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Leveraging the Subscription Model to Succeed in the Kids App Economy | Nancy MacIntyre

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The Subscription App
Economy & Kids
Presented by Nancy MacIntyre, CEO Fingerprint
Casual Connect 2018
• Founded in 2011
• Based in San Francisco
• 32 full-time staff
Funded by Corus Media,
DWA/NBC, Reed Elsevier,
GSV and Tri...
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Leveraging the Subscription Model to Succeed in the Kids App Economy | Nancy MacIntyre

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Delivered at Casual Connect USA 2018. The subscription model has become the most viable path to profitability for the kids app marketplace and is a concrete revenue strategy for global brands looking to extend their reach. In this talk, Nancy MacIntyre will discuss how subscription services will continue to fuel the kids app economy by giving consumers the accessibility, variety and value they desire; while giving app developers and global partners access to millions of consumers and a revenue pipeline.

Delivered at Casual Connect USA 2018. The subscription model has become the most viable path to profitability for the kids app marketplace and is a concrete revenue strategy for global brands looking to extend their reach. In this talk, Nancy MacIntyre will discuss how subscription services will continue to fuel the kids app economy by giving consumers the accessibility, variety and value they desire; while giving app developers and global partners access to millions of consumers and a revenue pipeline.

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Leveraging the Subscription Model to Succeed in the Kids App Economy | Nancy MacIntyre

  1. 1. The Subscription App Economy & Kids Presented by Nancy MacIntyre, CEO Fingerprint Casual Connect 2018
  2. 2. • Founded in 2011 • Based in San Francisco • 32 full-time staff Funded by Corus Media, DWA/NBC, Reed Elsevier, GSV and Trinity Capital Veteran management team with over 100 years of combined experience making and marketing great products Fingerprint is a mobile technology company focused on bringing the best subscription based content services to children around the world Our Foundation Technology Turnkey subscription aggregation platform Distribution Flexible and adaptable for OEM and carrier partners Content Vast library of learning games, books and videos Curation Curriculum-aligned content curation system Mobile Platform for Content Library of Games, Books and Videos Management Tools Support Platform as a Service Our Solution Our Platform Partners Our Key Content Partners A best-in-class product that drives engagement for kids and parents Streaming-based, cross-device and cross-OS learning platform A progressive learning path for a personalized learning experience A robust library of premium apps hand-picked by educational experts Expertise in the mobile kids business Competitive Advantage
  3. 3. Mobile penetration is driving digital content spending to new heights Over 300M families around the world have access to mobile devices Mobile Gaming $37B Educational Technology $44B OTT Video $25B eBooks $6B Source: US Census 2010/2013, US Department of Agriculture, Strategy & Analytics, Doecebo, NewZoo3
  4. 4. Company Valuation Paid Subs Revenue Price / Month $42B 83M $7B $9.99 $10B 12M $2B (57% subscription) Basic $7.99 Ad-free $11.99 $8B 30M $2B $9.99 $3B 4M $1B (16% subscription) Basic $3.99 Ad-free $4.99 More and more, that content is being accessed through subscription-based curated content platforms and OTT products Source: Company Reports 4
  5. 5. Since the inception of the App Store, the Kids Business has been in search of a financial model Premium Freemium Bundles Subscription 5 2007 2010 2014 2016
  6. 6. Today, there’s over 1000 Kids Subscription Apps around the world across a range of formats Subscription Apps Branded Content Books Video Games Learning 6
  7. 7. So why the shift to Subscription? Commerce • Apple expanded the types of apps eligible for Recurring Subscriptions • App Store / Google Play improved profit potential for long term subscriptions Consumers • Widespread adoption of wide range of subscription products • Business model eliminated fear of IAP or Ads with Kids Product • Predictable revenue allows for on-going investment in the product • Ability to market directly to Mom / Parent Developers • Improved ARPU and LTV • Growing user with recurring payments
  8. 8. 2014 2015 2016 2017
  9. 9. In fact in 2017, 18 of the top 25 Grossing Kids Apps used a Subscription Model • Leading Subscription Apps tend to focus on 4 main themes: • Learning (progressive learning systems) • Video (branded video experiences) • Games • Books (aggregated book platforms) Learning 42% Games 16% Books 10% Video 32%
  10. 10. Compared to Games, this is pretty remarkable Model FREEMIUM FREEMIUM FREEMIUM FREEMIUM FREEMIUM FREEMIUM FREEMIUM FREEMIUM FREEMIUM FREEMIUM Model SUB SUB SUB PREMIUM SUB SUB SUB PREMIUM SUB SUB
  11. 11. So why is it? Parents Engagement Tools Marketing Channels IAP Moment of Truth FREE
  12. 12. One example of Subscription vs Freemium Product A-Free was initially launched as a Freemium Game for Kids 5 to 8 • Sample Pack of 10 Activities • Upsell to content packs for $2.99 with 50 Activities • New pack every 4 weeks • After 6 months, conversion to paid was less than 2% Product A-Sub was relaunched as a Subscription game on month 6 • 7 Day Free Trial with 30 Activities • Upsell to full access to all content for $3.99 / month • Commitment to launch 10 new activities a week Subscription, $223,407 Freemium, $11,795 REVENUE GENERATED BY SAME GAME APP AS FREEMIUM VS SUB MODEL IN MONTHS 3 TO 6
  13. 13. Looking at the KPIs App Store Conversion D1 Retention Free Users % of installers starting content % going into trial % of trialers who pay % of DAU to Total Subs Payer Retention Annual / Monthly Sub Ratio
  14. 14. KPI’s significantly improved with Sub App KPI Actual CVR (App Store Conv) 35% % of Installers Starting Content 90% D1 Retention Free Users 40% % going into Trial 38% % of Trialers who Pay 85% Payer Retention (Mo to Mo) 85% % of Players who pay 11.3% KPI Actual CVR (App Store Conv) 52% % of Installers Starting Content 85% D1 Retention Free Users 30% % going into Trial NA % of Trialers who Pay 2.5% Payer Retention (Mo to Mo) 60% DL to Pay ratio 1.3% Freemium Subscription
  15. 15. Considering a Subscription App • Targeted at 3 to 8 year olds (generally) where Mom is making most decisions • The App has great introductory content for the Trial with strong mechanics to keep a child playing • The App has a lot of content (needs 2 year roadmap) • The content and value offered warrant the recurring price • You have invested in tools to create engagement with both the child and parent • You can keep a user for at least 12 months • You are prepared to run Live Operations of the product !
  16. 16. Questions?
  17. 17. Appendix
  18. 18. Top performing Subscription based Kids Apps are leading with content scale and dynamic updates App What is it? How much Content? ABC Mouse Progressive Learning 8500+ Activities Epic Book Library 25000 Books Noggin Video Episodes 100+ Videos Disney Jr. Video and Interactive 10 Series+ Curious World Games, Video, Books 1000+ Activities PlayKids Video, Games, Books 4000+ Videos and Game/Book library Samsung Kids Video, Games, Books 10,000 Hours of Play Amazon FreeTime Video, Games, Books Over 15,000 Content Apps/Videos/Books

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