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Monetizing Children

Applied Virtual Economist Ramin Shokrizade explains the biological link between children and vulnerability to coercive monetization models. He appeals to the interactive media community to act proactively to protect the next generation of gamers.

As uncomfortable as this subject makes me, I feel that as a community we need to start discussing the subject of how we sell games to children. A number of major studios have been asking me questions related to this under NDA, but I think this conversation needs to also be public. For brevity sake I am not attempting to make this a scientific-grade paper, but I do need to introduce some research because there are many layers involved in this discussion.

First I would recommend the cover article in the May 20, 2013 edition of TIME Magazine. The part that most interested me was the finding that the Millennial Generation exhibits three times the rate of narcissism as any previously studied generation. While the exact source is unknown, I don't think it is our rapidly changing diet of food, but our rapidly changing diet of media that is the primary source.

While I think everyone will feel confident pointing fingers at the social mechanisms that children learn from sites such as MySpace and Facebook, I have to believe that interactive media is also to blame. It would be just a bit too convenient to blame “the other guys” when games have such a profound effect on learning.

With infrastructure decaying in the USA, in the form of just about every sort of infrastructure you can think of (roads, bridges, dams, schools, etc.), you could say previous generations were a bit selfish in not leaving the same opportunities to their children. With real incomes going down. budget deficits rising, and borrowing from the social security fund putting its integrity in doubt, you could say that the selfishness of previous generations was unprecedented. Finding out that this trend might be increasing by even 10% in the latest generation would be catastrophic news. Finding out that it is increasing by 200% is, well, a good time to reflect on the future of our species.

Numerous studies have shown that interactive media affects brain development. Some studies show positive results, some show negative results, and some show both. What is certain, is that exposure to interactive media changes the brain. What is also certain, at least in 2013, is that we really don't know how or how much yet

The Role of the Prefrontal Cortex

Here I am going to use the US Department of Health and Human Services and the wiki on “Maturity (Psychological)” as references.

The Prefrontal Cortex is the slowest part of the brain to develop as the brain generally develops from “back to front”.

This brain region gives an individual the capacity to exercise “good judgment” when presented with difficult life situations. Brain research indicating that brain development is not complete until near the age of 25, refers specifically to the development of the prefrontal cortex.3

What this means is that the capacity to make sound long term judgments is not just a psychological state, but a biological state that is age dependent.

The pre-frontal cortex, which is responsible for higher cognitive functions such as planning, decision-making, judgment and reasoning, develops and matures most rapidly during early adolescence and into the early 20s.[17] Accompanying the growth of the pre-frontal cortex is continued synaptic pruning (the trimming of rarely used synapses) as well as an increased myelination of nerve fibers in the brain, which serve to insulate and speed up signal transmission between neurons. The incomplete development of this process contributes to the finding that adolescents use their brain less broadly than do adults when asked to inhibit a response and show less cross-talk (communication across diverse regions of the brain).[18] The brain’s “cross-talk” may be related to decision-making concerning risk-taking, with one study of American adolescents finding delayed reaction time and decreased spread across brain regions in a task asking them to determine whether a dangerous action is a good idea or not.[19] Steinberg observes that there is close overlap in the activated brain regions for socioemotional and reward information, which may pose a challenge when making decisions in the most high-risk peer contexts.[20] One study found that preference for small immediate rewards over larger long-term rewards was associated with increased activation with regions primarily responsible for socioemotional decision-making.[21]

Okay now if were to consider the design technique that Zynga describes as “fun pain”, the idea is to inflict some very uncomfortable situation on a player in their game, and then offer to remove that situation in return for money. While the vast majority of adults will make the assessment that it is in their best interest to not spend the money and to just exit the application that is designed to hurt them, it is biologically harder to come to this conclusion if the decision maker is a child.

Coercive Monetization of Children

Now if I was a company that wanted to sell a product to consumers that most adults would correctly identify as being a bad idea, what would I do? If I could market my product to humans that were too young to correctly evaluate the long term effects of using my product, that would make things a lot easier. Marketers are adept at this, and we already saw this with the Camel cigarette commercials that had Joe Camel in the form of a cool cartoon character. It took a generation to regulate the end of children being targeted by the tobacco industry.

Now we have Facebook which has become a staple of childhood socialization. A child's social worth is largely determined by their mark on Facebook. I find it extremely difficult to believe that the almost universal use of coercive monetization models on Facebook is a coincidence. I find it even more unlikely that the almost universal use of cartoonish and child-like characters (with their large heads and big eyes) in Facebook games is a coincidence. Ten years after the end of Joe Camel's pied piper rampage came to an end in 1997, it just seems like the same marketing campaigns found new life. I discuss briefly what makes a monetization model coercive in my Systems of Control in F2P paper.

As I discuss in my 2011 Zynga Analysis paper, major retailers will sell Zynga time cards for cash to children of any age, without the presence of an adult. The impending move by Facebook to remove their currency and shift sales to native currencies on FB games may improve the situation in the future, or it may just channel the traffic of minors to those games that have their own currency cards.

Solutions and Best Practices

I believe that the use of real money or its equivalent (premium currencies) should be removed as an option in games without the explicit informed consent of parents. I don't think the availability of a credit card necessarily constitutes informed consent. Can a parent that has her credit card “borrowed” by one of her children have all charges reversed if she finds it was used without her consent?

What I am also getting at here is that I think the use of premium currencies by minors is not a best practice. Children are not in a good position to judge the value of purchases without parental supervision. The use of common currencies in games for children is great, since this teaches them math, budgeting, and maybe even economic skills. I don't think in app purchases (IAPs) belong anywhere in games marketed to minors. If your response is “oh that is going to make it a lot harder to sell microtransactions”, then I'm going to suspect this is an admission that you know children are more vulnerable to suspect monetization methodologies.

When you sell a game to a child, it is a very difficult situation because you are not monetizing one person. You must sell to the child and the parent at the same time, both parties may have conflicting objectives, and both have veto power. This gives rise to the need for a new class of monetization models I call “dyadic” models. These models react to the needs of both parties and meet both simultaneously. This can be done without the use of IAPs and premium currencies. Transparency is key, the adult should be able to understand very quickly exactly what you are selling and why.

Future Trends

When a company deploys a pay to win game, they are essentially saying “I will reaffirm your notions of superiority over others for a price. You can beat anyone if you spend enough. Those that are not as narcissistic as you will leave but our marketing team will make sure they are quickly replaced, because we can't sell to you if you can't lord over anyone.” So perhaps this is just a natural adaptation to an increase in narcissism in society. But what if we are creating this narcissism by rewarding it? Which came first, the chicken or the egg? I am guessing it is both, and as I have said earlier, we are not the only complicit branch of media.

I think it is inevitable that some companies will iterate towards even more exploitation of children in games. The most aggressive companies will hire soft and hard scientists like myself, in addition to quantitative scientists, to optimize the exploitation of youth. The ultimate result will be national regulation, which is already happening in some parts of Asia. In the meantime, such agents will try to make as much money as possible in this Wild Wild West of gaming.

Concerned consumers and the companies seeking to sell to them may create a new class of “Child Friendly F2P” games that savvy parents can steer towards. I know there have been some efforts in this direction, but I think they can still do better. To my knowledge even the games marketed currently as such still have premium IAPs and currencies. As consumer demand for these types of products increases, the money to be made via this path will get quite lucrative.

The longer we keep trying to exploit our children with our questionable business models, the worse our reputation in society is going to get. Every time there is a case of youth violence and the other branches of media say “the interactive media industry is at fault”, it is going to just get easier and easier for them. At some point even the more rational decision makers in society are going to have to put the hammer down on us, whether we collectively deserve it or not.

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