Developers adapt to Apple’s crackdown on app discovery services

Google Play versus Apple App StoreEver since Apple instituted clause 2.25 in October 2012 to its App Review Guidelines, the Cupertino, Calif.-based corporation has been cracking down on app discovery services violating the clause like AppGratis, which was removed from the Apple App Store in an effort to stop third-party tools that directly compete with the store. Clause 2.25 states that “Apps that display Apps other than your own for purchase or promotion in a manner similar to or confusing with the App Store will be rejected.” Another relevant clause is 5.6, which states that “Apps cannot use Push Notifications to send advertising, promotions, or direct marketing of any kind.”

Inside Mobile Apps first heard of AppGratis when we spoke with CEO Simon Dawlat back in January about the company’s raising of $13.5 million in Series A funding and that its service was delivering up to 700,000 installs for app developers. Essentially, AppGratis offered developers burst campaigns by getting their app featured by AppGratis for a certain amount of money. Now that the app is removed from the Apple App Store, for those who still have the app installed on their devices, the app just prompts users that daily deals will be delivered to their email instead of through the app via push notifications. App discovery remains one of the largest hurdles for app developers, so when engines like AppGratis get taken down, developers need to start looking at other avenues for discovery. In a guest post from Side-Kick Games marketing director Noya Polliack, she adds that it’s clear Apple wants to remain “hands on” with picking the “right” apps for its users.

This wasn’t the first time Apple cracked down on limiting outside influencers from its app ecosystem. Apple shook down incentivized install practices back in April 2011, where developers offer their apps in other games and pay for downloads when users install their titles for virtual current.

PocketGamer.biz reported earlier this month that Apple apparently expanded the language in clause 2.25. PocketGamer.biz was sent an email conversation between Apple and an anonymous developer who’s developing an app “primarily focused on sharing recommendations to your friends.” In the email from Apple to the developer, Apple pointed to apps that “include filtering, bookmarking, searching, or sharing recommendations are not considered as significantly different from the App Store.” The additional language to clause 2.25 is not present in Apple’s guidelines. This expansion to the regulation 2.25 has left iOS developers confused about what is and what isn’t acceptable in terms of app promotion. (more…)

Skillz brings real-money gaming to the U.S.

skillz-logoReal-money gaming is now reality in the U.S. with Skillz, a first-of-its-kind multiplayer tournament platform, which gives players the chance to compete for real money and virtual currency in mobile games of skill. The platform launched today in beta for Android.

“We’re bringing real-money gaming to the U.S. right now, and we’re the first people to do that,” Andrew Paradise, co-founder and CEO of Skillz, tells Inside Mobile Apps.

Skillz enables games of skill to be played in cash tournaments in 36 states — such as California, New York, Texas and more — as well as virtual currency tournaments in any game worldwide. All a mobile developer has to do to enable cash and free multiplayer tournaments is integrate Skillz’s SDK, which can be implemented in as short as an hour to three work days.

Skillz legal states games of skill

Skillz has come out of stealth with 10 developers with 10 games on board, including Gnarly Games with GnarBike Trials, Spooky House Studios with Bubble Explode, Rocketmind with Big Sport Fishing 3D Lite and more. The first batch of titles run the gamut genre-wise, with genres like endless runners, bubble shooters, mini golf and more.

The obvious question to ask is how did Skillz make real-money gaming legal in the U.S.? The easiest answer is that real-money gaming via a skills competition has been legal for years in most states. First, it’s important to define the difference between a skill versus a chance game. On one end of the spectrum is a skill game like chess and on the other end is a chance game like roulette. The legal definition of a skilled game is if a skilled player predominantly beats an unskilled player about 75 percent of the time. Examples of games of skill where a cash competition is legal include chess tournaments, running marathons, golf tournaments, fishing tournaments, esports tournaments for games like StarCraft 2 and Call of Duty, even the arcade game Golden Tee, and more.

“One of the things we created is a way to statistically verify the level of skill versus chance in a game, and so one of the things we do is plug in these virtual currency tournaments into a given game and then we’ll run virtual currency tournaments and gather data,” Paradise says. “Basically, we can look at how often skilled players beat unskilled players and then determine if a game is skill versus chance.” (more…)

Digital Chocolate launches real-money gaming title Slots! Pocket UK

Slots! Pocket UK logoSocial-mobile gaming developer Digital Chocolate today launched its first real-money gaming title Slots! Pocket UK for iOS in the U.K.

Powered by real-money gaming platform Betable, Slots! Pocket UK is a slots game that allows U.K. users the option to wager either real money or virtual currency and chips on pulls of the slot machine. Betable first announced its partnership with Digital Chocolate back in November 2012. Digital Chocolate is one of 10 developers so far to partner with Betable for its real-money gaming platform, which is still a private beta program. Betable handles all the real-money aspects of the game on the backend, including compliance, fraud prevention, identity checks, wagering, and gambling results, while Digital Chocolate can focus on the development of the actual game. In order for players to gamble with real money, they must be authenticated with Betable by signing up, depositing money, and more.Slots Pocket UK screenshot

“[Betable] helped us leapfrog the whole race into real-money gaming by allowing us to partner with them on their platform, and of course, they have the license in the U.K. to do real-money gaming,” Jason Loia, chief operating officer of Digital Chocolate, told Inside Mobile Apps.

There are about three ways to enter the real-money gaming market. First, an IP-licensing deal like how Zynga partnered with real-money games operator bwin.party, where bwin makes a game that’s Zynga branded. Second, a developer can acquire their own real-money gaming license, but its a very expensive and long process. It costs millions of dollars and takes years to acquire a gambling license. Lastly, a developer can acquire a company that already has a real-money gaming license, but whatever developer that acquires a company with a license would have to restructure because they have to become compliant with whatever country’s government that allows real-money gaming. After analyzing its options, Loia says Digital Chocolate realized it couldn’t enter real-money gaming alone, and it didn’t have deep enough pockets to obtain a gambling license in each country where real-money gaming is legal. With Betable, Digital Chocolate gets to make its own game, control its IP, and have Betable do all the backend real-money gaming legwork, all under a fair revenue share model.

“There’s some bigger companies that are going after the licenses themselves, but for us and the majority of the gaming sector, it makes more sense to partner with experts in that field,” Loia says. “We’re not experts in real-money gaming law — Betable is. We’re experts in making great social games for mobile and web. The partnership makes total sense.”Slots Pocket UK screenshot

Slots! Pocket U.K. launches with seven thematically different slot machines, with more to come in the future. Themes in this release include a safari-themed slot machine, an underwater machine, a Wild West machine, and more, all with its own sound, characters and storyline. Each slot machine also features its own mini-game, which can be unlocked depending on the spin of the wheel. When completing mini games, users earn the chance to level up (users have to level up to unlock more slot machines) and win more. Lastly, the combination of potential winning spins increases based on the number of friends a player has.

The game also features an advanced power up system, which rewards users with virtual currency. For example, a player can take a chance and apply a multiplier to their spin, or they can throw an anchor to hold on to a specific reel within the machine, altering the outcome, or make a quake and shake the reel for a winning combination. No matter which power up a player utilizes, they earn bonus points. The real-money slot machines don’t have any of these power ups from the virtual-currency machines as the real-money machines look and feel like a slots machine a user would see in a casino.

Loia says the future for real-money gaming is when regulations open up even further so real-money gaming mechanics could be added to social gaming in general, not just casino games. Digital Chocolate’s portfolio mainly consists of free-to-play social games like social racer Race Track Rivals (review), medieval fighting game Kings and Warlords, city building game Millionaire City and more.

“The more exciting thing about real-money gaming is when you can couple the broad reach of those social games with the massive monetization that real-money gaming brings to the table,” he says. “That’s when it truly explodes and changes gaming forever.”

Guest Post: Apple enforces its new app promotion restrictions, removes AppGratis from the App Store

App Gratis removed from Apple App StoreEditor’s Note: Earlier this week, Apple booted out app discovery service AppGratis, which promotes paid apps by offering one for free everyday, from the Apple App Store for violating clause 2.25 of Apple’s App Review Guidelines, which states that “Apps that display Apps other than your own for purchase or promotion in a manner similar to or confusing with the App Store will be rejected.” The app also violated clause 5.6, which states that “Apps cannot use Push Notifications to send advertising, promotions, or direct marketing of any kind.” VentureBeat reported that Apple reached out to AppGratis last Friday, informing the company that it was welcome to change its app and resubmit it. AppGratis CEO Simon Dawlat said in a company blog post that there were no discussions between Apple and AppGratis in advance of the Cupertino, Calif.-headquartered corporation removing the app. Dawlat (who also explained the full story of how AppGratis got pulled) said he did eventually speak with an Apple employee over the phone and does want to speak further with Apple.

With all that said, in today’s guest post from Noya Polliack, marketing director at Side-Kick Games, a developer of family and mid-core games, says that despite discoverability being a huge issue for app developers in the crowded mobile app market, AppGratis is the latest example of Apple being keen on clamping down on any apps that violate its policies.

Six months after adding clause 2.25 to Apple’s App Review Guidelines, AppGratis finds itself outside of the best store in town – Apple’s App Store.

AppGratis is the second app banned from the App Store due to the new guidelines which restrict apps from providing pure app promotion services. These Apps usually function as app recommendation services and/or alert users when discounts are available. Among this type of apps are FreeAppADay, Appoday, Daily App Dream, Appsfire and more. Earlier in December, the popular AppShopper app was removed from the Apple App Store.

Both AppGratis and AppShopper offered developers burst campaigns — massive traffic in a short period of time. The result of these campaigns is usually high ranking in the Apple App Store for a few days. This method of app promotion is used by many developers in order to overcome the number one problem in the crowded app market today — discoverability.

At the moment there are still plenty of other discovery apps, which offer third-party promotions. While Apple’s next move is unknown, it’s definitely an issue that app developers should address.

Is Apple acting in the users’ best interest?

One of the reasons the new clause was added is that by attracting millions of users, third-party aggregators like AppGratis allow a way for developers to spend their way to the top 25, violating the Apple App Store’s purity. However, big game development studios that can afford to create a marketing buzz before they launch their app can be accused of doing just the same. While these well known studios get the media’s attention and use their apps portfolio to cross promote their new app, indie developers with a low marketing budget and a single app stay behind. Sadly, the outcome is that many new great apps are not visible to iOS users.

It’s also important to remember that burst campaigns can be executed using different user acquisition tactics such as web-based affiliate networks, ad networks and user acquisition networks. Since all of these sources use in-app ads to promote other apps, we can expect to see the mobile ads market growing faster than expected.

As Apple’s ranking algorithm remains a mystery, it’s known that the number of downloads plays a key factor in Apple’s app store ranking. Since app installs can be acquired one way or another, it only seems fair that users’ experience and rating will have a much stronger influence on apps’ ranking.

Looking at Apple’s latest moves — adding clause 2.25, clamping down on incentivized apps downloads, changing the Apple App Store’s look and the unknown magic formula of how to get featured — it’s clear that Apple is keen to stay “hands on” picking the “right” apps for its users.

FTC recommends new privacy guidelines for mobile app platforms and developers

The Federal Trade Commission today released a new report, which outlines recommendations for mobile platforms and mobile app developers across the country to better inform its users what personal data is being collected and how the data is being used. The report comes less than a month after the California Attorney General’s office released its own privacy guidelines for mobile app developers in the state.FTC logo

FTC Chairman Jon Leibowitz, who yesterday announced his resignation, said in a statement, “the mobile world is expanding and innovating at breathtaking speed, allowing consumers to do things that would have been hard to imagine only a few years ago. These best practices will help to safeguard consumer privacy and build trust in the mobile marketplace, ensuring that the market can continue to thrive.”

The FTC, the federal agency that oversees business practices, stated that mobile devices “facilitate unprecedented amounts of data collection” because users, for the most part, have their mobile device on and with them at most times. In an effort to improve mobile privacy disclosures, the FTC recommended platforms and developers provide privacy data disclosures to consumers before allowing an app to access sensitive content like geolocation and for other personal data such as photos, contacts or calendar entries.

The FTC also recommended that platforms consider implementing a version of Do Not Track (DNT), the privacy mechanism that allows users to prevent tracking by ad networks or other third parties. Multiple desktop web browsers already support DNT including Firefox, Internet Explorer, Chrome and Safari. Mozilla’s Firefox mobile browser has the DNT mechanism and Apple’s Safari has a “limited ad tracking” slider for iOS, but despite Mozilla’s and Apple’s DNT support on mobile, the privacy mechanism is not as standard on mobile as it is on desktops.

At the end of 2012, the FTC strengthened its more than a decade-old child online privacy laws, in particular, the Children’s Online Privacy Protection Act (COPPA). The new laws require child-directed websites and online services to obtain parental consent before collecting children’s personal information like geolocation data or photos before sending the data off to third-party companies. Although, the updated rules explicitly exempt app “platforms” such as the Apple App Store and Google Play from complying with COPPA since the app stores only offer “public access” to kids’ apps, as opposed to targeting kids directly and exclusively.

FTC updates child online privacy laws, exempts mobile apps

The Federal Trade Commission today updated its child online privacy laws that haven’t been updated in more than a decade, creating new guidelines that improve children’s online privacy.FTC logo

Child-directed websites and online services will now have to obtain parental consent before collecting children’s personal information such as geolocation data, photos, videos, audio files or online behavior before sending the data to third-party companies.

The definition of a website or online service will expand to include third-party “plug-ins” on websites — for example, Facebook’s Like button — or ad networks that have “actual knowledge” that they are collecting  through a child-directed website or online service.

The particular law the FTC made changes to was the Children’s Online Privacy Protection Act (Coppa), an Act the FTC initiated a review of in 2010 to ensure it stayed up-to-date in this ever-evolving world of technology — especially with the rise of mobile devices and social networks.

The new rules explicitly exempt app “platforms” like the Apple App Store and Google Play from complying with Coppa because they only offer “public access” to kids’ apps, as opposed to targeting kids directly and exclusively.

“The Commission takes seriously its mandate to protect children’s online privacy in this ever-changing technological landscape,” FTC Chairman Jon Leibowitz said in a statement. “I am confident that the amendments to the Coppa Rule strike the right balance between protecting innovation that will provide rich and engaging content for children, and ensuring that parents are informed and involved in their children’s online activities.”

The Coppa Rule, which Congress passed in 1998, required kids’ websites or online services to obtain parental consent before collecting personal information from children under 13 years old, but the technology landscape has dramatically changed since then.

The FTC, the federal agency that oversees business practices, will continue to allow websites or online services to collect children’s personal information for internal use, so long as the website or online service obtains parental consent via email.

Last week, the FTC released a report that found hundreds of kids’ apps that were acquiring data without parental consent.

The amendments to the Coppa Rule will go into effect on July 1, 2013.

New Google Play developer policies prohibit spammy apps, invasive advertising

Google is cleaning up the official Google Play store a bit, making several changes to its Developer Program policy to improve its user experience and address issues like “deceptive app names and spammy notifications.” In an email sent out today to Google Play developers, the company outlined several new changes to its policies.

From now on, Google will restrict the use of app names and icons that it deems too similar to existing system apps. These apps typically attempt to confuse or misdirect users by purporting to be an official, pre-installed application, rather than something the user downloaded themselves.

Google is also making its policies about collecting user data clearer. The new policies explicitly prohibit the collection of user data without permission, and require developers to specifically outline what user data they are collecting. Apps are now expressly prohibited from sending SMS or email messages on behalf of a user without permission.

One of the most significant changes, however, is a new section dedicated to the Google Play ad policy. It’s now clear that Google considers the ads in an app part of that app, meaning all of Google’s policies around content and data collection apply just as much to the ads an app show to the app itself. In addition, Google Play developers must now make it clear what app an ad or a notification originates from. Users must also be allowed to dismiss an ad without penalty, and ad walls — advertisements a user must interact with in order to gain access to an app — are now expressly prohibited.

In the past Google has been criticized for what some see as relatively lax quality controls in Google Play. Google does not pre-screen or censor apps before they appear in the Google Play store, a policy that some unscrupulous developers have taken advantage of.

Earlier this month mobile security company Lookout reported almost five percent of all apps use “aggressive ad networks” — ad providers that access personal information such as email without notifying the user, change a user’s bookmarks or settings without asking permission or even serve ads outside the app they are connected to. Today’s changes to Google’s Developer Program seem to be aimed squarely at those kinds of apps.

“The way I think about it is the apps and Google Play itself are evolving,” says Chris Yerga, engineering director for Google Play. “What we’re trying to do here is give developers very concrete guidance about what’s expected of them.”

In addition to the changes noted above, apps with the primary function of driving affiliate traffic to a website, or load websites that don’t belong to the application developer (unless they have permission from the website’s owner/administrator) are now prohibited. Apps that encourage users to download applications from outside the Google Play store are also banned under the new guidelines.

All these changes are in addition to the changes to Google’s payment policy, which we cover in more detail here. The new developer guidelines can be found here.

How Japan’s social game regulations will impact GREE, DeNA and the U.S.

Update: As of May 9, GREE, DeNA, Mixi, CyberAgent, Dwango and NHN Japan have announced they are removing kompu gacha from all their games by the end of May according to industry watcher Dr. Serkan Toto. Developers using the mechanic in their games include Konami, Zynga, GREE, Klab, Namco Bandai and Sega.

Shares in GREE, DeNA and other Japanese game developers plummeted this weekend on the news that kompu gacha, an extremely lucrative mechanic found in Japan’s highest grossing mobile-social games, violates Japanese law.

With Japanese news outlets reporting the Japanese Consumer Affairs Agency will soon ban the practice, analysts predict Japanese social gaming companies will see a dramatic impact on their revenues. While that alone could affect earnings of Japan’s mobile-social game companies, it could also pave the way for similar regulations in North America.

How the government got involved

One of the reasons Japan’s mobile-social games are so lucrative that is the games have something in them called gacha — a game mechanic where players can pay a small amount of money to get an in-game item at random. Some Japanese developers see half of their sales coming from gacha, and the Japanese game companies setting up shop in the U.S. are bringing gacha with them. Both GREE’s Zombie Jombie and DeNA’s top-grossing Android hit Rage of Bahamut make use of the mechanic.

The Yomiuri Shimbun’s explanation of kompu gacha.

Kompu gacha, or “complete” gacha in English, further incentivizes the practice — instead of just acting as a way to get extra items or goods, kompu gacha offers grand prizes to players that can amass a complete set of specific and usually rare items. According to a report in the Yomiuri Shimbun, collecting a complete set can take hundred of tries and hundreds of thousands of yen. Although it seems like a fairly benign motivation scheme, as Japan’s social game companies have focused more and more on kompu gacha to increase revenues, the Consumer Affairs Agency has seen the number of complaints about the tactic increase dramatically.

Between April 2011 and March 2012, parents submitted 688 complaints to the agency about children and gacha. In one case, a boy in middle school racked up more than $5,000 (400,000 yen) in charges in a single month. Another boy in elementary school was able to make $1,500 (120,000 yen) in purchases in just three days. Reports like these have turned press scrutiny against the Japanese social games industry.

In March, industry watcher Dr. Serkan Toto reported GREE, DeNA, Mixi, CyberAgent, NHN Japan and Dwango had formed a self-regulation council specifically to regulate monetization. Although both GREE and DeNA now restrict the amount of money minors can spend on their platforms, the way kompu gacha encourages players to pay lots of real money for random prizes still seems to be too close to gambling for the comfort of Japan’s regulators.

Although the Consumer Affairs Agency hasn’t released its official report yet, according to the Yomiuri Shimbun, the agency plans to ban the practice and impose fines on companies that continue to include kompu gacha in their games. According to Tech in Asia, the ruling will be based on the Japanese law that covers “unjustifiable premiums.” At this point regulation seems to be a question of when, not if.

Small regulation, big impact

Japan’s mobile-social game business routinely turns in profits that dwarf what North American developers earn. In its most recent earnings call, GREE reported third quarter net sales of $577.3 million (46.1 billion yen), and a net income of $167.8 million (13.4 billion yen). DeNA reported $1.7 billion in net sales in 2011. For both companies, tactics like kompu gacha that encourage users to buy lots and lots of virtual goods are a key profit generator.

That’s why even without a definite ruling from the Consumer Affairs Agency, the threat of regulation was enough to tank the stocks of Japan’s mobile-social game companies. GREE and DeNA stocks both lost more than 20 percent of their value after the news broke, hitting their daily loss limits and their lowest prices in a year. The stocks of other Japanese companies with significant mobile-social businesses like Capcom, Konami and CyberAgent took similar beatings.

Was the drop justified? According to Credit Suisse analysts, eliminating kompu gacha from Japanese mobile-social games could result in a 20 to 30 percent decrease in sales and an drop of between 40 to 50 percent in operating earnings. Other analysts are being more optimistic, estimating GREE and DeNA will see a drop in net income of about 18 and 6 percent, respectively. Even by conservative estimates, both companies will lose millions of dollars if the Consumer Affairs Agency goes ahead with the widely anticipated ban.

Ripples felt in North America

Both DeNA and GREE have made it clear they’re looking to become global players, and so far both companies have financed their top-dollar acquisitions with cash from home. Regulations that effect earnings in the Japanese market affect acquisition prices in the long term, even if Japanese companies aren’t the ones who are buying. Part of the reason Zynga paid $210 million dollars for OMGPOP was because it was bidding against GREE. Smaller Japanese companies looking to make plays in the U.S., like Gloops and Gumi, could also be affected.

International companies with significant businesses in Japan like EA, Game Insight, Zynga and Com2uS might also see impacts on their earnings if kompu gacha is banned. Investors are already wondering if North American game companies will be affected by the regulations — one asked if Japanese social gaming regulations would effect EA’s bottom line during the company’s fourth quarter earnings call on May 7.

The future of gambling and mobile-social games

While its similar to a lottery, kompu gacha is fundamentally different from the type of real money games that prompt government regulation, like poker or virtual slots where money goes back and forth from player to game operator. Japan might pass legislation that restricts or bans some variations of the practice, but the likelihood that similar legislation would be passed in the U.S. is fairly low. As it stands, the U.S. federal government has left it to individual states to define for themselves what constitutes lawful Internet gambling and these regulations are most often aimed at Internet poker or slots — so any actual regulation as applied to mobile games could vary by state and game type.

However, with both GREE and DeNA already bringing games that use Japanese-style monetization mechanics to the North American market, even U.S. developers without games in Japan should be watching the situation in Japan closely.

Despite the initial media flurry, Japan’s Consumer Affairs Agency hasn’t made its ruling on kompu gacha public yet. Games that use the kompu gacha mechanic are still widely available on GREE and DeNA’s mobile-social gaming platforms.

With additional reporting from AJ Glasser.

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