iKids: Apps Explained!

By Heather Kenyon

On Thursday, June 2, 2011, I attended Kidscreen’s day long “everything you wanted to know about apps but were afraid to ask” workshop.  It was great!  Not only did it cover the basics, the companies attending and panelists were top-notch and the focus was on making better apps for our kids audience.  Held at the beautiful Loews Santa Monica Beach Hotel, the group was small and intimate and there was plenty of time to network.   The attendees were an interesting mishmash as we all convened from our different backgrounds—kids programming, gaming, educators, researchers, etc.—to learn about this new, historically expanding space.  How does it work?  Who are the best companies in the field?  What are the best games?  What are the problems facing this new fantastically fast-growing field?

The goal of the event was to help participants learn to bridge the gap between kids entertainment properties and app revenue through better planning, better partners and better execution.  Featuring case studies, expert panels, networking sessions, brand and developer showcases and research presentations, the program delivered.  I went in knowing a tiny amount (we’ve ALL heard of and played “Angry Birds” right?) but not much more.  Anytime there is a six year old that knows more than you … you are in trouble.  So off I went and I was not disappointed.

The Hardware Lay of Land

Prior to this event when I heard app I immediately thought of my iPad but this isn’t even close to the current biggest delivery device for apps.  Early in the day we heard from Nielsen, which is quickly moving to get specs on this space for us.  Cel phones are by far the biggest delivery systems for apps, with media players and tablets (like the iPad) trailing behind with only 5% penetration.  38% of the connected devices in the US are to smartphones.  In fact, Nielsen is predicting that by the end of this year the majority of phones that people will own will be smart!  With 280 million mobile subscribers in the US alone we can see the potential for this market.  The top smartphones are the Blackberry, iPhone and Android.  Android is aggressively rising fast.  Unlike the iPhone, which is an Apple exclusive, Android is technology that can be wrapped in any brand of phone or tablet (like Barnes and Noble’s Nook Color).  We are already seeing over 150 of these Android products in the marketplace and there are no signs of stopping.  Many of the developers at the conference referenced Android as not to be underestimated in the slightest and dwarfing the iPhone’s potential reach.  Similarly, a few mentioned that while now the BlackBerry lives firmly in the staid business world it too shouldn’t be counted out.

While smartphones are the biggest vehicle, tablets are growing fast and their growth potential is enormous.  Currently 82% of tablets out there are iPads.  But the previously mentioned Nook and Amazon’s Kindle are both viable contenders, especially when price point comes into the conversation.  Moreover in April 2011, Amazon sold more digital books than they did paper ones for the first time.  With a  built in user base and a known “go to” store, Amazon has been building this business even before the idea of a tablet was invented.  Josh Koppel of ScrollMotion said it best when it comes to the potential of this world, “All the content in the world is going to be sold again on devices like that,” as he motioned toward Wendy Paige Bronfin from Barnes & Noble who was holding a new Nook.  The Nook also has unique business opportunities, which we will discuss later.  Once a consumer buys a tablet 75% of them will use it every day and the use of their other connected devices will fall.  Sessions on tablets tend to be longer than other connected devices and people will easily make purchases over their tablets as well.

Cool tip!When you develop your apps don’t build a game that is over 20 megs.  If it is over 20 megs then you need to connect to a computer to download the game or book.  This cuts down on your potential downloads as many are done while waiting in line or in traffic as parents need to download something new to entertain!

The Growing Market

Cynthia Neiman, VP of Digital at Mattel, started the morning in her breakout session with a few astonishing facts that proved how important mobile phones are to kids.  In 2011, mobile has become the leading platform for games surpassing videogame consoles.  In fact, in the United States, 20% of all kids media comes to them via a mobile device. 

Kids expect every property they like to be a 360-degree experience so they are actively searching for apps on all of their favorite connected devices (computer, laptop, phone, tablet).  Nine years-of-age is when the average kid starts to download apps and they are mostly to a parent’s phone!  Nine is also the age that most kids have a phone or a shared phone to use between siblings.  Most of the time these devices are handed down from parents or older siblings.  Currently tablets are more of a community device but I think we are going to start seeing tablets becoming more individualized as these start to trickle down and become more mainstream.

The morning session was rounded out by the exuberant Gary Pope of Kids Industries, who basically blew our minds with more facts and figures than one could take down.  The amazing thing and bottom line of all these facts and figures is: the potential here is huge folks.  We are going through one of the largest media disruptions we have ever seen.  By 2015 there will be 15 billion – yes!  BILLION – connected devices in the world.  52% of children already own an app capable device.  32% of those are 3-5 years-old.  Yes…pick your jaw up off the ground.  Here’s another one: 12% of 3 – 5 year-olds own an iPod Touch.  There is no doubt about it – our media world is changing much like it did when movies started to talk or when televisions entered every home.  How we deliver IP is once again being shattered and rebuilt.  How to be found amongst all those shards is the big question that everyone mentioned in every panel and presentation. 

The Big Play

The great news about the day was that every company that was featured discussed story, quality, preserving brands and being true to the underlying purpose of their app.  We have heard the facts and figures about the potential of the whole app market and there is indeed some glaring needs.

On Thursday Apple updates their store and kids download every free game.  They will play them and if they are terrible, delete them.  If they are good they will play.  Pretty simple.  Kids want to be entertained.  Most parents however, want to enhance their kids development and hence, are looking for educational games.  The key is to make fun and educational apps that are fun for the kids and parent approved.  This you can get paid for.  The day started with a great session from the Insight Research Group, lead by Donna Friedman Meir and Cassandra Rowe, as they taught us the basics on three different key kid age groups.  Being connected to and knowing your audience is step one to being successful.  Neiman of Mattel put it best: “There are two reasons to buy an app – use-ability or enchantment, which one is yours?” 

Pope also chimed in with the fact that 14 of the top current 25 best sellers are child friendly and yet 97% of parents surveyed by his company said there are mostly poor apps.  “Only 10% of all “educational” games are really educational,” Rick Richter, the CEO of leading app publisher Ruckus Media Group, added to one panel.  But regardless of this seeming void of quality content, parents are buying apps for their kids (or letting their kids buy them) to the tune of roughly 27.2 apps per child a year.  That’s about $100 dollars a year and broken down differently equals about one app every 12 days.  The hunger is there if you can create an app that appeals to your audience successfully and also passes the parental nod of delivering educational fun.

Cool Fact!App downloaders tend to be young and affluent – the perfect combination for advertisers and people wanting to sell apps.  In addition, teens are the most likely to buy goods online. 

As parents navigate these challenging waters – how do you know what is a good app and which are bad? -- they are drawn to brands.  A branded app gets attention and there is the feeling that a brand name will mean quality.  This is especially true in books.  “Some brands help you get above the noise and gives the buyer a sense of quality.  But then you better deliver!” says John Zuur-Platten of Rubicon Studios.  Michel Kripalani, President of Oceanhouse Media, the successful app creator behind the Dr. Suess franchise, agrees, “Having a big brand is a true blessing and curse – when we signed the Dr. Suess deal there was a great sense of exhilaration but also of duty….the responsibility!”  Already expectations are rising.  People expect their apps to be great values with deep gaming, high quality, the ability for in game currency, etc. all for $1.99.  If they download one of your apps, like it and perceive it to be great value for the spend then maybe, just maybe, they will download your next one.

Not to be completely brand centric, even though the market is growing up fast, there is still a great opportunity for original IP.  “Doing your original IP is always high risk and high return,” states Chris Ulm, CEO of Appy Entertainment. “But in terms of growth this is the best platform for new IP I’ve ever seen.”  With word of mouth in this chaotic marketplace driving the best products to the top -- and when the spend is just 99 cents -- you hope a few consumers take the gamble, enjoy and then start talking!  There are a few websites that offer reviews but the main player that can drive you to the top is Apple. Getting a banner on Apple is the pot of gold.  Of course, their infamous secrecy applies here as well.  If you are going to get a banner you don’t know, it just shows up.  Yes, they might call and ask you for some artwork but it is all hints.  Several people mentioned that knowing the people behind the scenes at Apple are key.  Kripalani cut to the chase by saying, “If you ever get a call from 408 pick it up!”

It is also interesting to note that all of these creators plan to go back to their product once it is launched and continue to upgrade it.  “Apps are a living breathing business – you have to update them!” says Kripalani.  “This is a long tail business,” he continues.  “You need to invest in your product.”  Once an app is uploaded it is much like a YouTube video – people will find it and you want them to see and/or play the best version.  You never know when it is going to blow up so putting your best foot forward all of the time is of the essence.  As technology advances, these leading developers are continually updating to protect the most important brand – their reputations. “People are looking for a level of polish and quality that they expect in all of their entertainment so you have to deliver,” explains Platten of Rubicon.

Interesting Dilemma!During iStoryTime’s presentation they discussed their work on the super cool app for “The Penguins of Madagascar.”  It is technically a book – but there are a lot of games.  If games are also being licensed where is the line?  What is a “book” in this new age?

Hurdles to Overcome

Now the one thing that was glaringly obvious is that there was really very little discussion of what an app costs to develop and where the number of downloads is currently.  Are these folks making money?  Probably….but they are really buying time until this market catches up with them.  To bring back the wild west analogy they are the pioneers, staking their claim and buying up real-estate, i.e. waiting for device penetration to catch up with their libraries and the big contracts to come.  “The Long Tail” came up a lot during the day and the general thought is that this tail is going to grow so thick that the money will come.  The big players that were present at this event are the industry leaders and therefore, they are already successful.

On the cost front the general number is $50,000 to $100,000 per app, but then someone else said, “Well, if one app costs $200,000 doing seven is better because you can amortize the costs across each of them and bring that cost down.”  This is a steep investment especially when considering some of the challenges facing this field.  “A single app isn’t going to pay the mortgage,” explains Kripalani.  “You need a strategy for your brand.  You need 80 apps building a brand over three years.” 

The biggest hurdle facing this field is the issue of curation.  Rick Richter of Ruckus was the most direct calling upon his colleagues to come to action to create their own way to curate the available apps.  “At this trajectory there will soon be one million apps in the app store by next year!” he said.  Currently there is no real system for the cream to rise to the top and be organized.  While many people say “the flea market” of the Apple app store will be radically different in a year, there is currently no real way to rate apps and hence consumers can accidently download some stinkers.  This in turn, they fear, can hurt the business.  Paul O’Connor of Appy Entertainment agrees, “The rising tide lifts all boats.”  If parents have a good app experience they will download more apps.   When asked how O’Connor proposes to get his work noticed he says, “Well…I sacrificed a goat!”  It’s a joke but shows how even the pros are at the mercy of this untamed wild frontier.

Another issue that came to light on this subject is that while everyone regards Apple as the creator of this industry, they aren’t interested in helping these developers sell their products.  Apple is interested in selling its own products.  Again and again and again, panelists said that as a creator you need to market your own apps.  Apple is not interested in helping you with this.  This gives the Nook an interesting angle as they can market distinct apps with prizes or incentives to drive walk in or online traffic to Barnes & Noble.  Amazon is also in this prized situation.  Both will probably curate very carefully in certain situations if they can use this new platform to drive business into their other offerings.

The final panel of the day broached another sobering thought: the FCC. The Child Online Protection Act (COPA) was originally created to restrict minors from harmful material on the Internet.  The FCC has just deemed that this law could also apply to mobile phones.  This has wide ranging implications for the field.  For instance, you have to market your own apps, right?  Well, that pretty much means you add a Twitter and Facebook button without even thinking.  However, Facebook isn’t for children under 13….what is your responsibility?

And finally, to join this group of pioneers you have to be ready to embrace anything!  “Right now it is a stage coach ride – pretty bumpy!” laughs Ruckus’ Richter.  O’Connor agrees, saying, “All of this is a work in progress.  One year from now I could be one of the smartest guys or crazy!”  The industry is moving so fast that Oceanhouse’s Kripalani discussed designing apps for the iPad before it was even released.  His team created three apps for the platform without ever seeing one! Six to nine months ago no one knew that the Nook would support apps. Oceanhouse is a thriving business shipping two apps a week and minding the Dr. Seuss brand.  In just 18 months the company has amassed over one million downloads.  Obviously this is the result of a well-plotted, rigorous business plan right?  Wrong.  Kripalani has no long-range business plan.  The business is simply moving too quickly.  His principles?  Hussle, hussle, hussle.  Be nimble and fast.  Most people agreed that they had no idea what they would be delivering come Christmas.  And while this does sound pretty loosey-goosey.  Kripalani is serious that, “You need an experienced team behind you.”  There are plenty of stories of the 13 year-old kid creating an app that sells record numbers….one feels these days are coming to an end.  And that perhaps this business is going to grow up just as fast as it has grown out in the very near future.

While I can’t say I am going to rush into this field tomorrow, I now feel confident that I have added “app” to my arsenal.  One day will I have a property that I think should be launched first through an app?  Maybe…and I’ll know a few people to call to help me do this after this day.  I also know that pretty much every show I ever do moving forward will have an app created and now I feel better prepared to go into these conversations, armed with basic knowledge.  Granted, since the field is moving so fast it will probably be outmoded. But everyone I met today was very warm and approachable.  Email addresses were freely given, business cards handed out, and open invites “to come on and visit the studio!”  I am sure if I call upon them, they will catch me up!  Kidscreen is wise to feature iKids in NYC in February and carry on with another West coast repeat in June.  Every six months we should have an update.  Thanks iKids from helping me not become a dinosaur before I’m forty!

Want to check out a few cool apps?  Get started here.

Tonka Chuck and Friends – Hasbro cleverly extends and builds their brands using this new distribution outlet.

Plants vs. Zombies -- PopCap Games created this game, which lets a homeowner use several types of plants to repel an army of zombies.

Fruit Ninja HD -- This massive hit by Halfbrick Studios let’s you slice fruit with your fingers.

Team Hot Wheels Flame Rider – This game from Mattel let’s you draw the track as you race your car!

Angry Birds – In case you’ve been buried somewhere, check out Rovio’s smash hit.

Dr. Seuss – Any of his books or fun apps will do in this treasure trove but try “Green Eggs and Ham.” 

Cut the Rope – Feed Om Nom some candy!  Developed by ZeptoLab in Russia and published by Chillingo, “Cut the Rope” is moving from solely iOS to Android soon.

Trucks and Skulls – Paul O’Connor of Appy gave an in-depth presentation on the creation of this game.  It took four developers 180 days!

Zombie Pizza – More stupid fun from Appy.

Bowls – Make authentic Tibetan music by playing these bowls.  This app is the first ever created by Oceanhouse Media and has been downloaded over 50,000 times with no end in sight.

Heather Kenyon is an independent producer and development guru currently working with Citizen Skull Productions, Sprite Animation, Guru Studio and Brenda Wooding Media, among others.  She is the former editor-in-chief of AWN and senior director of development, original series, at Cartoon Network in the U.S.