Game in-app purchases are warping kids’ understanding of basic economic ideas

Mystifying, isn’t it?
Mystifying, isn’t it?
Image: Reuters/Brendan McDermid
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It is nighttime and my young son is asleep; I am awake and trying to help him. If he were a little older I might be gluing something onto a science project or baking cupcakes for a school event. Instead, I am drawing my finger over lines of imaginary fruit on an iPad, trying to rack up points so he can better enjoy a game called Fruit Pop, a matching game similar to the wildly popular Candy Crush. Specifically, I am trying to increase the stack of coins in his account so that he can buy boosts that alter the game in some way (such as giving the player more than the normally allotted sixty seconds per turn).

After a while, it becomes evident that the easiest way to obtain coins is simply to buy them with real cash—such as 50,000 coins for $1.99 (the most common in-app purchase in Fruit Pop). Many parents will recognize that in-app purchases on apps largely aimed at kids are one of the most insidious inventions of modern times. Not surprisingly, they are also lucrative: the global market for in-app purchases (not all aimed at kids) is estimated to hit about $30 billion next year, which is especially impressive considering that fewer than ten years ago it was zero.

Part of the indignation is that most parents would prefer not to see their kids rack up spending on any kind of game. Yet as our experience with Fruit Pop and other games demonstrates, there is another set of lessons that seems undesirable. The design of many of these games sends potentially confusing signals to children about fundamental economic ideas like value and pricing.

There are thousands of kids’ apps out there, and there must be some in which purchases are built into the need to progress through the game, e.g., in order to get from Level 3 to Level 4, you need to buy a magic wand for $2.99. But I don’t think I’ve ever encountered one. Instead, the games my son has favored over the last few years feature a deliberate and extreme gamification that encourages players to exchange real cash for items that, even within the context of the game, have questionable value.

Take Fruit Pop as an example. To score points in a sixty-second game, you draw a line with your finger over as many of a type of fruit as possible; those fruit then disappear and are replaced by other fruit. At the end of every game, you are then awarded coins, in an amount that bears no obvious relation to the score you just achieved. If you accumulate enough coins, you can buy “boosts,” special powers (like slowing the game down or extra-long chains of fruit) that may allow you to get a higher score over the three-game life of the boost.

In our experience, however, because a higher score doesn’t necessarily yield more coins, the boost is usually not worth its cost; at the end of the three games you have fewer coins than if you hadn’t bought the boost. This deficit does not seem accidental; it keeps players coming back and provides an opportunity for the app to sell coins for real money.

Leave the actual cash aside—and I do: this is precisely the type of in-app purchase that I, and I assume many parents, refuse to make; surveys show that only a tiny percentage of app users make in-app purchase. On its own, the exchange rate of Fruit Pop boosts and coins is peculiar from an economic point of view. You’d expect that if players ended up with fewer coins than they paid they’d stop buying boosts. Yet my son either has trouble grasping this concept or simply doesn’t care. The boosts are novel and fun enough, apparently, to justify the cost, and he also argues that they can help him get a higher score.

Of course, the high Fruit Pop score is itself illusory. The game doesn’t keep track of one’s high score for more than a few days. Instead, a player participates in a multi-day “tournament” that has no prizes and is impossible to win because the other players and their inflated scores are fake, although it is unclear whether a kindergartener will understand that opponents named Coco Shanell and Litmus McLimey are not actual people. (Fruit Pop’s parent company Metamoki calls them “computer controlled characters.”)

Metamoki CEO David Maestri acknowledges that using coins to buy boosts in his game is not cost-effective. “In some ways, the boost pays for itself, the boost is its own reward,” he said in an interview. He said his game has been downloaded perhaps 10 million times over several years—a modest hit by app standards—and has brought in “millions” in revenue, although currently in-app purchases make up only about 20% of its revenue, with the rest coming from advertisements that players must watch. Maestri explains that constructing an internal game economy involves “creating value out of nothing,” and that making the “nothing”—such as a boost—scarce is one way to accomplish that.

In his popular 2014 book Hooked: How to Build Habit-Forming Products, Nir Eyal referred to “variable reward” as a game design element that taps into the primal human need to hunt. This makes Fruit Pop unquestionably addictive, but it also creates a confusing value chain to a child through its myriad of incentives—high score, coin accumulation, boost purchases, a fake competition—that can’t really be fulfilled or even easily prioritized.

Fruit Pop is far from unique in bamboozling players with multiple currencies that have uncertain exchange values. In Monopoly Bingo, for example, a boost might cost a few hundred Monopoly dollars—which can typically be earned in a handful of bingo games—or it might cost 20 gems, which could take months of regular play to earn.

In Yahtzee With Buddies, one of many available options is a dice duel, a regular Yahtzee game except that players must take their turns within three minutes. To enter the dice duel, a player usually must ante up at least one die that represents a bonus roll, thereby depriving himself of the chance to use an extra roll within a game. Yet even if he wins the duel, the reward is paid in diamonds, which have no use within the game, except allowing players to buy different dice designs. (Again, this feature is one that my son favors, despite it being purely cosmetic.) The effect resembles a casino or carnival game in which losing seems inevitable and is rewarded with only flash and thrill.

John Sulaitis, a user experience expert with the digital agency HYFN, argues that the market illogic within such games is deliberately built in. To him they are “dark patterns,” sly design techniques that manipulate players into paying for things they become convinced that they need. Partly, this is mandated by the business model of apps. In the home video games of the ‘80s and ‘90s, Sulaitis explains, a player might pay $60 for a DVD that could provide hundreds of hours of game play, and that consummated the economic relationship; game companies had no economic stake in the playing outcome.

By contrast, the “freemium” model popularized by Apple’s App store effectively requires game companies to give the initial product away for free. It then becomes incumbent upon designers to structure the game in a way that pushes users into purchasing features that wouldn’t be necessary in previous generations’ games.

Obviously, many parents avoid these conflicts altogether by simply banning such games altogether. While I sympathize with that sentiment, to me it seems extreme; fun and gaming strategies are legitimate pursuits for a child. Sualitis, for his part, also believes that games can design their internal economies in a manner that minimizes confusion and manipulation; he points to the evolution of payments in Angry Birds as a positive example.

And parents should also acknowledge that many equally insidious marketing strategies have long existed in the non-digital world; who hasn’t seen a kid drawn into buying McDonald’s food by the toy in a Happy Meal?

As with many other parenting situations, the harsher aspects of these experiences can become teaching moments if parents are sufficiently immersed. Through our conversations about the apps, my son has come to understand that he should figure out which game features have genuine value and how he can get them for the best price. That’s not a bad lesson, inside an app world or the real one.