In-App Purchases in Children’s Online Games



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In-App Purchases in Children’s Online Games
A report for the All Party Parliamentary Group for

Children’s Media and the Arts


By

The Children’s Media Foundation



All Party Parliamentary Group for Children’s Media and The Arts

Chair: Baroness Benjamin of Beckenham

Vice-Chairs: Damian Hinds MP, Tom Watson MP

In-App Purchases in Children’s Online Games
At the inaugural meeting of the All Party Parliamentary Group for Children’s Media and the Arts in 2011, Ian Douthwaite from Dubit Limited presented some of his research into ‘what children are really doing online’i. It was clear then that while traditional TV advertising and content for children is well regulated, the internet is still a new frontier. Since 2011 there has been much concern and some action to improve child internet safety with the Bailey Review’s recommendations such as www.parentport.com being implemented. Nevertheless ‘safety’ is generally seen to concern a child’s emotional and physical well-being rather than financial. So less attention has been paid to how online content for children makes its money.

Games will always be in the mix for kids online. Dubit’s research showed that Under 11s particularly love the mini-games – “shoot ‘em ups” or “dressing ups”. These are a heavy focus for Media Brands such as Disney, CBBC and Nickelodeon. With the need for commercial companies to make money they are ad-monetized. Dubit’s research showed that children hate adverts on screen and ignore them. They don’t see them.. In fact adverts may have very little relation with the audience, for example Mini Clip carries adverts for Kodak. However, parents may ask: if this is so, why do companies pay vast sums to advertise at all? Is the effect subliminal? Will the effect be felt in the future? This is an area that needs research. In the meantime, it is fair to say that if kids don’t like adverts, neither do their parents.

In 2011, Dubit highlighted the trend for “Advergames”: more controversial than mini-games because the central reason for the game’s existence is the promotion of a product. Again one could assume ‘brainwashing’ but as yet there is no evidence. Another area rapidly growing in 2011 were ‘Freemium’ games: an early example being Farmville, free to start playing but with micro payments later that could quickly add up. So much so that the business earned millions and ‘freemium’ has become the business model for the apps and games that have mushroomed with the increasing popularity of smartphones and tablets.

All in two years.
So what are kids doing online now? Dubit’s latest research (a survey of 500 6-12 year olds)ii shows that when children reach the age of eleven their internet use increases at a dramatic rate. By the time they’re 14 they are spending five and a half hours online on a weekend day. 63% of children now have access to an iPad or another tablet at home (either their own or they use their parents). While 12 year olds are less likely to own their own smart phone, 62% have access to one (iPhone or android) and 31% have access to an iPod Touch. It’s at this age, around 12, that the divide between how much time the parent thinks their child spends online alone and the time the child reports in the survey gets wider. With parents increasingly unaware of their child’s online time, so they become increasingly out of touch with their child’s online spending habits.
Two years ago this lack of parental knowledge and confidence was deemed a problem in reports such as The Bailey Review. So it is worth considering Dubit’s more recent research into parents. 91% of parents now play mobile games: clearly now much more au fait with the online world their children inhabit. But it seems the majority of this game playing is for free: 66% of parents have never paid for in-app purchase and 83% of parents don’t let their child make such purchases.

Looking specifically at games and in-app purchases, 59% of children say the games they play have options to buy something (for example membership or items used in the game). But only 32% have actually paid for or bought something within a game. Of those children who play online games but don’t pay, 68% say this is because their parents refuse permission. 35% said they didn’t buy anything because the free part of the games were enough fun. Of the children allowed to make in-app purchases, 87% of children always ask their parents’ permission first. A further 11% usually do. Apparently leaving only 2% who just do what they like. It seems that despite children’s increasing online independence, the majority will speak to their parents if a site asks for parental consent and abide by their parents’ rules.

So how do children make online purchases? The research two years ago showed a number of methods: paypal, a child’s own debit card, i-Tunes account, for example. But the majority were made using a parent’s credit card (60%). It could be argued that parents still have control. It could also be argued that by giving their credit cards or I-tunes password to their children to use unsupervised on the internet, parents forfeit control. Dubit’s latest research found that of the children allowed to make in-app purchases, 41% know their parent’s details and 51% don’t. It is worth asking whether this 41% would be allowed to roam free in a toyshop with their parent’s credit card details. It is certainly asking a lot of children to make wise purchasing decisions when caught up in the fun of a game.

There have been numerous stories in the press about children running up enormous debts playing games (Schoolboy, 6, runs up £2,000 credit card bill playing Tiny Monsters app on grandfather's iPad, Daily Mail 19.9.2012). Stuart Dredge in his Guardian article, 10 Mobile Games for Kids with £69.00 in-app Purchase Options iiishows the ease with which in-app purchasing can get out of hand. As the article title suggests, there are at least ten mobile games that start either free or for a minimum payment but inside which purchases to enhance the game can rise to £69.00. That sounds like a lot of money for a virtual bag of virtual goodies. But £69.00 is about the price of a Kre-o Transformers Optimus Twin Cycles toy or a Toy Story Buzz Lightyear and if the child gets the same amount of play value and pleasure, then a parent may consider it money well spent. Nevertheless, what is at issue here is not the value of the purchases but the ease with which they can be made and the extend to which operators are reluctant to provide failsafe mechanisms to minimise risk of overspending. For example, an i-Tunes password has a window of 15 minutes before you need to put it in again, even for new purchases, leaving the field open to purchasing, which unscrupulous app developers may exploit:

To be fair, there are companies that take steps to minimise the pain the parental purse might feel. For example, Nickelodeon’s new Spongebob Squarepants game Spongebob moves in displays a pop-up message at the beginning warning there are things to buy and advises parents how to lock the ability to make in-app purchases.iv
Furthermore Apple’s App Store now carries a guide for parents on its home page. This provides advice on passwords and restricting in-app purchases. Also the App Store’s game listings now carry a note alerting buyers if the title offers in-app purchases. However, this alert doesn’t show on the search results page, from where games can also be downloaded.
Another helpful practice is seen on the free version of Angry Birds: Star Wars, which allows parents to remove adverts. This game and other free games, such as Real Racing 3 do offer the potential to pay for extra levels or enhancements to the game. But all prices are clearly displayed before the player is taken to a payment screen and there is no direct exhortation to purchase.

But other games are not so clear. Candy Crush Saga for example provides a note in the game’s profile on the Play Store that the game will require in-app payments and also provides instructions how to block this. However when the player runs out of moves in the game, they are asked if they wish to ‘play on’ or end the game. If they ‘play on’ they are taken to a payment screen. There is no warning. Other practices that at best fail to recognise a child’s vulnerability and at worst exploit it, include not displaying prices until the last moment or using direct exhortation. For example if a player wants more doughnuts in The Simpsons: Tapped Out (the currency of the game), they are asked if they want to ‘get more’ or ‘cancel’. By clicking ‘get more’ they are taken to The Store. Here various doughnut quantities are listed but their prices are not. Prices are only revealed once the player reaches the payment option. Football Manager
and Smurfs’ Village both use ‘Buy Now’ buttons, i.e. direct exhortation, to purchase. Finally some games offer an easy ‘pay by mobile’ option. Under Digital Marketing Association’s Code of Practice 19.24, mobile payments cannot be accepted from under 12s without parental consentv. Now while some games like Candy Crush Saga or Football Manager could argue that they are not strictly for children, games such as Bin Weevils state on their homepage that they are. Indeed Bin Weevils is hugely popular with kids. It sells its membership using graphics displaying ‘pay by mobile’.

Against this backdrop of good and bad practice, and alarmist press reports, research shows that of the children allowed to make in-app purchases, 73% say the most they’ve spent on a single purchase is £5 or less. For 24% it is less than £1. The horror stories exist but it would seem they are rare occurrences.
On-line games and apps are very popular with both children and adults but they do not make themselves and their producers have to earn a living. Sources of income boil down to advertisers, players and/or the players’ parents. Given that previously there were concerns about advertising to children online, it is worth noting that when asked if they would be prepared to pay £1 to remove adverts from an app their child was using, 62% of parents said “No”. As the efficacy of advertising on children’s sites is questionable and likely to be as regulated as more traditional media, this leaves in-app purchases as the most attractive and possibly the only revenue stream for producers.

As highlighted, there are good and bad practices that the Office of Fair Trading should consider encouraging or discouraging as appropriate and possibly through regulation. When children are involved, leaving best practice to the goodwill of companies is perhaps not the best practice itself. Looking at the selection of games that children are enjoying, it is also clear that there is no clean delineation between what is intended for children and adults. IOS7 is considering having a dedicated kids category but as yet Apple has yet to define what a kids’ game is. In the United States, COPPAvi has attempted to define children’s online services as “a commercial website or online service that is targeted to children or a portion of a commercial website or online service that is targeted to children.” With effect from July 1st it will also regard a site targeted at children as one that uses music content or celebrities that appeal to kids. But given that children enjoy Farmville, Candy Crush Saga or The Simpsons for example, i.e. games not strictly intended for children, this definition is inadequate.

Looking away from the children’s realm, it is worth considering how late night gambling and call TV shows have introduced payment caps and twenty-four hour cooling off periods to help protect hard-core gamblers from themselves. Most bank accounts put spending limits on debit card purchases, requiring the account holder to confirm their identity if they want to spend more. App stores could do something similar: small purchases done against an account pin number, larger purchases needing to be checked against the original credit card details to verify it is the account holder and not a child.
The danger with putting heavy restrictions on in-app payments is that it could kill off the producers who need to make a living. A blanket ban on products containing High Fat, Sugar and Salt being advertised on children’s TV had an unforeseen devastating effect on the UK children’s TV industry. So the recent news of the Video Standards’ Council developing a Pegi for apps sounds an excellent innovation. The VSC’s current ratings are easily understood and give the consumer choice, whether it’s for film or games and the proposals for smart phones sound as equally useful: not just providing an age range but icons that will warn of in-app purchases, social interaction, location data sharing and personal data sharing with future parental controls. These would be invaluable for parents and other consumers.

If such ratings are deemed inadequate controls then perhaps we need COPPA like regulation: insisting that if a service is knowingly used by a sizeable proportion of children, there must be a duty of care on advertising, in-app purchases etc, with safety features in place (such as the mobile rules or ATVOD rules). Or perhaps pressure could be put on gatekeepers such as Apple and Google to put technical measures in place, such as a daily spending cap, beyond which the consumer would have to go through a more complex validation process. This would help vulnerable adults and children especially. ATVODvii rules on pin protection for TV video on demand platforms and the gambling thresholds are strong evidence that there is a middle way between heavy state intervention and leaving it to the market.

In conclusion: It would seem from Dubit’s research with children and their parents that while horror stories exist, the majority of parents and children play online games and apps responsibly. In-app purchases are roughly pocket money prices, or the equivalent of many toys and a vital source of revenue for the producer. What seems unfair and unhelpful is when a game doesn’t offer a child or parent sufficient warning about payments, uses direct exhortation, or fails to give the player choice (taking them directly to a pay page without warning). It could be argued that these practices are unfair trading standards for all, not just children.
Jayne Kirkham

With thanks to Marc Goodchild, Paul Rayment



27.6.2013

i “What Children are Doing Online”, All Party Parliamentary Group for Children’s Media and the Arts, Annual General Meeting, House of Lords 7.6.2011

ii Dubit Limited, The Half Roundhouse, Wellington Road, Leeds, West Yorkshire, LS12 1DR www.dubitlimited.com Dubit Limited uses a child-centred approach, using extensive research, to help brands develop, test, and launch kids’ digital content. Research includes market scoping and ethical marketing with the aim of making research and marketing companies listen closer to what young people want and involve kids at the heart of their business. Dubit is a frequent adviser to the media and not-for-profit sectors, including the Department of Culture, Media and Sport, The Arts Council of Great Britain and BAFTA.

iii “10 Mobile Games For Kids With £69.99 in-app purchase Options” Stuart DREDGE, guardian.co.uk, 7.6.2013

iv “Spongebob Squarepants Mobile Game includes £69.99 in-app Purchase Option”, APPS PLAYGROUND www.appsplayground.com 6.6.13


v “Code of Practice” Direct Marketing Association, 4th Edition, February 2012 Version http://www.dma.org.uk/sites/default/files/tookit_files/code-of-practice-feb2012.pdf

vi "Children's Online Privacy Protection Act of 1998".

vii The Authority for Television on Demand www.atvod.co.uk






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