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Five reasons why Apple’s loss of its IAP class action lawsuit is good for the industry
by Nicholas Lovell on 03/05/13 09:57:00 am   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

Apple was recently sued in a class action suit over minors who were able to download in app purchases for their games without the permission of the account holder. Apple defended the suit at first but recently settled. (You read the court documents here.)

In the context of Apple’s annual revenue($156 bn), it is a tiny amount. In the context of its AppStore revenue (around $3 billion) it is more significant, but most importantly it is a reputational issue that Apple will want to address. This is a very good thing for the industry. Here are five reasons why.

1. Parents will lean to treat passwords like PINs

The class action suit requires people requesting refunds to confirm that they:

  • paid for Qualified Game Currency charges that a minor charged to their iTunes account without their knowledge and permission
  • did not knowingly enter their iTunes password to authorize any such purchases and did not give their password to the minor to make such purchases
  • have not already received a refund from Apple

You will only get a refund if you did not give your AppStore password to your child. This is a clear, defensible rule that is unambiguous. Parents will need to learn (and Apple will need to emphasise) that giving someone your AppStore password is giving them access to the credit card tied to that account. If you don’t want to do that, don’t give your child the password.

2. The issue will become more important at Apple

Mobile game design has, with some reason, been described as a Wild West. Developers are experimenting with new business models and Apple has intentionally stepped back to allow experimentation, learning and innovation. However, they also have a responsibility to help parents make informed decisions and developers to have flexible payment models that also protect minors from spending money that they did not intent to do. With the success of the class action law suit, senior executives will be more aware of the importance of tackling this issue head-on.

3. Communication will improve

I believe that game developers should be allowed to charge very large sums of money for in-app purchases. We are moving away from the era of fixed-price businesses, where every customer pays the same amount irrespective of their desire for the product and the only way to drive more revenue is by increasing the volume. In the more nuanced world where a business’s raison d’etre is to find customers who love what they do and let them spend lots of money on things they truly value, variable pricing is very important. It should, however, be transparent and obvious. That means improved iTunes listings, perhaps a renaming of the Free+ price point and other ways of making it abundantly clear to anyone downloading the game that it contains micropayments.

The settlement requires Apple to “provide instructions concerning the use of Apple’s parental controls, which may be set to disable In-App Purchases on an iOS device or to require a password before every In-App Purchase transaction.”

4. Apple’s rules will evolve

I hope that as a result of this class action, and points #2 and #3 above, Apple will have clearer guidelines for what constitutes appropriate IAP behaviour by developers. I would like to see no IAPs promoted during the first 15 minutes of play, particularly aimed at children. I would like all IAP transactions to be required to have a currency symbol. The GAMESbriefers have a list of ideas that Apple could implement to help with this issue. I believe that this class action lawsuit will focus Apple’s attention on this issue. (Personally, I really want a kid’s mode that is as easy to turn on as Airplane mode).

5. Developers will adapt

Backflip Studios, the developer of Dragonvale, a game which frequently occupies some of the top slots in the Top Grossing charts, puts this warning up as soon as you load the game.

photo

I think that reputable developers will get better at being open, honest and transparent about their In-App Purchase strategy, which will be good for us all.

Better we regulate than government does

I’m pleased about the class action ruling because the alternative is much worse. I have argued before that four groups have responsibility for protecting minors: parents, developers, platform holders and governments. Most parents are responsible, but some aren’t. Most developers are responsible, but some aren’t. The risk is that if the platform holders don’t act, government will. That raises the spectre not only of regulation but of different regulation in dozens of countries the world over, a nightmare of logistics, lawyering and technological challenges which will remove many of the benefits of Apple’s global ecosystem. I see the class action suit acting in the way it is intended – as a check on the behaviour of large corporations. I hope that Apple (and Google, and anyone else with a global service that offers In-App Purchases) pays attention and adapts now.

Because I would really hate for government to get involved.

 

Nicholas Lovell is director at GAMESbrief, a blog about the business of games. He provides business advice on free-to-play and paymium design. He will be giving a masterclass on How to make money from free-to-play games in San Francisco on Sunday 24th March, just before GDC. You can also book one-to-one surgeries for your business at http://www.gamesbrief.com/2013/02/book-a-surgery-session-with-nicholas-during-gdc/


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Comments


John Flush
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I wish that games came with disabled in app purchases in the first place. Then you know how many customers really ever cared about in app purchases, because they would have manually flipped the switch in the first place. It doesn't even need to be intrusive - on that warning screen just turn the 'OK' button into a "Enable" - "Disable" choice.

Of course if that was the option it would quickly expose how abused this model really is.

Carlo Delallana
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I don't buy the generalization that "customers never really cared app purchases" because people are spending, heck i'm spending! IAP allows me to enjoy a game based on how much I want to commit to it and by far Magic 2013 and Hero Academy is where i've spent money.

That said, disabling IAP on a per-game basis is something that iOS should allow for. I don't know how many non tech-savvy parents even know how to disable the IAP option on the device's settings page. You have to go into Settings, then scroll down to Restrictions then scroll down to the Enable/Disable IAP slider. How many parents know this option exists?

As a mobile game designer I know that my priority is to make great experiences for players and I love it, i love designing games for a living. But I do have bills to pay and I think i'm entitled to live and thrive from the work I do. Right now Free-to-play with IAP is the business model that lets me keep doing what I love.

Nicholas Lovell
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I'm not sure that would work. It would end up like the Facebook permissions screen for games where you basically have to say Yes to everything if you want to install it.

I much prefer a quick "turn off all IAPs" button. Actually, what I really want is a kid's mode that comes predefined but can be tweaked so, for example, I could disable all Internet access except the YouTube app, or whatever.

Alexander Symington
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Regarding the permissions problem, the OS wouldn't have to expose whether per-app IAP is enabled to the app itself. If IAP were disabled, an error/explanation could pop-up in place of the password box at the point where a non-free transaction is attempted, and the app would continue as if the transaction had been cancelled.

James Yee
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I'm with Nicholas I want a kids mode like I have on the Nook. Then again I'm smart enough to NOT link any payment systems, as well as turn off IAP for my iPad. :)

Jeremy Reaban
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Let's be honest, games with in app purchases that target children are very questionable morally.

Obviously there is a lot of money to be had, but did people really get into this industry to bilk children of their allowance money by using psychology to create a skinner box that will appeal to them?

Nicholas Lovell
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I'm not sure I agree. There is a lot of valid debate about this topic. Parents don't want to pay for games until they know their kids will play them. They will only download free games but developers need to eat.

If you were to argue that it matters *how* you do IAP for kid's games, I would agree with you. But a blanket statement like the one that you made is ridiculous.

Carlo Delallana
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The arcade was the skinner box of my youth and my allowance came from my dad. I don't think game designers of the arcade era got into the business with the goal of bilking money from players. They wanted to make great games that people wanted to sink quarters into.

It might be a good for someone to write a column on games that do IAP well. There are studios that do care and it's unfortunate that the only dominant story is IAP done bad.

Chris Clogg
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I agree Carlo; would be good to see the games that do it well, because in general it seems to be done very poorly. Something along the lines of:
*Hey you want to play level 2?* $1.99
*Oh you'll need a sword for level 2* $0.99
*You've run out of level 2 credits, please wait 24 hours or pay* $0.99
...

But I mean, you do hear about the few devs who are nice about IAP, like Punch Quest, and they make much less money :/

Carlo Delallana
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@Chris ~ I think this quest for "IAP well done" should go beyond mobile. League of Legends does IAP well. The game is 100% playable without a purchase. People who really get into it can invest through the purchase of Champions.

James Yee
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Don't Forget Mechwarrior Online their F2P system works really well too.

World of Tanks works as well to, up to a point.

Planetside 2 is doing a good job too in my book.

Dave Hoskins
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Carlo - "I don't think game designers of the arcade era got into the business with the goal of bilking money from players. They wanted to make great games that people wanted to sink quarters into."
Well, in the late 80s some arcade games turned into the exactly the same cash cow. They got so hard to play, people had to keep bunging coins in just to advance. Usually with the words 'Insert coin(s) to continue!' displayed in big letters...surely people remember that phrase on more than one machine?

Cordero W
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I want government regulation.

Carlo Delallana
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Well, maybe not the US government....they can't even get their shit together

Ramin Shokrizade
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I'm in a full agreement with the OP, and I made many of the same suggestions in my 2011 "Zynga Analysis" paper, especially regarding the need for us as an industry to achieve some level of standards before the government is forced to step in and do it for us.

Bob Johnson
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ITs ridiculous this isn't off by default.

Curtiss Murphy
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Good thoughts. IAP is okay, with limits. Time management games like Farmville (and clones) hurt our industry by tricking players into making hundreds of micro-transactions for what amounts to nothing more than a Skinner Box with pretty pictures. Just my opinion, of course.


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