iPad-ding the bottom line

In January, Apple CEO Steve Jobs made the much-anticipated announcement that his company planned to unveil the purported missing link between smart phones and laptop computers. With much fanfare, the tablet, measuring 9 x 7.5 inches and weighing 1.5 lbs., hit the US market in April. More than one million iPads flew off retail shelves in just over a month, and to date roughly three million units have been sold worldwide.
October 22, 2010

In January, Apple CEO Steve Jobs made the much-anticipated announcement that his company planned to unveil the purported missing link between smart phones and laptop computers. With much fanfare, the tablet, measuring 9 x 7.5 inches and weighing 1.5 lbs., hit the US market in April. More than one million iPads flew off retail shelves in just over a month, and to date roughly three million units have been sold worldwide.

Because of its bigger size and augmented touch-screen features, many believe the iPad is better suited to the kids market than either of its predecessors, the iPhone or the iPod Touch. And kids IP owners are now lining up to launch apps for the device. However, like any new development opportunity there is a learning curve and special considerations that should be addressed.

App format, functionality and price point

‘The sheer size and intuitive nature of the iPad will make it a natural for kids’ applications,’ explains Anne Loi, SVP of DHX Interactive, a division of Toronto, Canada-based DHX Media. ‘It’s so exploratory,’ she adds. ‘I don’t think anyone will disagree that this is the future.’

Rather than develop one of its kids properties, like Franny’s Feet, for an iPad app, DHX entered the market with the creation of an app for US space agency NASA that commemorates the 40th anniversary of the Apollo 11 moon landing. The company then made a series of apps using public domain kids stories under the umbrella brand My Living Stories that sell for US$1.99 each.

‘Our goal was to develop a robust pipeline,’ Loi says, explaining the exercise was as much about sharpening the company’s development chops as it was about creating a new revenue stream. ‘We are treating it more as a tool, so when we are ready to take our own IP into the space, we can really pump the apps out.’

FremantleMedia has developed iPad-specific apps for its game show franchises such as Price is Right and Family Feud, and its new kids division is also currently exploring the territory. For his part, Olivier Delfosse, FremantleMedia director of interactive, sees the platform as a natural for educational and entertainment apps for kids. ‘The iPad capabilities are faster, it’s got a bigger screen and, in general, it’s just a much better user experience than the iPhone,’ he says.

Perhaps the most passionate spokesperson for the emerging platform is André de Semlyen, CEO of Paris-based Gong Media. The company has launched a free app, Gong Radio, that supports its many IPs, including the kid-targeted Samurai Shampoo. The app includes a subscription option where users can pay to access additional video and audio content on the iPad.

‘Once you have that magic tablet you can’t just put it in a drawer and forget about it,’ de Semlyen says. ‘The screen is an incredible toy for kids. I do think it’s the missing link.’

In terms of blazing new trails in functionality, Encinitas, California-based Oceanhouse Media’s work on apps built around the Dr. Seuss storybook collection is exemplary. (A number of them were available at launch and consistently rank in the top-10 in iPad apps sales.) ‘It’s like the format that these books have always wanted to be in,’ says Michel Kripalani president of Oceanhouse Media. ‘Tablets are really where it’s at for children’s books.’

The Cat in the Hat app includes a professional narrator, sound effects to denote such things as rainfall and the opening and closing of doors. Additionally, kids can touch objects on the screen and watch as the Cat, a ball and Sally, for example, transform into the very letters that make up the word seen on-screen.

‘The reason the format works so well is that kids are very tactile,’ says Kripalani. ‘Having a young child touch the screen and have it react is the most natural thing in the world.’

Over the next couple years, Oceanhouse is planning to develop apps for the entire Dr. Seuss catalogue, and Kripalani expects that each one will grow in functionality as his developers become more familiar with the capabilities of the platform.

And while the development process for an iPad app is somewhat similar to that of an iPhone, the underlying costs of doing business with Apple are exactly the same. Apple takes a 30% cut of all sales generated at its App store.

Keeping this in mind, many developers and IP owners have been zeroing in on the perfect price point that will suit the market and enable them to maximize their 70% share of the sales.

‘We priced our storybook at US$1.99 to keep it out of the under-US$1 bin,’ says DHX’s Loi. ‘I think it has to be the right play pattern and amount of playtime to have people pay upwards of US$3 for an app. That is probably the price where companies will start to see big money coming in.’

Oceanhouse’s Dr. Seuss apps are US$3.99 apiece. ‘It’s significantly less than a hardback version of the book,’ contends Kripalani. ‘There is a lot of life delivered at that price. It’s rich enough that a child can sit down for 15 to 30 minutes at a time and be totally occupied.’

Dora’s Colouring Adventure app from Nickelodeon offers similar functionality as the Seuss books, including the ability to create and color in scenes, all for US$4.99 a pop. It is a retail proposition that senior director of business development at Nickelodeon Gerry Gouy says will generate enough revenue to re-invest in developing subsequent applications that will push the tech even further.

‘The bottom line is that revenue is the driver that keeps us investing,’ he says. ‘Free apps and promos are part of our thinking, but overall this is a heavily revenue-focused area for us.’

To license or not to license

Since the market is so new, property owners are experimenting with different models to get the most bang for their app. Dr. Seuss Enterprises and FremantleMedia, for their part, are treating iPad apps like another digital licensing category and structuring traditional deals based around royalties.

Dr. Seuss, for example, licensed its properties to Oceanhouse for iPhone apps and then extended the agreement to cover the newer platform. Similarly, FremantleMedia had an iPhone app licensing deal with Montreal, Canada-based Ludia and granted the company iPad rights.

‘We do see it as a new category,’ says Delfosse, who describes the terms of the arrangement as ‘a straight-forward licensing deal.’ He adds, ‘We include it with the license for the iPhone development because it seems like such an easy transition for people to make. ‘

Nickelodeon, however, is taking a different tack. With its Dora’s Coloring Adventure released in April, and a slew of additional apps featuring the likes of SpongeBob SquarePants, Diego and iCarly currently being readied for a pre-Christmas release, Nickelodeon is not looking to treat apps like a licensing category.

‘We don’t believe it constitutes a new licensing category, but our view might change,’ says Gouy. ‘We have external developers involved, but the project management is all internal.’ He says it’s a matter of retaining control over the Nick brands in this new digital space. And, he adds, parent company Viacom has enough in-house resources to handle the workload entailed in developing and distributing iPad apps.

No app is an island

Once an app is developed and a workable price point is set, new titles still run a very good chance of getting swept away in the veritable ocean of apps available at Apple’s online store – the primary distribution channel for all things i-related.

Delfosse, for one, doesn’t see it as a huge hurdle. ‘It is a meritocracy,’ he says. ‘The best apps rise to the top, so we have been able to not get lost by producing consistently good products.’

Loi, on the other hand, stresses that the key to standing out at the App store is to cross-promote a number of different apps. ‘It’s easy to get lost in the store,’ she says. ‘I think if you can get featured, that is important. But if you have just one lone app, no one will find you.’ So, she says, DHX’s ability to cross-promote has made My Living Stories apps a modest success. A simple strategy that’s working includes placing ads and links to new apps on existing ones.

As with securing traditional shelf space, having a well-known IP is a great help, but sometimes it is just not enough. ‘There is a lot of iconic IP,’ says Nick’s Gouy. ‘But it comes down to quality. Cross-promotion is just a must.’

Oceanhouse’s Kripalani says it is a combination of the brand recognition invoked by Dr. Seuss, cross-promotion and the app’s quality that has kept his product’s sales consistent. ‘I think the people who complain about being lost are the ones with wholly original IP,’ he says. ‘It’s easier if you have something people recognize, and then you also have to constantly cross-promote it to be able to get people interested.’

About The Author
Gary Rusak is a freelance writer based in Toronto. He has covered the kids entertainment industry for the last decade with a special interest in licensing, retail and consumer products. You can reach him at


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