KS: Can you tell me a bit about the main findings of the study? Were there any trends that emerged?
Dubit: When most people think about mobile apps and games they tend to think that they all have to be given away for free to be success, with in-app payments used to bring in revenue. What we found with our study into kids’ apps was that this couldn’t be further from the truth when designing apps for young children. For each of the three age groups we looked at, the majority of the highest grossing apps were paid for, with many costing more than $2.99. For instance, for nine to elevens only 10% of the highest grossing apps were free! This would be unheard of outside of the kids section, some paid-for apps also used IAP (in-app purchases) but they were the minority.
KS: From your research, are more paid kids app being downloaded? Or more free apps? Why do you think that is?
Dubit: Because of the closed nature of the App Store it isn’t possible for us to see download numbers. Instead we focused on the apps appearing in the Highest Grossing charts as revenue is better signifier of success than download numbers. What is clear is that unlike apps for all ages, kids apps can break into the Highest Grossing chart without having to be given away for free.
There are a number of reasons why this might be. It could stem from parents seeing the value in a paid-for app for their children, as they may not want them buying (or asking for) in-app purchases. Also, many of the highest grossing apps either use a popular IP or have an educational focus – both allow for premium pricing. It’s also possible that parents will pay more for things, including apps, for their children but not for themselves. We’re sure that many of the parents paying over $2 for a mobile app for their child would never pay more than 99c for one for themselves.
KS: According to your research, how many kids apps have In App Purchases (IAPs)?
Dubit: We studied three age groups, under 5, six to eight, and nine to eleven. We also examined the ‘all kids’ section that encompasses all the age groups. For all the groups in-app purchases existed in fewer than half of the games appearing in the Highest Grossing chart. For apps in the six to eight and nine to eleven categories it was under 25%. With all three age groups combined, looking over 150 apps, only one third included IAP.
It’s worth noting that sometimes the apps in the study monetized through both in-app purchases and a download charge, but they are in the minority with only 10% monetizing this way.
KS: What is the concern with IAPs in kids apps?
Dubit: For games not specifically designed for children the fear around IAP seems to be based on children spending vast sums of real money on virtual items. Although the risk was low it brought a lot of media attention and led to both Apple and Google changing their IAP policies.
KS: How are IAPs for kids different from purchases in games?
Dubit: IAPs for apps in the Kids section of the App Store tend to be focused on the purchase of additional content, such as extra books, packs of stickers and expansions to the app. This is quite different to the type of IAP we’re used to as adults, getting hassled to buy lives in Candy Crush or doughnuts in the Simpsons game. Part of this is down to responsible developing, part is down to restrictions on how ‘Kids’ apps must behave to be in that section of the store, and part is down to the type of games young children play. Ultimately children under ten don’t want to play ‘click and create’ games, they want a more open playtime so being hassled every minute for in-game currency doesn’t work.
There’s also the key difference of IAP in games appearing in the kids’ section of the store not being consumable, so there’s a limit put on the user’s spend. If an app in the Kids’ section has five books to buy through IAP for $1 each then that user can only ever spend $5 in that app. Compare that to a a popular game like Candy Crush, the potential to spend is unlimited.
KS: What was the average price point for the apps? Why do you think that price is so popular?
Dubit: The average price point is $2.99, which is high enough to appear premium without being so high that it looks expensive. It’s the price used by Toca Boca and the Peppa Pig games so it’s also possible that it’s the popularity of these brands, rather than the popularity of the price point, that makes it so prevalent. However, these apps and others in this bracket very rarely used IAP, only 3% did. So for $2.99 the parent is buying a complete product. Compare that to apps priced at $1.99 and 99c, 16% and 17% of these price points respectively also use IAP.
KS: How does age affect pricing?
Dubit: Age didn’t affect pricing as much as we expected. For under 5s and nine to eleven year-olds the most popular price point was between 1.99, $2.99, whereas the peak for six-to-eights was at $3.99-$4.99. Apps aimed at nine-eleven year-olds had the lowest proportion of free apps in the highest grossing chart.
KS: What role does education play in determining price?
Dubit: Many apps in the highest grossing charts have an overtly educational title, although we don’t know if this is the reason why they’re placed so high. For instance, around a quarter of the most successful apps in our study featured terms like ‘phonics’, ‘maths’, and ‘ABCs’ in their title. Away from the more overtly educational titles, the majority of successful kids apps contain some form of educational benefit, whether that’s matching colors or learning sums. The same could be said for much of kids entertainment.
KS: Are there any tips you have for developers looking to create a monetization strategy for their apps?
Dubit: To begin with, if you’re developing for young children you shouldn’t be afraid to charge for your app, especially if it’s aligned with a known brand. But it’s not possible to have one rule for all children’s apps, the strategy has to match not only the market but also the app.
As a general rule we advise our clients to consider children’s apps as a hub, or a storefront for your future apps and games. It’s much easier to suggest new apps or content within an existing app then to expect the child or parent to find new ones in the App Store, especially if you’re not working with a recognised IP.
KS: Where do you think pricing will go? Will there be more IAPs in the future?
Dubit: We expect to continue to see a range of pricing strategies on the kids’ section of the App Store and also an increase in IAP as discoverability becomes a bigger issue. discoverability is already a challenge and it’s one of the reasons why games sell expansions, such as extra levels or books. Creating an excellent hub-app allows your brand to become the destination parents and children go to for more games, rather than the App Store. It’s what apps like the hugely popular Disney apps, Disney Junior Play, Disney Storytime and Disney Princess: Story Theater are doing already.