Epic, the Redwood, Calif.–based children’s digital reading platform, has a lot to celebrate. January marked the company’s fifth anniversary, and in the wake of that milestone, Epic released the latest data tracking its performance and announced that it had secured $30 million in new funding.
“We’re now reaching 10 million kids across our network of schools and homes, and kids have read 500 million books since launch,” says Epic cofounder Kevin Donahue, pointing to some of the company’s benchmarks. “That number has increased dramatically.” Indeed, Epic has stayed on an upward course since its debut, doubling its revenue every year, according to the company.
The recent infusion of $30 million, led by Evolution Media, a global media and entertainment investment firm backed by Creative Artists Agency and TPG Growth, brings the amount of funding Epic has obtained since 2014 to more than $50 million, all of which is being used to fuel the company’s growth. Donahue outlined some of the allocations: “It takes a large team and a lot of financing to do what we’re doing. Our team is now up to 75 people. We’re hiring even more people than that. We need more engineers, more marketing people, and of course we’re developing the technology itself. Beyond that, we also have advertising requirements.” In all, he adds, the goal is “to continue to grow the service and do what we’re doing, and just do it even better and reach more families and teachers and kids.”
Epic’s upward trend continues to be somewhat of an anomaly when it comes to e-book sales, which overall have been in decline for the past several years, according to numbers provided by the Association of American Publishers and other industry reporting sources. Though success stories exist in the world of online subscription services for digital reading content—Scribd, for one—and a few children’s-only content platforms are available (e.g. LeVar Burton’s Kids Skybrary), Donahue believes Epic stands alone in its mission. “When we think about competitors, we don’t see any specific companies doing what we’re doing,” he says. “We look at our competition more as the distractions that kids have from other digital entertainment experiences, such as computers, smartphones, tablets, or any other apps or services they’re presented with.”
Donahue points out several features that distinguish Epic in the marketplace. “What makes us special, I think, is the size and quality of our library of real children’s literature, real books,” he says. “Kids are really in control of the experience so they can choose what they like to read and it’s personalized to them. And just the experience of the app itself is unique and playful and fun. I think that makes it quite a bit different from what other people are doing.”
In addition to the rise in revenue and number of readers, the breadth of Epic’s digital offerings has grown. Currently, Epic boasts 35,000 books, audiobooks, and videos in its library, up from 14,000 items in 2016. These materials represent partnerships with 250 publishers, including HarperCollins, Macmillan, Sesame Workshop, and a host of independents. “We’re very careful to curate our library,” Donahue says. “We don’t just go for size; we care about the quality and the appropriateness of the books.” An advisory board of publishing and literary experts, educators, librarians, and parents helps develop the collection, providing content intended for readers ages up to 12.
The platform usage breaks down as a total of 1.7 million paying subscribers since 2014, at $7.99 a month, and more than 1 million teachers who access Epic in the classroom, where it is available free of charge. To date, 91% of elementary schools in the U.S. have signed up for Epic. So far, Donahue says, Epic is “very happy” with how the free access to schools option has worked out, noting that it has helped more people to learn about the platform. “Since we made it available to teachers, it’s been word-of-mouth growth,” Donahue says. “Teachers are really active on social media and are also dying for resources in the classroom, and they care about reading and learning through great books. So it’s been a perfect fit in that respect.”
Within the Epic platform, teachers have curated more than two million of their own content collections on topics including coding, ocean animals, and Native American history. And to help gauge their students’ reading comprehension, teachers have drafted roughly 200,000 interactive quizzes, which have been taken by children more than 35 million times.
Donahue says there aren’t any plans to begin charging educators and schools for access to Epic. “You never know what the future may hold with any business, but we do intend to continue doing this for the foreseeable future.” When it comes to technical logistics, Epic lands on school computers in a variety of ways. Of course, the major educational tech players—Apple, Google, and Microsoft—are eager to distribute various platforms in schools, “and they need content for that,” Donahue says. “We have a Google for Education partnership, we work closely with Apple, and we’re starting to work more closely with Microsoft.” For a more in-depth look at how some teachers are using Epic in their classrooms, see “In the Field with Epic.”
At Epic’s five-year mark, Donahue reflects on what he has learned about the business over time. “There’s so much we didn’t know when we started,” he says, noting that the learning curve was a great impetus for assembling Epic’s advisory board. “We put together this amazing board of luminaries from the children’s publishing industry: Kate Klimo, Joanna Cotler, and others. They really helped us in those early days to be connected to the publishing community.” Flashing forward, he adds, “Now we’re EBMA [Educational Book and Media Association] members and pretty plugged-in, and we’ve also learned a lot through the 250-plus partnerships we have with publishers.”
Donahue cites the relationships with partner publishers as an essential ingredient to the Epic formula. “We learned that the quality and diversity of the content being created by independent publishers is astounding and it’s been part of the key to our success,” he says. Partner publishers have reason to celebrate Epic’s success, as well. Though Donahue declined to share financial terms, he says, “the amount of revenue we’ve been able to pay out to our leading publishers is pretty significant, and as we grow, they can make more revenue.”
Donahue relates that he and Epic cofounder and CEO Suren Markosian discovered early on that it would be a challenge bringing a digital platform into the mix for children’s books in the publishing industry, “because people hadn’t seen it succeed before.” But Donahue and Markosian had confidence that their approach would work, based on their previous experience working as executives at consumer internet companies (YouTube and CrowdStar, respectively) and on what they observed their own children liked to do online with books.
“It’s not really rocket science,” Donahue says. “We just didn’t feel like kids were properly served in terms of digital reading previously, and we thought that if we brought in the great content and created a great platform they would read more. The numbers we’re able to report reflect that, and we’re very proud of what we’ve been able to accomplish.”
Looking ahead, Epic has begun to look at expanding beyond the U.S. market. The platform has seen strong demand in South Korea and Japan, where it is used by many as a tool for learning English. The Epic library offers titles in Chinese, French, and Spanish, many of which are bilingual books, which appeal to language learners.
Donahue has also hinted that the future may hold a move for Epic into content creation and distribution—a move that companies such as Netflix and YouTube have made. The release of Epic’s latest progress report included the statement that the company “has set its sights on more than books and is well on its way to becoming a responsible digital media brand—just for kids.” This would fit hand-in-glove with Evolution Media’s recent investment.
“We do look to companies like Netflix and admire their success as content platforms,” Donahue says. “Another company we like is one of our partners, Sesame Workshop. We look at the content they’re creating, and we have decided that yes, it’s of interest to us to explore that, and we’ll talk more about that in the future.”
