WIXLIB

USCHILDREN’SBOOKLANDSCAPEBASED ON DATA FROMQUARTER 4, 2014APRIL 2015Copyright 2015 The Nielsen Company1

CONTENTSMETHODOLOGY. 3DATA SOURCES USED.3READING THE CHART. 4DEMOGRAPHIC PROFILE. 5BOOK BUYING L ANDSCAPE. 6BEST SELLER LIST. 6MARKET ANALYSIS. 7KEY TAKEAWAYS. 19APPENDIX. 202US CHILDREN’S BOOK LANDSCAPE

METHODOLOGYDATA SOURCESUSEDDEMOGRAPHICINFORMATIONBOOK L ANDSCAPEINFORMATION*Q4 2014 CHILDREN’SBOOK BUYERSBOOKS &CONSUMERSBOOKS &CONSUMERSRACE / ETHNICIT YHOUSEHOLD INCOMEGEOGRAPHYGENDERAGEAWARENESS REASONS FORPURCHASE PURCHASINGPL ATFORMS RETAILERSPL ANNED VS. IMPULSEFORMAT DEVICEDOWNLOADED TO ETC.BOOKSCANQ4 2014 BEST SELLERS*Based on new, purchased (paid for) books only; excludes Young Adult booksCopyright 2015 The Nielsen Company3

READING THECHARTS % values in black at the top of each column represent thepercentage of children’s book buyers to which the item applies The numbers at the base of each column are indexes, calculatedas % children’s book buyers / % of all US book buyers. An indexof 100 means that children’s book buyers are in line with thenational average, whereas the below index of 120 means that thesegroups are 20% more likely than the US average to purchase itemA (as seen in this example graph). An index of 90, by contrast,means they are 10 percent less likely than the average American topurchase item B.40%29%11%12090105ITEM AITEM BITEM CSource: Nielsen4US CHILDREN’S BOOK LANDSCAPE

DEMOGRAPHICPROFILEFemales are the primary purchasers of children’s books. These buyersalso over-index in the under 45 age group and non-white ethnic group,specifically Hispanic.INDEX:8839%31%Q4 ‘14 Children’s Book BuyerAverage Age: 33.9 outhWest45-545%5%505655-6465 RACE/ETHNICITYHHIIndex64INDEX%Index% 0- 24,9999416%White9677%21% 25,ooo- 49,9999728%Black, AfricanAmerican11110%9434% 50,000 - 74,99910023%Hispanic12714%10424% 75,000 - 99,99911919%Asian1177% 100,000 - 149,99910011% 150,000 1004%Percentages reflect % share of Children’s book buyers, Indices are % children’s book buyers/ % All book buyers * 100Source: Nielsen 2014 Books and Consumers: Q4 2014.Copyright 2015 The Nielsen Company5

BOOK BUYINGL ANDSCAPETOP 10 CHILDREN’SBEST SELLERSPRINT BOOKS Q4 2014BOOK TITLEAUTHORThe Long HaulJeff KinneyElf On The ShelfCarol Aebersold &Chanda BellThe Blood Of OlympusRick RiordanMinecraft: ConstructionHandbookMatthew Needler &Phil SouthamDork Diaries: Tales From ANot-So-Fabulous LifeRachel Renee RussellFrozen: A Little Golden BookVictoria SaxonLaugh-Out-Loud JokesFor KidsRob ElliottMinecraft: CombatHandbookStephanie Milton, Paul MiltonSoares Jr., Jordan MaronThe Book With NoPicturesB.J. NovakRush Revere And TheAmerican RevolutionRush Limbaugh5 MINECRAFT TITLESIN THE TOP 256 FROZEN TITLES INTHE TOP 25Source: Nielsen 2014 BookScan. Q4 20146US CHILDREN’S BOOK LANDSCAPE

BOOK AWARENESSThere are many ways to make buyers aware of children’s books. Of thetop 10 factors, all but one in-person method of awareness over-indexes,with book fairs & recipient requests over-indexing the most.IN-STORE DISPLAY/ONSHELF/SPINNING RACK145AT SCHOOL1338%BOOK FAIR2678%RECIPIENT ASKED FOR ITEM233RECEIVED RECOMMENDATIONFROM A FRIEND/RELATIVE606%BROWSINGTHROUGH THE SITE866%PUBLIC LIBRARY1255%TV AD1005%LIBRARIAN13316%7%4%IN PERSONONLINERECOMMENDED BASED ONWHAT BOUGHT/READ BEFORE674%TELEVISIONSource: Nielsen 2014 Books and Consumers: Q4 2014Copyright 2015 The Nielsen Company7

PURCHASINGPL ATFORMSChildren’s book buyers buy more than half of their books in person.Online and direct downloads under-index for this group compared to thegeneral market.4%INDEX:13%112829313356%27%PLATFORMSIN STORE (IN PERSON)ONLINE WEBSITEAPP/DIRECT DOWNLOADOTHERSource: Nielsen 2014 Books and Consumers. Q4 2014PURCHASINGPL ATFORMS:TRENDEDThe share of in-store purchases has slightly declined since Q1 2013, withonline and direct downloads seeing increases since Q4 2%23%23%22%27%27%PLATFORMSIN STORE (IN PERSON)ONLINE WEBSITE63%62%63%61%57%59%54%56%APP/DIRECT DOWNLOADOTHERQ1 ‘13Q2 ‘13Q3 ‘13Q4 ‘13Q1 ‘14Q2 ‘14Q3 ‘14Q4 ‘14Source: Nielsen 2014 Books and Consumers. 2013-20148US CHILDREN’S BOOK LANDSCAPE

PRINT BOOKS:WHERE DISPL AYEDPlacement on a shelf is the runaway leader in this category, with morethan 60% of books in each genre having been found there.ON SHELF 6%72%SERIES/ CHILDREN’SCHAPTERNF*Other Children’s Genres includes genres such as: Coloring books, Sticker books, Activitybooks/Workbooks, Craft/Hobby books, Puzzle books, etcSource: Nielsen 2014 Books and Consumers: Q4 2014.Copyright 2015 The Nielsen Company9

WHERE DISPL AYED(CONTINUED)With on shelf removed, the importance of promotional table, frontwindow, and clearance table placement can be seen; the check-outcounter’s presence for children’s books is LDREN’SNFWHERE DISPLAYEDON A PROMOTIONAL TABLEON A SPRINNING RACKIN THE FRONT WINDOWIN A CARDBOARD DISPLAYIN THE BARGAIN BIN/CLEARANCE TABLEAT THE CHECK-OUT COUNTEROTHER*Other Children’s Genres includes genres such as: Coloring books, Sticker books, Activitybooks/Workbooks, Craft/Hobby books, Puzzle books, etcSource: Nielsen 2014 Books and Consumers: Q4 2014.10US CHILDREN’S BOOK LANDSCAPE

BOOK RETAILERS43% of purchased children’s books are from Barnes & Noble, Amazonand Walmart together, while the rest of the market is highly fragmented.TOP RETAILERS FORCHILDREN’S BOOK BUYERS14%BARNES & NOBLE19%50%AMAZONWALMART10%3%2%1%1%* 50% “OTHER RETAILERS” DISPERSED AMONGMORE THAN 150 VARIOUS RETAILERSTARGETBOOKS-A-MILLIONCOSTCOAPPLEOTHER RETAILERSSource: Nielsen 2014 Books and Consumers: Q4 2014.Copyright 2015 The Nielsen Company11

BOOK RETAILERS:TRENDEDWhile B&N, Amazon, and Walmart together consistently account forclose to half the children’s book market, Q4 2014 represents theirsmallest share since Q1 2013.1%2%4%8%21%17%Q1 ‘132%1%3%3%6%22%2%2%3%3%8%22%1%1% %10%1%17%14%21%19%18%18%18%18%Q2 ‘13Q3 ‘13Q4 ‘13Q1 ‘14Q2 ‘14Q3 ‘1419%Q4 ‘14TOP RETAILERS FORCHILDREN’S BOOK BUYERSAMAZONBARNES & NOBLEBOOKS-A-MILLIONWALMARTCOSTCOTARGETAPPLE*BARS DO NOT REFLECT THE FULL MARKET, REMAINING PERCENTAGESDISPERSED AMONG MORE THAN 150 VARIOUS RETAILERSSource: Nielsen 2014 Books and Consumers. 2013-201412US CHILDREN’S BOOK LANDSCAPE

REASONS FORPURCHASE:Price is the primary factor when considering purchase; recipient askingfor the book & liking character/cover art highly over-index.PRICE122I LIKED THE TOPIC/SUBJECT70I LIKE THE CHARACTER133I LOOKED THROUGH THEBOOK AND LIKED IT117I LIKE THE COVER ART14422%19%16%14%13%12%I LIKE THE AUTHOR52I LIKE TO READ BOOKSIN THIS SERIES649%RECIPIENT ASKED FOR/LIKES BOOK2259%INTRIGUED BY BOOK TITLE67IT WAS RECOMMENDEDBY SOMEONE I KNOW678%6%Source: Nielsen 2014 Books and Consumers: Q4 2014.Copyright 2015 The Nielsen Company13

FORMATSNAPSHOTMore children’s books are bought in hardcover than any other format –overall, and within sub-genre 63%3%17%6%15%1%47%4%44%27%27%2% 2%5% KS21%2% 1%26%21%1% EVELEDREADERSPICTURE/STORYFORMAT TYPEMASS MARKET PAPERBACKOTHER BINDINGSHARDCOVERAUDIOE-BOOKTRADE PAPERBACKSPECIAL CHILDREN’S BINDINGS*Other Children’s Genres includes genres such as: Coloring books, Sticker books, Activitybooks/Workbooks, Craft/Hobby books, Puzzle books, etcSource: Nielsen 2014 Books and Consumers: Q4 2014.14US CHILDREN’S BOOK LANDSCAPE

BOUGHT WITHANOTHER ITEMCompared to all books, children’s books over-index when it comes to“bought with another item,” especially picture/story ORY147110SERIES/ CHILDREN’SCHAPTERNF*Other Children’s Genres includes genres such as: Coloring books, Sticker books, Activitybooks/Workbooks, Craft/Hobby books, Puzzle books, etcSource: Nielsen 2014 Books and Consumers: Q4 2014.Copyright 2015 The Nielsen Company15

OTHER ITEMSBOUGHTAside from another book, the top items bought along with a children’sbook appear to be either toys/games or items typically displayed nearregisters.FORMAT EADERSDVDGIFT CARD/CERTIFICATEMUSIC CD23%6%7%12%MAGAZINETOYS/GAMES1%1%4% ER18%CHILDREN’SNFANOTHER BOOKTHE #1 ITEM BOUGHT ALONG WITH ACHILDREN’S BOOK IS ANOTHER BOOKAll books59%Children’s books56%Leveled n’s NF63%Other Children’s Formats41%*Other Children’s Genres includes genres such as: Coloring books, Sticker books, Activitybooks/Workbooks, Craft/Hobby books, Puzzle books, etcSource: Nielsen 2014 Books and Consumers: Q4 2014.16US CHILDREN’S BOOK LANDSCAPE

E-BOOKPERCENTAGE OFTOTALChildren’s books are not being purchased as eBooks to the same extentas all books are, though the gap between the two is shrinking.24%23%22%20%19%18%5%Q1 '136%Q2 '1322%14%19%12%8%10%7%Q3 '13Q4 '13CHILDREN'S EBOOKSQ1 '14Q2 '14Q3 '1410%Q4 '14ALL EBOOKSONLY 10% OF CHILDREN’S BOOKPURCHASES FOR Q4 2014 WERE EBOOKS,COMPARED TO 19% OF ALL BOOKSSource: Nielsen 2014 Books and Consumers: 2013-2014Copyright 2015 The Nielsen Company17

E-BOOK DEVICESTablets & e-readers appear to be the most frequently used devices forchildren’s e-Books.TABLET48%51%E-READER29%30%SMARTPHONEOTHER DEVICE12%10%CHILDREN’S E-BOOKS11%9%ALL E-BOOKSCHILDREN’S E-BOOKS SEEM TO BEDOWNLOADED TO SMARTPHONES &OTHER DEVICES TO A HIGHER DEGREETHAN E-BOOKS IN GENERALSource: Nielsen 2014 Books and Consumers: Q4 201418US CHILDREN’S BOOK LANDSCAPE

KEYTAKEAWAYSKEY TAKEAWAYS &QUESTIONSUSING THE DATA TO BUILD YOUR BUSINESS1. Hispanic families are 27% more likely to buy books for their childrenWhat opportunities does this present for your business? Bilingual editions?New promotional partnerships? With a projected buying power of 1.5trillion, the U.S. Hispanic population is worth watching.2. “Lifestyle” subjects are driving interesting growth in non-f ictionTitles such as Minecraft, as well as the presence of licensed characters likeDisney Princess and Star Wars in non-fictional content are making nonfiction an important category to watch beyond the academic side of thebusiness.3. “In-person modes” of discovery remain critical for children’s booksDo not ignore store placement, book fair opportunities, and cultivating keyconnections with librarians & teachers. Are you investing in these areas?4. The children’s market is becoming increasingly fragmentedLess market share at the top retailers, more market share in the bottom.Direct to consumer communication should be a central strategy movingforward. What are you planning?5. When a book is “bought with another item” it is most often anotherbook.What opportunities does this present to make sure that OTHER book isyours too? Bundling? Special display strategies? BOGOs?6. Roughly oughly 10% of children’s books purchased are eBooksFurthermore, when you look at slide 25, you will see that the pattern hassettled into a mirror of print book sales. Does this indicate a maturemarket for children’s eBooks?Copyright 2015 The Nielsen Company19

APPENDIXABOUT OUR DATASOURCESNIELSEN BOOKS & CONSUMERS MONTHLYTRACKER Online questionnaire of 75 questions to 6,000 book buyers permonth, selected from a nationally representative sample by age,gender, and location Panelists were provided by MetrixLab’s “Precision Sample,” a“TrueSample” approved vendor of quality panels From this tracker, children’s book buyer data from 2013-2014 wasanalyzed, mainly focusing on a snapshot of Q4 2014. To serve as abenchmark, data on all book buyers during this time frame was alsoanalyzedNIELSEN BOOKSCAN20 International point-of-sale data monitoring and analysis service forEnglish-language book industry worldwide Tracks approx. 85% of general retail sales for physical books withinthe USA on a weekly basis Data is acquired from growing list of retailers who send Nielsenscanned data on 500,000 ISBNs/14 million units from 16,000locations a weekUS CHILDREN’S BOOK LANDSCAPE