In-app purchases targeted at kids ‘potentially unfair and aggressive’ say OFT

POSTED BY Analyst Team
In April of this year, my colleague Dr Windsor Holden wrote a blog post for Juniper’s Analyst Xpress detailing how the OFT (Office of Fair Trading) in the UK were to be investigating “whether children are being unfairly pressured or encouraged to pay for additional content in ‘free’ web and app-based games, including upgraded membership or virtual currency such as coins, gems or fruit.”

The results of this investigation were announced this week, with the OFT saying that “some games included potentially unfair and aggressive commercial practices to which children may be particularly susceptible.”

To add a bit of background to these results, we should probably backtrack a bit: Traditionally, PC or console games required players to purchase a game for a one-off cost, which allowed them to play as much as they liked; unlocking extra levels was done through spending more time on the game. However, many mobile developers have instead opted to monetise their games via in-app purchases, a model which had previously been popular in the Far Eastern markets. In-app purchases are commonplace in mobile app stores, frequently attempting to make users pay between $0.99 and $2.99 (although it can be higher than this) for extra weapons, lives or in-game currency. Indeed, they are in no way limited to children’s apps or games, with apps such as Playboy for iPhone encouraging users to subscribe through the in-app purchase mechanism.

However, the OFT was most interested in games which targeted children, and studied 38 games which would appeal to them. It concluded by suggesting 8 principles which it believes should be adhered to, to ensure consumers are aware of the costs associated with a game, and alternatives to spending money, before signing up and downloading them. This is particularly important when one considers that many games which are free to download utilise in-app purchases – something which someone who is not a seasoned Analyst may not be aware of.

Although this might seem applicable not only to children’s games, but also to adult’s, it become increasingly pertinent when one considers that children’s minds work differently to adults. Studies have shown children don’t understand the value of money until they are five or six, so whether an in-app purchase is $0.99 or $99.99 makes no difference to them – they just want more in-game jewels. In addition to this, it’s not actual money the child has to understand, but virtual currency, adding an extra layer of confusion.

The OFT noted in its report that “of the games we examined, some implied that consumers who did not make a purchase would let others down – either other players or characters in the game. The OFT considers children are more susceptible than older consumers to such practices, which have the potential to impair children’s freedom of choice because of their inexperience, vulnerability and/or sense of credulity”. But one must bear in mind that many smartphone and tablet games appeal not only to children but also to adults, who are able to make informed decisions about what to purchase, and it remains to be seen what the OFT recommends for these games.

No doubt parents will be pleased to see these recommendations, however, although some may argue the OFT should have gone further and banned all kids games which utilise in-app purchases, if only to stop their children from pestering them. And they are entitled to their say – the principles are open to consultation until November and will be published in 2014.