This post originally appeared Kidscreen.com under the title "If you have no scruples, your game can make $600,000 a day."
http://kidscreen.com/2013/07/15/if-you-have-no-scruples-your-game-can-make-600000-a-day/

Yes, you read that correctly. Candy Crush Saga, a puzzle game, is estimated to make more than $600k daily (Business Insider). Not $600 a day, which would actually be respectable, but $600,000.00 smackeroos every single day. On a game you can play with Apple and Android devices and on Facebook.

Puzzles & Dragons, another puzzle game (with role playing as well), made about $3.8 million per day in April of this year (Guardian).

I’ll wait while those numbers sink in.

Now, before you start counting the dollars, know that in the current environment, your children’s app will not achieve the same success if you use a similar business model, known as free to play.

In this uncharacteristically long post, I’ll discuss

1. The business model known as free to play

2. The design features of free to play games

3. The psychology behind the monetization of free to play games

4. The state of the debate on whether free to play games should be used in the children market

1. The business model known as free to play

Games like Candy Crush Saga use a business model generally known as free to play (sometimes abbreviated f2p or called freemium). It’s essentially an in-app purchase model but it incorporates behavioral economics into the pricing strategies, many of which are quite aggressive.

CandyCrush

Zynga is largely responsible for putting the free to play model on the map, including with Mafia Wars and Farmville. The model has always been controversial, but the concerns focused around monetization strategies in general (not specifically about children) because the games were limited to Facebook. Now that the games are available on mobile devices, they’re much easier for kids to access, elevating concerns that children are able to spend large amounts of money accidentally or without understanding the implications.

I’ve discussed the issue of accidental spending before and Apple recently settled a lawsuit around in-app purchases by kids. Accidental spending can generally be abated with gates that are difficult for children to navigate (such as an advanced gesture or a math equation) as well as explaining to parents how to manage their settings to require a password to be entered for every purchase on a device.

The other concern with free to play games centers around the monetization practices that can’t be protected with an advanced gesture gate because they require psychological maturity in order to make rational purchasing decisions.

2. The design features of free to play games

Before the psychology, though, these are basic features that define free to play games.

The initial download or install is free. At the simplest level, free to play games are available to play without any advance purchase. You can then begin playing the game for free before you begin to encounter points where you are presented the option to pay money for additional content or features.

The game can be played end-to-end without ever paying. Free to play games often start as skill-based games, where you can quite manageably play without paying, but then transition into levels where it is possible to play for free but it would be far easier if you paid.

The game have barriers to slow players who do not want to pay. I’ve currently only spent $4 on Candy Crush Saga and I’m on level 103. But that means it has taken me a lot longer than some people. I’ve been stuck on some levels for a week or more because I can only play in short spurts. Candy Crush Saga is designed so that you have five lives to use. If I use a life by not successfully completing a level, it takes 30 minutes to replace that life. I can only ever have a maximum of five lives. So if I use all five lives and put the game down for 2.5 hours, I’ll then refill all five lives. But I can also pay $0.99 or I can post to Facebook that I need help (thus spreading the word…) to be able to play more sooner.

In this way, while it’s possible to play the game without paying, it will take you far longer to progress through the game. In other words, you will pay with your time.

Candy

The game does not offer an option to unlock all content for a single, high sum of money. Some games offer an option to download all the content for some large amount of money, like $50. That’s more inline with in-app purchase models for content than it is with the idea of free to play games. And developers sometimes take heat for high-priced in-app purchases.

Analytics are used to identify pain points and target users who are most likely to pay. Data can be used for good and it also can be used for to make money… Which brings me to the psychology of free to play.

3. The psychology behind the monetization of free to play games

A few years ago, Roger Dickey (of Mafia Wars and Zynga) coined the phrase “fun pain.” It’s the parts of the game that involve grind. Grind tends to be an annoying experience or task that you tolerate because you know it gets you to the fun parts.

In free to play models, the game will progress to a point where you encounter a pain point and then offer the player a way to release the pain, generally by paying for an item.

In Candy Crush Saga, the puzzles have a limited number of moves you can make. If you don’t win the board in that number of moves, you lose a life and have to start over. I’m often one or two moves from winning the level when I run out of moves. I can then pay $0.99 to get more moves (and win the level! FUN!) rather than start the board all over again (PAIN!).

Another (disturbing) way to label the practices of free to play games is coercive monetization. The player is essentially manipulated into making a spending decision under emotional duress or with limited knowledge. The example above is one such example, but others include

If you haven’t played any of these games, I’d highly suggest you spend some time playing something like Candy Crush Saga to experience first-hand the monetization points and the emotion you feel when presented a purchase option. It’s powerful stuff even for us as adults.

Which is why it’s incredibly challenging to think about whether it’s possible to use the model with children.

4. The state of the debate on whether free to play games should be used in the children market

In the business of children’s app development (and in children’s media in general), we generally have two bottom lines — financial and social good.

In other words, we need to make money. But we also need to do what’s best for the children.

That means the business models available to our products generally comprise subscriptions, premium (one-time payments), free (under the logic that it’s marketing for another product), advertising-supported, and free to play either as in-app purchases for content/episodes or the model discussed above. In an era where the audience increasingly want free options, the performance of free to play games like Candy Crush Saga makes it a compelling model to explore further.

It was not so long ago that in-app purchases for content and episodes were thoroughly villainized in the children’s community. Best practices around in-app purchases have emerged, including the use of gesture gates that slow children from making accidental purchases. High-profile apps, including those by established brands (e.g., Sesame Workshop, Highlights for Children) and new brands (e.g., Kidaptive) use in-app purchases for content with little push-back. One year from now, will we be talking best practices in free to play games rather than arguing about the model?

But is it actually possible to ethically implement free to play for children?

That was the question put to me as part of a panel at The Children’s Media Conference in Sheffield, England.

The answer is not easy. Simply the idea of free to play for children is fraught with a lot of heated discussion, as you can see from the conference summary post as well as from Stuart Dredge’s Guardian article “Apps and games for children need to entertain — and educate.”

If a developer were to attempt the free to play model as designed in Candy Crush Saga but aim for the kid audience, the backlash would be enormous. Kids simply don’t have the psychological maturity to be able to evaluate whether the purchase decisions are actually good or coercive. Most adults struggle with that, too! So any developer attempting a free to play model would have to make significant modifications to the model. Without those aggressive monetization strategies, it would almost certainly mean a significant reduction in profit.

That’s why I said that you will never see even a fraction of $600k a day earnings if you implement this model for children or in a family-friendly way. The gates to slow down kids from making poor decisions would also slow down revenue. Parents would have to be involved to manage how much money a child can spend, and as soon as you add another layer, the profits drop. Subscription models are so challenging for this reason, too.

One thing that was clear during the Children’s Media Conference panel is that for a company to successfully implement this model, they would have to build an enormous level of parental trust, both as a brand as well as in the restrictions in-game. So perhaps Nick Jr. or Toca Boca could in fact do a free to play model with relatively little push-back from consumers? But would it monetize as successfully as their current premium purchase model?

To find the answers to free to play, we need to continue the discussion as a community of developers. Is there really a way to marry the financial and social responsibilities in free to play? Or is that only an option for those with no scruples? Are we better to implement in-app purchases and ad networks like the recently announced one by SuperAwesome? GamesBrief brought up this question of monetization and ads in children’s apps

If you want to read more on the subject of free to play beyond the articles already linked above, check out

I’ll be at Casual Connect in San Francisco at the end of the month, including showing off Williamspurrrrg at the Indie Prize Showcase. Yell if you’ll be there! Or sign up for our No Crusts newsletter or follow us @NoCrusts! Additionally, if you’re a developer willing to share some stories or post-mortems or if you have additional questions on any topic we discuss, please drop us a note at [email protected].