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In Conversation: How Spice Labs Is Approaching The Kids Apps Segment – Part 1

Last week, Spice Labs* announced the launch of educational and entertainment apps for Blackberry. According to the company, these apps are being used by 2 million parents worldwide (we assume this refers to downloads), and are available free of cost on Blackberry. Spice also has apps for Nokia’s Symbian devices. The Blackberry apps include: Magic Canvas, Rhymes, Memory, Jigsaw, Kiddo, Hangman Kids, and are available here.

The focus on kids apps intrigued us, especially after what we learned about the challenges that kids books publishers are facing in the digital domain. So we spoke with Dr. Abhinav Mathur, CEO , Siddtharth Jain, VP (Consumer Apps) and Prashant Singh, Sr.Manager (Alliances) at Spice Labs in detail about how they’re approaching this segment. In part 1 of this discussion, they spoke about IP creation, data collection, the kind of applications they’re creating, monetization, advertising support and more:

MediaNama: Are you looking at replacing the toy market?
Dr Abhinav Mathur: It’s not a replacement. What is happening globally is that more and more people are looking at digital products. If my phone is not in my pocket at home, it is in the hands of my child. If he can have content and apps that make sense for that age group, it makes sense. It’s a very big market available. Toys would mean that there are purpose built pieces of hardware and software combined. Maybe a doll that speaks, and a screen associated with it. This isn’t a toy, but it’s an application on the mobile phone.

Siddharth Jain: If I look at my kid, in a journey of one to five years, he’s been playing with jigsaws. A jigsaw is nothing up a cardboard cut into pieces that he can put together, and we spend Rs 125-150 bucks minimum when we get that. There are also flash cards for ABC. The idea is that those very things can be available to you on a medium or a platform which is always with you, to which the kid is attracted. A jigsaw with a new image can be available to you, and which is just Rs 5 or Rs 10.

In case of words, I can take a real picture and teach him grandfather or dada instead of a caricature, he can hear dada being said, or he can hear dada’s voice, because the device is a full computing device. It just depends on how you present it to the kid. When he is in the car, or some place where you can’t carry all those toys…the physical contact is a very important part of learning. Childrens books are now being replaced by the touch medium, and we’re looking to do products for both touch and non-touch devices.

MediaNama: What is the value chain like in the digital toy industry?
Dr Abhinav Mathur: Right now the value chain is not very clear, but there will be developers like us, app stores and OEMs which we’ll have to work with. We might have some branded app stores where you can place apps, like Getjar might lead into a child specific app store in the future. There are two ways kids find something on a handset. First is what is available on the handset and the other is what I’m willing to download and share with him, which is largely educational.

Siddharth Jain: Today if you enter any mall, there is a segment which is for kids. Today’s app stores are like those marketplaces. Parents like me are looking for things for their kids. It’s not a direct disruption of the toy industry right now.

MediaNama: So who are you targeting for the app?
Siddharth Jain: The parents need to be convinced it is educational and the kids need to have fun. We have an application which teaches spelling. A four year old can’t do spelling, but the thing is that when he gets it wrong, he is happy making the character (in the app) cry. But once in a blue moon, when he gets it right, we show a chocolate on screen, and he loves it, and he runs around and shows it to us. So the kid has to have fun.

MediaNama: So it’s gamification, and you put in achievements and gifts to incentivise the kid to learn. For all the apps that you’re planning, are you also planning to take data back from the applications? Can a parent even track how a kid is performing on that application, in a manner similar to what the Khan Academy has done?
Siddharth Jain: The moment you get into the digital medium, the whole track is there – how many things you got right, how many things you got wrong. Whatever you get wrong is available there, and you can help correct it. Subtly, it’s getting introduced. For this medium you’ve pointed out a very strong reason why this should be done, where this data can help a lot, and if you connect it to the server then there are ‘n’ number of things you can think of. We want to keep it simple.
Dr Abhinav Mathur: We do get information on how many games did the child play, but we don’t do anything for the parents right now. That information is available for the parent on the application itself, but these things could be done, and we want to keep it simple. We just want to have that fun element for the child.

MediaNama: So do you also monetize the application through gifts as well? For example, Cadbury’s could sponsor a gift.
Dr Abhinav Mathur: That is one option. Maybe in the future there could be kids ads directed at kids or, with the Disney channel and their characters. Many of our kids applications are also paid apps, more gifts to be added to the gifts store. You could do in app purchases, that if he exhausts a number of spellings, then you could get more.
Siddharth Jain: Here is a model where the consumer is paying directly. Mostly it’s try and buy – you get a free version, and the upgrades here are better. The ratio here is better than the normal apps…

MediaNama: Is this a market specific trend – this higher propensity to buy – or is it a global trend? Where do you see scale coming in – in an ad supported model or a paid application model?
Siddharth Jain: I see it in in-app and the gifts that work around it. In terms of scale, the conversions in case of kids apps is higher, and advertisements is something we’re trying to figure out right now. The general large scale ad networks out there – they’re not tuned to target kids.
Abhinav Mathur: It’s dangerous also. We have to be responsible, since the ads might not be suitable for kids.
Siddharth Jain: We’re trying to avoid being a sponsored app. We would like to create our own properties on which a brand would like to participate

MediaNama: In your interaction with brands, what has the response been?
Prashant Singh: They are excited, and because there are brands in the US who are advertising on apps, they definitely want to do it here. But one thing they want to establish is scale. Right now, if you look at the classic problem with online and mobile advertisements, it’s only a small fraction of the pie. When, as a demographic, the shift will happen to online, I’m sure the advertising shift will also happen. It will still happen sooner than I expect. They say give us more data. We’re working on some partnerships. For example, we’re working with Pratham Book publishers, and we’re bringing their content on our apps.
Siddharth Jain: Pratham allows us to define the power of this medium. The interactivity that you can get on top of that book, in this medium, is remarkable. And there is no disruption to the normal thing. The phone is a complement to the book itself. The kid actually always wants to go back to that book also, but on the phone you can give him interactivity, a Q&A. When a story is being narrated, a character can narrate it in a voice.

MediaNama: Instead of partnerships, are you looking at your own IP? One would be to create a kids brand, because there is no one in this sector right now. The other is to look at what book publishers and toy companies are doing, and say that if you’re buying this book, an app is bundled in. How do you view these options?
Dr Abhinav Mathur: Option number 1 is more attractive to us.
Siddharth Jain: It’s what we’re working towards, but Option 2 is what comes up a lot, as an immediate thing that we can do to monetize in the short term.
Prashant Singh: (from an IP creation perspective) The concept is commoditised, but if we put game mechanics on top of it – like a reward system that we’ve thought of, and the kind of behavioral data we have thanks to our millions of application downloads that we’ve seen, that can manifest into features and engagement models which I don’t think someone can copy on day one. When you’re first movers, you establish a use case and anyone can come in and try and take the market. But you have customer data. For example, I know what kind of a spelling a five year old is more likely to crack. And what spelling to serve when a three year old becomes a five year old. If I do jigsaw, I know what kind of image complexity a two year old is comfortable with.

MediaNama: How are you capturing age related data?
Siddharth Jain: It’s a Q&A, certain features if they get used, the level someone is playing. We have been getting data back from the application in terms of the basic features that we put in, and basic questions and answers. For example, we ask if the child is a prince or a princess, and the character that comes up says “I’m so many years old. How old are you?”
Prashant Singh: The other thing is that the people who are trying it are early adopters and are more vocal, and we get a lot of emails. Someone writes in to say that their 5 year old or 3 year old loves the application. The data is there. It’s not structured, but if you look at it you can trace the path.
Siddharth: The first part is the knowledge that we build up. The second is that the brand is getting formed. The Hangman application that has done so well on Blackberry, has done reasonably well on Android. The reviews on Blackberry are around 1000, and the first set were recognising the character that’s a part of the brand. The strength that we’re building up from the data, and what goes into this understanding. The characters that are getting built in – the idea is to make sure that the recognition translates into a brand. Through those channels, which are different from Internet, TV and print. The plan is that we’ll leverage it into something.

MediaNama: How do you communicate to parents that there is educational value in the app, because app stores don’t have ratings/metrics for it?
Siddharth Jain: Right now, it’s in the description. Sometimes there is something which is extreme and interesting, we put it up. If someone said something helped their kid, we post it. We’re also looking to leverage, for example, Nokia’s own media. We have internal videos where parents used the application to teach kids. We have home videos for internal consumption. Now we’re putting ourselves out there.
Prashant Singh: We did a focus group in a school, and we suggested that this application should be used as a teaching aid. Some people signed up, and we got some interesting data. For example, the vocabulary increased because it was more engaging. Their comfort with English words improved – instead of saying kursi, they were saying chair. If you get a spelling wrong on the app, you don’t get punished. And there is positive feedback in the app, which makes it more of a conducive learning experience for the kid. That essentially established the need for the parent. Now all the 30 parents who took part in it became our brand ambassadors.

Disclosure: Spice Digital, of which Spice Labs is a subsidiary, is an advertiser with MediaNama

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