App Purchasing (Paid, Lite and Freemium): What’s working, and what’s appropriate in apps for kids?

by Moms With Apps on July 24, 2011

Here is the first in a follow-up series of posts from Ahmed Siddiqui, the developer of Go Go Mongo, who is compiling articles of interest from the MobileBeat 2011 Conference in San Francisco. He started by highlighting an overview of industry trends for app developers discussed at the conference. In this post he specifically covers app purchasing methods like “freemium” vs. “paid” vs. “lite”, how they work, and the ethical considerations of using these methods in apps for kids.

Today’s blog post will serve as the primer for others in the series by discussing the concept of “Freemium”.

In the app store, we have 5 types of apps/games:

  • Paid app
  • Lite app
  • Free ad-supported app
  • Freemium app
  • Subscription app

Paid/Lite/Ad Supported

The paid app is obvious, it is an app/game you pay something for, in many cases this is $0.99.  The Lite app is typically the first few levels of the paid app, and is designed to get you to purchase the full paid app.  The free ad-supported app, is typically the full app but will display banner ads on the top, and most recently started displaying video ads, which I will discuss in a later blog post.

Freemium/Subscription

The next two are newer types of apps that came about once Apple created the concept of the “in-app purchase”.  This is where the app will ask you if you want to purchase some additional items within the game (you do not need to go back to the app store to download another app).  A subscription app works in a similar manner, except that it can be a recurring payment, like for a magazine subscription.

In the conference, it appeared that the first two types, the Paid app and the Lite app, are becoming less popular.  Many publishers are switching to ad-supported, freemium, or subscription apps.

This trend poses a big problem for educational app/game developers.  This is primarily because their apps are aimed towards younger kids where the parents are making the primary purchasing decisions.

Barriers between free and paid

My current game, Go Go Mongo! has a Lite version and a paid version.  We typically see a 20 to 1 download ratio for Lite versus paid, and the paid version is only $0.99, so the barriers between free and $0.99 is quite high.  Parents don’t have any hesitations to downloading free apps, but have a tough time parting with their dollar.

Are free ad-supported apps safe for children?

In many cases, moving to a completely free ad-supported app has its own challenges.  Younger children typically do not know how to read the ads, so the ads are not so effective anyways, and if something flashes on the screen, they WILL click on it, and not know how to navigate back to their game, requiring parent intervention.  Furthermore, there isn’t enough finite control for the developer/publisher on the types of ads being served to the kids, unless the developer/publisher is willing to scan through thousands of ads, which they most likely aren’t doing.  As a parent, it is much better just to pay the extra dollar and ensure that the kids aren’t seeing any inappropriate ads.

The next option is to make the game a freemium game.  This actually will require a re-design of the game in most cases.  Here, the child can play the game without having to pay for anything, but in order to progress, they may need to purchase additional modules.  These transactions are managed by Apple’s in-app purchase system, where a little pop-up comes up asking the child to purchase the item.  If the child presses OK, it asks for the iTunes password.  This will require the child to ask his/her parent to input the password so that he/she can proceed.

The issue is that there is a 15-minute buffer period to ask for the password again, so in case the child runs into another in-app purchase, he/she can actually make the purchase without having to enter in the iTunes password.  This can be troublesome, and there have been many cases against the makers of these games where the child ended up spending thousands of dollars on these in-app purchases within the 15 minute buffer window (case of the $99 smurfberries).

In-app purchases can be turned off in the global settings of the iPhone/iPod Touch/iPad, but many parents are not aware of this feature.  As educational game developers, we need to carefully evaluate this feature because it seems like this is the way everything is headed.  How can we utilize this feature in the most ethical way?

Freemium solutions for educational/kids games

One solution is to sell “content packs”.  This is where once a child masters a certain subject, offer an in-app purchase for the next set of games.  A good example of this would be a math game where once the child masters addition, they will have the option to purchase the “subtraction pack”, which will download the next set of levels.

Also, if the game features a character, perhaps offer the child a pack to customize their character only after they complete a set number of activities.  This would be a one-time purchase, that will give the kid access to multiple hats, shoes, etc.  This means that the parents have to pay a little more for a grouping of items instead of paying a-la-carte.  However, this could serve as a really great way to reward children for completing levels.

The next solution is to build a subscription-based app/game, which I will discuss in my next blog post, titled:  “The use of subscriptions in kids games.  Its not just for magazines!”

Developers and parents, what are your thoughts and experiences with App Purchasing? What do you prefer? What do you avoid?

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