys, books, and music.

Parents buy SmartyCard "points" in $10 increments and their kids have to complete a series of educational games before they can unlock and use the points as virtual cash.

"It's a way for parents to manage their kids' allowance and teach kids to learn and earn. And to make sure that at least some of their time spent online is being used well," says Chris Carvalho, GM of SmartyCard.

The company launched last month at the DEMO conference, winning an award. It is one of four game and educational ventures created by Gazillion Entertainment, which recently came out of stealth mode.

SmartyCard estimates that there are about 26 million tweens in the US, kids aged between 8 and 12 years. Its business model is to target the allowances of tweens, and to collect as much as 50 per cent of the value of SmartyCard points, in exchange for providing thousands of educational games.

"With virtual goods we can achieve an almost one for one value exchange but for most things it is about 50 percent," says Mr Carvalho. That means a $10 SmartyCard once it has been "unlocked" by a kid by winning the points, can be used to buy $5 worth of books, games, or music.

That seems like a large share taken by SmartyCard but the company says the educational value it provides would cost a lot more if parents had to purchase online educational programs.

Most kids use their unlocked points to buy a monthly membership in a virtual world such as the popular Club Penguin, and this is also where there can be a more equal exchange of dollars and points.

"It's like eating your vegetables before you get your desert, before you go play in the virtual worlds," says Aaron Burcell, VP of marketing. That doesn't mean that the educational games are dull, like vegetables.

"The games are fun. The kids quickly get caught up in them and all of our focus groups have shown near 100 percent satisfaction and that they would recommend them to friends," says Mr Burcell.

The company is planning a large marketing push for the beginning of the summer vacation that will feature celebrity endorsements, and pre-loaded SmartyCard cards available in a wide variety of retail locations such as gas stations and corner stores.

- - -

Please see:

BusinessWeek: Marketing and Tweens

For as much industry talk as there is about tweens being the decision-maker driving purchases, ultimately it is still the parent in control. Of the reported US$ 51 billion spent by tweens themselves, an additional $170 billion was spent by parents and family members directly for them, according to 360Youth.com, which focuses on youth marketing.

Gazillions Of Gamers? - Forbes.com

Armed with a pile of venture capital and staffed with veterans of top games shops such as Electronic Arts (nasdaq: ERTS - news - people ) and THQ (nasdaq: THQI - news - people ), Gazillion will create online worlds to appeal to men, women and children of all ages, says Rob Hutter, the former venture capitalist recruited to run Gazillion. The company, which has been operating under the radar since last year as NR2B Research, has plans to create massive multiplayer online (MMO) games played on Web browsers, consoles and packaged software platforms.

Gazillion Announcement - Gazillion Entertainment

Headquartered in San Mateo, California, Gazillion has four independent but wholly owned MMO development studios located in California, Colorado, and Washington currently in production on Casual and AAA MMO properties. The company also owns the award-winning SmartyCard payment service for younger audiences which works with leading online games and more.

Investors - Gazillion Entertainment