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The right way to monetize kids?

Nerd Corps president Ken Faier explains how to make a transmedia hit without cutting ethical corners

2014 was a big year for Nerd Corps Entertainment. After eying an expansion into interactive entertainment since the days of the DS, the animation studio had its first significant video game success with Slug It Out, based on its own Slugterra cartoon. And after a dozen years forging its own path, the studio behind properties like Kate & Mim-Mim, League of Super Evil, and Storm Hawks was acquired by Canadian family entertainment firm DHX Media in a deal worth up to $57 million.

Speaking with GamesIndustry.biz, Nerd Corps president (and now DHX senior VP of content and GM of kids & family) Ken Faier said his studio was an attractive pick-up for DHX because of its track record creating brands that could become hits in an increasingly competitive market.

"Right now the quality level of kids entertainment has gone up tremendously because it's just so much more difficult than it used to be," Faier said. "There used to be lots of shows that would hit Saturday morning that were paid for by toy companies with bad writing, bad animation... They tried to cheap out on that because it was really just a marketing expense. They wanted to create a quick fantasy to sell the kids more plastic."

"Right now the quality level of kids entertainment has gone up tremendously because it's just so much more difficult than it used to be."

In the '80s and '90s, that strategy could work just fine, Faier said. There were only a handful of networks, and companies able to wrangle their way into a time slot could be assured a reasonable return on their investment. But now with the market more fragmented, with more channels than ever, each of them offering a smaller portion of the audience, the strategies have changed. For Nerd Corps, that means transmedia plays like Slugterra, a cartoon with multiple toy lines (plush dolls, action figures, NERF-like guns) that contain codes to unlock content on an official website and in its mobile game.

"It's harder to build brand, so you need it to be good," Faier said. "It's got to be one where kids will want to play the game, the online game, where they'll want everything that's there and it's all a pretty good experience. You put a bad one out and you start to lose them. They'll go to the next one that's pretty good."

For Slugterra, the formula appears to be working. The mobile game has seen nearly 2 million downloads on iOS and Android, the website has 350,000 registered users, and Nerd Corps has seen a 13 percent redemption rate on the codes included with the toys.

On the one hand, that provides a handful of revenue streams for Nerd Corps, and each part of the transmedia play boosts awareness of the others. On the other hand, that diversity of revenue streams involves just as many attempts to get money from an audience of children. That's a tricky situation for purveyors of children's entertainment, Faier said, especially in a mobile gaming market where some companies have been overly aggressive in monetizing kids.

"Imagine yourself as a parent of a child who loves something," Faier said. "If your child is asking to buy them something that's awesome, and you gladly do it, that's the [desired] result. If you can achieve that, then you can be proud of the revenues you're generating. It's when you start to cut the corners and try to take advantage of your audience... The morality of that is questionable, and I think parents and kids can see it. If you're in it for a quick hit with a cheesy product that's got a hook, parents know that. You're going to get one shot at it, and you won't get a second, third, or fourth with that brand."

"You can't do it in a faceless way. You have to be able to get up in the morning and say, 'Yeah, I'm a parent of a child and I'm good with this.'"

Faier offered a rule of thumb for developers concerned about where to draw the line when it comes to making money from an audience of kids.

"Is this something that I could stand in front of a large group of parents with, have them ask me the hard questions, and answer with a heartfelt response that I believe in as to why I think it's so awesome? Then I think it's great," Faier said. "You can't do it in a faceless way. You have to be able to get up in the morning and say, 'Yeah, I'm a parent of a child and I'm good with this.'"

Faier said one thing developers sometimes overlook is the timing on the first monetization pitch in an app. Any new brand needs to work on building trust with its audience, and more importantly, the parents of its audience. One sure way to prevent that trust from building is to have the parents' first exposure to the brand come in the form of an aggressive sales pitch.

"When a 7- or 8-year-old asks their parents, 'Can I get this in the game," there's a dialog between the child and the parents about that," Faier said. "An eight-year-old is better able to convince their parents to spend that money because they love the game or they're playing it a lot. Whereas if they just downloaded it, or it's a thing the parents have never heard of, they haven't seen that their kids are watching it and now they ask for $5, I think it's a tough sell."

That caution is especially relevant for transmedia properties, because a bad impression from the toys or a mobile app will impact the parents' view on anything else carrying the brand's name.

"When we launch a game related to a show, we have to think about that because we have other things we're selling, eventually," Faier said. "You want it to be coming from a place of heartfelt enjoyment.... We have to build trust for the greater good of the property."

Latest comments (16)

Rolf Klischewski Founder & CEO, gameslocalization.com4 years ago
In my book there's no such thing as a
right way to monetize kids
. You can cater to parents or grandparents, you can even cater to the kids themselves, but even having that
dialog between the child and the parents
is problematic.

Yes, kids will be nagging, and you could argue that it's the same with supermarket checkouts, but that doesn't mean actively trying to monetize kids is okay.
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Gareth Martin Senior Programmer, Epic Games4 years ago
that doesn't mean actively trying to monetize kids is okay.
Isn't that what toys are in the first place? Not to mention "kids games".

That said, the bit in this article about making sure your first push for an in-app purchase isn't too soon would be a good lesson for developers to learn generally, not just for kids games. I'm not sure this article is really that kid-game-specific.

Edited 1 times. Last edit by Gareth Martin on 15th January 2015 4:42pm

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Rolf Klischewski Founder & CEO, gameslocalization.com4 years ago
If monetizing kids is the first thing that comes to your mind when you think about toys, then you have a rather particular view on that subject.

Of course, toys are made to be bought for or even by kids, but, to me, the concept of actively mining kids for their (parents') money is not exactly a laudable endeavour, especially considering that kids play in a different way than adults. It's easy to tailor the IAP's in a game to make kids fall for them. But just because it's possible doesn't make it any more desirable.

Just my two cents as a dad (and gamer and dev).
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Lance May Indie Game Designer/Developer, Nekoyoubi Games4 years ago
I, for one, couldn't possibly disagree with Mr. Klischewski more; as a designer, a producer, a marketer, a parent, or as someone who (vaguely) remembers being a child myself.

As a designer, I long for the challenge to meet the wants and needs of my audience. Especially when that audience is mostly a black-box and hardly predictable in trends as children tend to be.

As a producer, I want to make a product that not only fulfils the needs of my user, but also inspires them to the work that I might be able to provide them down the road. With children it's even more pivotal. A good product will have lasting impressions on a child that may very well help shape their lives.

As a marketer, I feel that my responsibility is to adequately poise my product or service in the light that is most representative of what my product is and what I want my product to be perceived as by onlookers. Children see things that adults don't in many cases. They see what's in their imagination; what they've been inspired to see.

As a parent, I want my children to respect my wallet, yes, but I also don't feel that it is my job to tell them what they want. It's my job to lead them through life as far as I can, protecting them from whatever dangers threaten them; not to choose what games or toys they are to enjoy. I hope my kids never run out of gift suggestions... I may have to start giving them... socks.

As a former (debatable) child, I know that I would not be where or even remotely who I am today, had I not grown up in the Nintendo-generation. While it was certainly my parents that bought me the systems and games I wanted (to an extent), it was completely my decision what I wanted to play. I would not have known what I wanted if it weren't for digital marketeers monetizing me for these systems and games.

TL;DR

@Rolf: By your comments, I get the impression that the morality of marketing to children is absolute and unconscionable. If I read that correctly, then I assume all of your toys were randomly given by your parents based on no guidance by you. I hope that's not true. I really do. Sounds boring. I, however, am proud to have been in support of the progress of the games industry as a child. Thanks Nintendo!
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Rolf Klischewski Founder & CEO, gameslocalization.com4 years ago
Yes, I think that marketing geared towards children is wrong.

Sure, they can spend their pocket money on anything they want. But to actively try getting your hands on a child's money?

I'm not saying it's wrong to produce things especially for kids. And it's not wrong to make such things desirable for kids. But, to me, "monetizing kids" sounds too much like "tricking kids into parting with their (parent's) cash.

And, don't worry, my kids have more toys than they'll ever need, bought and crafted.
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Lance May Indie Game Designer/Developer, Nekoyoubi Games4 years ago
I'm not saying it's wrong to produce things especially for kids. And it's not wrong to make such things desirable for kids.
... but...
Yes, I think that marketing geared towards children is wrong.
Perhaps I'm missing something here, but these two quotes don't seem to add up. Are kids supposed to simply guess at where to go look for those allowably desirable items? And when they find them, wouldn't any indication of what they are by their producers be the marketing for said item? Other than to turn the phrase "monetizing kids" into a holy war over morality, I'm sorry, but I simply don't see your context.

If companies are in business to make money and they are, by your words, "not [in the] wrong to make [products] desirable to kids" how do they do this without marketing those products to children?

On a side note, I hope you didn't misunderstand my TL;DR. I wasn't challenging what your kids may or may not have, or you as a parent in any way. My comment was succinctly referring to what your yesteryears were like with regard to toys/games.
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Axel Cushing Freelance Writer 4 years ago
@Lance
I think Rolf does have a point. Somewhere, there's a threshold that goes beyond simply advertising the product and assumes that the customers (kids) must do anything you tell them to do in order to keep the business afloat. It stops being about selling the product and starts being about commoditizing your customers in the worst possible fashion. It's not a clearly defined threshold, but you know you've reached it when parents groups start giving you grief over "predatory practices."
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Lance May Indie Game Designer/Developer, Nekoyoubi Games4 years ago
@Axel
I can completely agree with your statements. I mean that absolutely and entirely. Probably because your comment clearly convey a grey-area, and speak much more to what I perceive the article to reference versus what Mr. Kliscewski is saying in that there is no grey-area, and that threshold you speak to doesn't exist.

I would never condone the misuse of marketing (or baiting) tactics to funnel children into a profit bucket, but then again, as I read it, neither would the article's subject.
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eoghan dalton Creative Director & Co-founder, Studio Powwow4 years ago
You're right Lance. I'm not sure how any business, regardless of what age their target audience is, can hope to survive without marketing to their consumer. If game devs can't monitize the very people they are trying to provide quality entertainment for, ... well that's not helping anyone.
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James Podesta Programmer 4 years ago
You won't be able to monetize my kids because Skylanders has already taken all their money.
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Paul Johnson Managing Director / Lead code monkey, Rubicon Development4 years ago
There was a time when only kids played video games. In fact I'd say the fact that a lot of adults do now is mainly due to the "Nintendo generation" people getting older. To suggest that only adults should be targetted as customers is bizarre in the extreme.
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Klaus Preisinger Freelance Writing 4 years ago
Putting the word right in the headline early on is an indication that either writer or editor expect the reader to think of all the wrong ways first. As a result the pressure in on the article from line one.

I am not sure the times have changed as much as the article suggests. Video games, such as Pokemon, and trading card games still get TV shows which are marketing expenses. Skylanders has become today's version of G.I Joe. If you look for value then you may neither look at the games, nor the plastic toys, such as Amiibo, which are hardly anything more than glorified memory cards or DLC. Compared to old He-Man toys, there is no improvement of quality to be found.

The type of seven year old that can defeat his parents in a reasonable argument about the importance of them buying a game, will probably know better than to buy it. Or at least have the decency to go for a game with predictable fixed costs.

Here is my crack of moral highground marketing to children:
You buy a pack of cigarettes, but the pack has no cigarettes in it. Instead you find a message telling you that you should be happy, because not smoking means you might live longer, meaning you can enjoy the life of your kid more. To further increase the amount of happiness the empty cigarette pack provides, you also get a downloadcode for your kid. The product also exists in a sixpack of beer version. At the end of the year, there are college fund sweepstakes. The products come with a TV that teaches children how to exploit their parents into quit drinking and smoking while buying them online codes.
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Ultimately, I dont think there is NO right way to monetize kids...
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Nicholas Lovell Founder, Gamesbrief4 years ago
Oh dear Rolf.

There is some really interesting research that holding "essentialist" positions stifles creativity. (Admittedly, it's focused on essentialist statements relating to race and gender, but the research seems to suggest that holding black or white positions makes it hard to succeed in creative endeavours).

I think your statement "monetising kids sounds like "tricking kids into spending their (parents) cash" says more about you than it does about making cool stuff that kids want.
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Rolf Klischewski Founder & CEO, gameslocalization.com4 years ago
Fair enough, and before anybody calls Unicef, don't worry my kids don't play with rocks and bones, we moved on to sticks a long time ago.
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Chris Payne Managing Director & Founder, Quantum Soup Studios4 years ago
It's a tricky one. My daughter is a huge fan of Monster High, which she saw in stores and in TV ads and hassled us for. We resisted for a long time, but eventually we got her a doll and a DVD, and we're glad we did - the CG movies are actually pretty good, with a not-so-subtle message of individuality and inclusivity. And she is getting enormous play value out of the dolls (especially since xmas).

We're also big fans of Toca Boca's apps for kids - many have an educational slant, and my daughter loves them too, and has hassled us to buy new apps based on the (very sparse) ingame ads. But we trust Toca to only have that one ad on the title screen, and no IAP. Their business strategy is based on that trust, and I hope it's working well for them. I'd be terribly disappointed if they ever introduced microtransactions...
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