Saturday, February 21, 2015

Youtube for Kids: not just a $$ move? Yuan (Danny) Xu

Google is about to release a kid-version youtube app for smartphones and tablets featuring popular television shows for preschoolers.  Interestingly, this App will not be available at the popular IOS platform, at least initially. You might want to ask, what, no IOS app? And how do the ads work, if any, for these kids audience? One thing for sure, there are still a lot of uncertainty around the economics of this App.

Sources has indicated that Google is planning on showing ads in the App, but one legal concern is that “Google will have had to comply with the Children’s Online Privacy Protection Act, which is overseen by the Federal Trade Commission. Among other COPPA rules, websites that cater to children must notify parents if they collect personal information.” ( If individual level data cannot be collected, then it is unclear how Google is going to effectively do their ad distribution job. Another concern might come from the lack of platform support. The data has shown that on average, IOS users have higher income than Android users. If there is no IOS platform support, then is there a strategic portion to the move as well?

A $$ Move

No doubt that an App just for kids will attract a vast amount of advertisers who are thirst for a channel that they can use effectively to target the kids “consumers”. Think about it, preschoolers rarely have any kind of smart phone, thus almost impossible to identify among all the mobile device users. Given such a kid specific channel, advertisers could finally identify this segment easily. According to WSJ, “Darcy Bowe, vice president and media director at Starcom, an advertising agency, said her clients are often frustrated by lack of digital advertising venues geared for children.” Given that there aren’t many competing platforms that have such a huge potential for attracting kids (yes, kids are in general addicted to watching TV programs), the bargaining power of Google is in much favor.

But could there be a deeper level of reason for such an App, Given all the potential hassle of getting it approved?

A Strategic Move

Well, one thing we know is that at least in the US, the annual sales of android devices are dropping compared to IOS. Just last quarter in 2014, the IOS devices accounted for 47.7 percent of sales compared to 47.6 percent for Android. Although Android is still dominating the overall smartphone market, Google does need to worry about this change in sales trend. Having an App like this, if later proven to be popular, will likely to fuel the sales of Android devices.

One thing they might miss though, are the higher income families that mostly use IOS devices.  If the advertisers on this App can only target kids from the comparatively lower income families, then that might be a slight disappointment for potential advertisers.

A more important aspect might be the long term effect on people’s consumption habit both for the mobile platform and how they interact with TV programs. First, if a kid growing up using Android platform, this could potentially affect their choice of devices when they become teens. Second, kids nowadays are shifting away from the traditional TV-watching habits that the last generation might have. One director from Comcast once said that the 7-11PM prime time is the “God intended” way to watch TV programs. However, it seems that the majority of teens do not think that way. Watching TV programs on mobile devices has increasingly become popular not just among teens, but also among young adults and even mid-ages. An App like this one could further catalyze the process, resulting in more TV-program consumed from mobile platforms in the future, therefore eating away TV broadcasters’ share. We will see how that plays out in the future.

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