Apps for Kids: Content Wars for the Milk and Cookie Set

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If you've seen a baby take to an iPad before she can walk or say "Mommy," you know that the "mobile natives" are born into a different world—an intuitive one of touchscreens—than even their predecessors, the "digital natives."

And there's a burgeoning digital content market to be conquered.

"My 1-year-old figured out how to drag icons on my smartphone three months ago," said Caleb Clark, director of the Educational Technology Program at the Marlboro College Graduate School in Vermont. "I Iook for apps for him that his mother will approve."

One recent entrant is StoryBots, a purveyor of digital "fun and educational" games for kids from the brothers behind JibJab, who entered the national consciousness in 2004 with their musical viral video sending up presidential candidates George W. Bush and John Kerry.

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"We see this massive shift in how kids are consuming media," co-founder Gregg Spiridellis told CNBC's "Squawk on the Street." "So we were inspired. We said, 'If Sesame Street were created today in this world in connected devices, what could it be?'"

StoryBot's answers include "Starring You" e-books and videos that put a child's own face into the action, and millions have been viewed since last September's launch. StoryBots is a walled-off ad-free online world so kids can roam it safely, and instead of a price-per-app model like its competitors, it offers all access for a subscription of $4.99 a month.

Of course, PBS Kids and Sesame Workshop have their own presence in the children's app space. Others include Scholastic Interactive, Toca Boca, Ocean House and LeapFrog, although there are many small players hoping for a breakout hit.

The market promises to be huge and fast-growing. The rise of the tablet and decline of the PC has been rapid. Market research firm IDC reports that in the first quarter, tablet shipments increased 142 percent over last year's period while PC shipments dropped 14 percent—the biggest decline ever. BitChemy Ventures head analyst Sameer Singh forecasts tablet shipments will overtake those of PCs this year.

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Meanwhile, within two years of the release of the first iPad, more than 25 percent of parents had downloaded an app for their kids, according to a study last year by the Joan Ganz Cooney Center at Sesame Workshop.

It also found that from 2009 to 2012, the portion of top-selling apps targeting elementary school kids and younger jumped from half to about three-quarters.

Classroom Tablets

Schools are taking note. The San Diego School District reportedly made one of Apple's largest iPad orders last year—for 26,000 of them. William Weil, CEO of Washington-based Tales2Go, which sells audiobook services to schools, said tablets make a lot of sense for the classroom.

"Think how much easier to administer and maintain a tablet is versus a PC," he said, adding that a tablet's content is also more simply controlled.

But is all this good for kids? The American Academy of Pediatrics has famously come down on screen media use of any kind for children under 2 years old, and has raised alarm about media saturation for older children. The AAP said unequivocally: "Unstructured playtime is more valuable for the developing brain than any electronic media exposure."

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"We want to be wary of anything that labels itself 'educational,'" said Hilary Levey Friedman, a Harvard sociologist specializing in childhood and parenting, whose book, "Playing to Win: Raising Children in a Competitive Culture," is coming out later this year.

She recalled the firestorm surrounding Baby Einstein when one scientific study's findings suggested that viewing the "educational" DVDs may be detrimental to a child's language learning.

"We live in a world of screens," she said, adding that her own 16-month-old is "extremely interested in the iPad" and has mastered the slider that unlocks the device. He's not alone—iPads were the most-requested gift this past holiday season, according to Nielsen, with almost half of kids aged 6 to 12 years wanting one.

But rather than a blanket rejection of screen time, Friedman suggested "approaching it with moderation."

Clark of Marlboro College argues it mostly depends on the parenting context.

"A great educational and fun app in the hands of an absent or neglectful parent will probably be way less effective than the designers intended, and maybe even have negative effects with too much play," he said. Conversely, "An average non-educational app in the hands of an engaged parent could be a healthy diversion."

They key, he said, is finding "a site, or person, a group, or school, who reviews apps to help you find the good ones."

Spiridellis said the hassle of constantly seeking out, evaluating and buying apps is one reason StoryBots pursued a subscription model. "Parents like that one-stop shopping in a place they trust," he said.

—By CNBC's Matt Twomey. Follow him on Twitter @Matt_Twomey.