The Kids App Market, Part 2: Q&A

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The Daily

My last post about the kids app market received a lot of interest and a fair bit of feedback too. It’s very rewarding to write when people take the time to read it. Thank you.

To honor the feedback that I got, I will address a few additions and questions here below. The third and last part of this series will be a wish list of improvements and changes that I think would improve the market.


– Where is the publishing and toy industry?

This is a fair question, especially since the early days of kids apps was mainly animated books. Toca Boca was also acquired by a toy company, so clearly there is a connection here.

In short, I look at them in the same way as the entertainment market. Both their strategy and outcomes are the same, more or less.

Longer version: In my model of the market, I chose to only include Gaming, Technology, Education, and Entertainment. This was a simplification to make it more clear. From a structural perspective, however, the publishing and toy industry treat the market very similarly to the entertainment industry. It is a supplement to their main business, and primarily serves a marketing purpose. Their apps are, mainly, created as a consequence of other products being developed first. This is what makes them a good candidate for licensing. You generally wouldn’t license out the categories that you consider your core business.

It is fair to say that there are more players in the market than I initially described, but the additions don’t warrant further analysis if you understand the entertainment side. Their strategies are almost identical.


– What’s the responsibility of parents that don’t pay for high quality apps?

Simply put: Why don’t parents pay for great apps? Wouldn’t this solve everything? In fact, many do pay. But they have stopped paying in the way that a lot of developers prefer, which is upfront. They are also not buying the apps of the highest quality, but rather the ones that are the best at marketing. But since the kids grossing top list is still growing, it means that more money is being spent in the category overall. So where is this discrepancy of perception coming from?

A large part of the kids market frowned upon using in-app purchases for a very long time. It was seen as unethical to try to sell to kids in the middle of their app experience. There’s still a strong case to be made for this, from an experiential point of view.

What’s changed is how parents choose to spend their money. They want to try before they buy. They are surprisingly fine with subscriptions. But the developers of high quality apps don’t necessarily have a product strategy (or overall philosophy) that aligns with this shift in consumer spending. It’s a bit of an indie mentality where you hold onto what you think is right, even if the world has moved on. For better or worse. The paying parents are still there though – they are just paying in different ways.

Then there are the parents that don’t pay at all. Regardless of the business model. And this is the vast majority of parents. They simply don’t value or perceive the quality to be high enough to justify the price. There are countless free apps for kids that seem fine. Why pay?

One reason for them to pay could be to avoid advertising or to not get your kids’ privacy violated. But in order for that to drive a purchase, you have to:

a) know that it is happening,
b) perceive it as an issue you’d like to avoid,
c) preferably have an equivalent alternative to purchase instead.

There are issues with all three of these prerequisites in the market today. For many parents, this is not clear at all. That being said – there are countless parents that do acknowledge it, complain loudly, and still won’t pay a penny to solve it. It would be better if they did. But this is unlikely to change.

I’m not saying that it is parents fault that the kids app market is hard. It’s not Apple’s or Google’s fault either. Or the developers themselves. But I am saying that all three parties could have – and can – do better.


– What are the advantages of making kids apps?

Perhaps my last post came across as more gloomy than intended. You can be successful in this market. I have been so myself. What I tried to illustrate were the complexities of the market. That naturally skews towards challenges rather than opportunities. But let’s switch sides a little, and shine some light on three positive aspects instead.

1. A recurring target group

If you’re 35, an app you downloaded five years ago is going to be pretty dated by now. Your expectations are higher than they were then. Your taste may have changed.

For a 3 year old, this is not necessarily the case. The 3 year old that is now 8 will feel similarly, but now there’s a new 3 year old in the market instead. And a 3 year old now, compared to a 3 year old five years ago, is going to be pretty similar.

What does this mean? It means that if you make a fantastic app for a 3 year old, it’s probably going to be fantastic for 3 year olds for a very long time. This creates a steady stream of new customers to a product that you finished a long time ago. This is a huge opportunity, if played the right way.

Some regular games fall into the retro category and experience something similar. But it is rare and tends to take much longer. Super Mario Bros 3 is still awesome (and was released in 1988).

2. International kids are similar

With a similar line of reasoning as above, a Chinese 3 year old is considerably more similar to an American or a Norwegian 3 year old than the 35 year olds. Cultural context gets added over time, and in school especially. For developers this means that if you have a great app in one country, other countries are likely to agree. With ecosystems like the App Store that lets you publish to over 100 territories with a single click – this is a big deal and something you should make the most of.

Parents, however, are not especially similar. Language alone can be a barrier. So the marketing will be a challenge. But compared to making a completely new app for a geographical market, this is a big opportunity to take advantage of.

3. It’s simple (but not easy)

Compared to many other categories, developing for kids can be quite simple. By simple, I mean that you don’t need to run constant A/B tests, yield optimizers for ads, price sensitivity testing, live ops management, or community engagement campaigns.

Look at Toca Hair Salon for instance. It is one of the most successful kids apps of all time. It doesn’t even have a backend. Everything lives in the app itself, works offline, and requires no server costs. Over time, this means the app is running at 0% margin cost and 0% distribution cost (minus the 30% cost of sales). Year after year (as per point 1), and in every market (as per point 2). That is a great business.

Now, it isn’t easy to make an app like Toca Hair Salon. But it is simple to run it, once you have it. That’s more than can be said for most regular games and online services.


– What about the ethics of marketing to kids?

This is a tricky one. And I’m no ethicist either. But I’ll offer a few pieces of advice to consider at least.

  • Do your homework before you start. There are a lot of resources in this space. I suggest you start looking at the Designing for Children’s Rights Guide.
  • Take kids seriously. They’re not small adults. They’re not stupid. They shouldn’t have to settle for less. This might sound obvious, but spend five minutes looking at marketing for kids and you’ll see why this is advice is needed.
  • Make your own guidelines, and stick to them. It is easy to get caught up in trying to increase conversions or click-throughs. But making your own framework can be a good ethical railing to hold onto when you get deep into operations.
  • Avoid all dark patterns.
  • Consider the context you are in. This isn’t your average “buy-500-gems-get-250-for-free” game. Or at least it shouldn’t be. Because the notion of buying virtual gems is predatory if the user can’t distinguish what that transaction entails. This goes for how the product is designed, and subsequently for how it is marketed (inside and outside of the app).
  • Follow the law. Know your COPPA and your GDPR-K. They are there for a reason.

This summarizes the majority of the feedback and questions that I received. As mentioned, the third and final part of this series will be a wish list of how things could be improved to make this market better for all parties.


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8 Comments

  1. Hi Björn,

    Very nice articles – thanks for writing them.

    About “You can be successful in this market. I have been so myself”. As you wrote, it is a complex market nowadays. I’m wondering if you still can be successful if you don’t have enough fund to market a new app (eg Apple ads, FB,…) which means having a very good long term user value to pay for these expensive ads, which means you need subscriptions. Visibility is the main challenges and even if you’re featured by Apple/Google it seems it is not enough.

    • Björn Jeffery says

      Thanks for the comment, Pierre. Is it possible to be successful from scratch, starting today? I want to say yes, but I can’t offer up a bullet proof plan that will get you there. Even funding the development of a new product with the quality that is required now, would not be easy. This is undoubtably a difficult time to enter the market.

  2. Hi Björn. Like others have said, thanks for these insightful posts. I was wondering if you have a reference for this excerpt?

    > What’s changed is how parents choose to spend their money. They want to try before they buy. They are surprisingly fine with subscriptions

    • Björn Jeffery says

      No formal figures or data unfortunately (there’s isn’t any, to my knowledge). But if you look at how the Kids Top Grossing list has changed the last few years, the trend is very clear.

  3. Pingback: The Kids App Market, Part 3: A Wish List – Björn Jeffery

  4. Andrew Kao says

    One question we have been wrestling with is, there are clearly parents who value the same experience differently. Some parents are willing to pay high subscription price, then there are others who would complain if they have to pay even a little. Ideally, you would figure out a way to charge different amounts to these different parents. In the general mobile gaming space, this problem is solved by designing a virtual currency economy. What’s your thought on what an equivalent may be in the kids space? This is a topic that we have been thinking a lot about. Virtual currency for a young kids market doesn’t seem appropriate (or effective), but without it, it’s not clear what such a model would look like..

    • Björn Jeffery says

      It’s hard to tell of course. But I would assume that the creation of virtual currency for kids will create new problems rather than solve the ones you have now. A lot of parents just don’t want to pay. It might be better to just ignore them and focus solely on the ones that do.

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