Commonwealth Consumer Affairs Advisory Council

Transcription

1 Submission to Commonwealth Consumer Affairs Advisory Council Subject Issues Paper: App purchases by Australian consumers on mobile and handheld devices Date January 31, 2013

2 Introduction The Interactive Games and Entertainment Association (igea) and the Game Developers Association of Australia (GDAA) welcomes the opportunity to respond to the Commonwealth Consumer Affairs Advisory Council s (CCAAC s) issues paper on app purchases by Australian consumers on mobile and handheld devices (Issues Paper). Set out below is a summary of our submission, a brief description of igea and GDAA followed by our detailed response to each of the issues raised in the Issues Paper. Since the questions raised in the Issues Paper were largely directed at consumers, rather than answering the questions directly this submission addresses the topics listed in the Issue Paper s terms of reference. Summary 1. The significant majority of users enjoy mobile and handheld games and in app purchases (IAPs) without any issues, and only a small percentage of users have reported problems with mobile games and IAPs; 2. The industry are reactive to consumer demands and concerns and already provide sufficient processes and systems to address the problems that may arise with IAPs and arms consumers with the tools needed to securely manage the purchase of IAPs; 3. Consumers must actively use the systems and processes introduced by industry to address any problems that may arise with mobile games and IAPs; 4. Regulation on this issue is unnecessary as there are sufficient protections currently available such as consumer protection laws. Any regulation on this issue would be problematic and may affect the availability of content in Australia. About the igea The igea is an industry association representing the business and public policy interests of Australian and New Zealand companies in the computer and video game industry. igea s members publish, market and/or distribute interactive games and entertainment content and related hardware including mobile and handheld games. igea s members publish or distribute over 95% of all games sold through retail in Australia and New Zealand.

3 About GDAA Formed in 1999, the GDAA is a NGO, not- for- profit organisation that represents the interests of the national game development industry. The GDAA is tasked with promoting the game development industry (locally and internationally), retaining and attracting development talent, attracting investment and global game publisher interest, engaging with educational institutions, advising government of industry trend and opportunity, and fostering the Australian game development community. The GDAA currently has in excess of 180 game development studios in its national database. Features and trends of app markets in Australia The Australian market for mobile games has grown significantly and, according to PricewaterhouseCoopers Outlook report, will continue to experience significant growth over the next 5 years. In 2012, Australia s mobile game market was worth $400 million, representing approximately 4.2% of the global mobile game market 1. The mobile game market is populated with games that have been developed from all over the world by developers that range from one person hobbyists to larger developers that employ hundreds of people from all over the world. The proliferation of Internet- enabled mobile devices has provided such developers with instant access to a global market with little to no barriers to entry. The ease of such access has paved the way for the development of exceptional game content and the introduction of new and innovative business models. Free- to- play or freemium games are prime examples of the new and innovative business models that have been developed in the mobile game market. These apps are provided to the customer for free, with the developer or publisher s 2 revenue derived from alternative sources such as in game advertising or IAPs. While the Issues Paper focuses on IAPs in mobile and handheld devices, it is important to acknowledge that the IAP model is now being used in a variety of devices and platforms, including in console and computer games 3. IAPs are used for both free and paid games. For example, a customer may download a game for free or for a nominal price and then through subsequent IAPs they can unlock further levels or features for the game. There are several key benefits for consumers that have emerged through the use of IAPs in the games industry, including: 1 media/publications/outlook/index.htm 2 Since developers are now regularly self- publishing their content, and publishers are also incorporating game development within their businesses, there is often little distinction between a developer and a publisher. Accordingly, for ease of reference, this submission will be referring to both developers and publishers as developers. 3 Xbox Live Arcade and PlayStation Network games now offer IAP. Amazon has also recently announced they intend to allow IAP for the Amazon Digital Games Store for games on Mac, PC and Web platforms (see extends- its- in- app- purchasing- option- to- mac- pc- and- web- based- games/) Page 3

4 users are able to enjoy games for free or by spending amounts relative to their own financial circumstances and interest in a particular game; users, or potential users, are now able to effectively sample a game with little or no financial risk to determine whether they would like to spend any money on the game; developers are able to continually enhance games after their initial launch by building and delivering more game content through IAPs; developers are able to serve a broader market of users, from those users that would prefer not to spend any amount on games and are happy with a basic game experience, to those users that want an in- depth game experience and are willing to pay for it; IAPs have also been used to prevent or reduce copyright infringement of games on mobile devices. Games that provide IAPs are often initially provided for free or at a low cost and therefore the appeal of downloading such games from unauthorised sources is reduced. Furthermore, the technical process for delivering such in- app purchases is difficult to manipulate for unauthorised access. While there continues to be incredibly high amounts of mobile apps and IAPs sold in Australia, we understand that the amount of users who request refunds for their mobile game purchases and IAPs is an extremely small percentage of game and IAP sales. It is important to acknowledge that the significant majority of users enjoy mobile games and IAPs without issue, and only a small percentage of users have encountered problems with mobile games and IAPs and requested returns through the reporting tools made available by mobile game stores and developers. Adequacy of the information being disclosed before and after it is downloaded Annexure A provides a detailed example of the many processes and systems that are implemented for IAPs with reference to several popular mobile and handheld games. While purchasing IAPs, there are multiple steps both before and after IAPs are made to ensure that such transactions are properly authorised, that users are properly informed and that users are able to report any concerns after the transaction takes place. For example, for ios devices such as iphones, ipods and ipads, the process of a game download and subsequent IAP is as follows: 1. Prior to downloading the game, the user is provided with information on the game, including a description of the game and the relevant customer ratings Page 4

5 and reviews. This page also indicates whether the game contains IAPs through the use of a Top In App Purchases list. 2. IAPs are displayed within the game indicating the real price for the IAP; 3. After selecting an IAP, a prompt from the device is displayed to the user asking for confirmation that the user intends to purchase the IAP for the stated price; 4. The user is required to type their Apple ID password; 5. The user downloads the IAP; 6. Within a reasonable time after the IAP, an is sent to the address associated with the Apple ID account detailing the transaction and provides the user with a link to report a problem to Apple if necessary; 7. If a user has a concern with a particular transaction, they are able to easily follow the guided process and report the problem to Apple. The above process highlights the many steps, confirmations, notifications and systems that have been implemented by a platform to ensure that IAPs are handled properly. These systems have been implemented to address consumer demands and concerns. It is also important to note that IAPs are distinct and separate from the original game purchase or download. Users that download free apps are not compelled to make any further purchases. It is when a user is provided with an option to make an IAP that the user is provided with sufficient information to determine whether they wish to proceed with such IAPs. Current protections available to consumers The Issues Paper provides a comprehensive outline of the many protections that are available to consumers for IAPs. Actions that can be taken by consumers, industry and governments to help improve consumer experiences Consumers As set out above, there are a number of accessible systems and processes available to consumers that allow them to control and monitor how IAPs are made on their Page 5

6 device. It is important that users take the time to learn about these systems and processes and use them when appropriate. We also encourage parents to take time to learn about the various games and devices their children are using. This would include familiarising themselves with the features of the device such as parental control tools. This would also include actively reading game reviews and ratings and ensuring that passwords remain secure. In circumstances where parents have concerns about the use of IAPs in a particular game, it is also reasonable for parents to communicate their concerns by providing feedback in game ratings and reviews. If necessary, it is also important that consumers use the available reporting features to communicate any concerns. Industry As demonstrated by the many processes and systems implemented to protect the interests of consumers, industry continues to actively respond to consumer concerns and demands. This has been illustrated by the example used in the Issues Paper itself, where Apple quickly updated its ios 4.3 to address concerns with IAPs. While industry will continue to respond to consumer concerns, it is important that consumers actively utilise the solutions provided by industry, such as securing passwords, parental controls, ratings and reviews and reporting functionality. Industry is also sensitive and reactive to consumer concerns that are communicated through game ratings and reviews. The popularity and commercial success of apps are highly dependent on high customer ratings and positive customer reviews. These ratings and reviews are prominently displayed on all of the mobile game stores. Developers recognise that aggressive strategies utilising IAPs are likely to reflect negatively on customer reviews and ratings and ultimately have a negative impact on the commercial success of the game and the developer s business. Accordingly, it is in the best interest of a developer to be reasonable and sensible with their use of IAPs. Government igea and GDAA strongly believe that further regulation is unnecessary as industry already provide sufficient processes and systems to address the problems that may arise with IAPs and arms consumers with the tools needed to securely manage the purchase of IAPs. Additionally, Australia s consumer protection laws currently provide an adequate framework for any unresolved issues that may arise. Care needs to be taken with the introduction of any regulation that could negatively impact the market and availability of content to consumers. As mentioned above, the popularity and success of the mobile games market has largely been dependent on developers having low cost and instant access to an international market. Should Australia impose restrictive regulatory requirements on mobile games, it is feasible Page 6

7 that international developers will simply choose not to deliver games to Australia and avoid the cost of compliance, or worse, bypass the more credible supply points that exist in preference to those who may not offer the same safeguards as the more popular distributors. This outcome is realistic considering Australia represents a small percentage of the global game market. This would impact developers ability to do business in Australia and ultimately result in a disservice to the Australian consumer. If improvement in this area is needed, it: 1. needs to be at a platform level to ensure consistent and efficient implementation across all mobile and handheld games; and 2. should be done via self- regulation and industry working groups, rather than through regulation. Page 7

8 ANNEXURE A: IAP EXAMPLE The following is an example of how IAPs are used in popular games on ios devices such as the iphone, ipad and ipod including Australian developer Kumobius game Time Surfer 4, Electronic Arts game The Sims Freeplay 5 and Supercell s game Clash of Clans 6 Time Surfer is an endless runner/action game where users surf across the galaxy to escape the end of the universe. The user can purchase a number of in- game items, such as character costumes, using cakes that are progressively earned throughout the game. To unlock these features faster, users can purchase more cakes using real money through IAPs. The Sims Freeplay is a life simulation game where users create their character called a Sim, build a house, begin a career, start a family etc. The Sims Freeplay has two types of virtual currencies called Simoleons and Lifestyle Points. The Sim can earn Simoleons and Lifestyle Points by achieving certain goals within the game. Simoleons and Lifestyle Points are then used in the game for certain features and to purchase in- game items. Simoleons and Lifestyle Points can also be purchased with real money through IAPs. Clash of Clans is a strategy and simulation game where users build a village and protect it from goblins. The user can build their army and buildings using gold and gems that are earned throughout the game. The user can also spend gems to speed up the process of creating buildings in the game. Both gold and gems can be purchased with real money through IAPs. Users are able to download The Sims Freeplay and Clash of Clans for free from Apple s App Store. Time Surfer is currently sold on Apple s App Store for $0.99. The App Store provides a general description of each game and allows the user to browse the ratings and reviews for the games. Users are also able to see the Top In App Purchases for each game. The Top In App Purchases list clearly indicates whether IAPs are available. For example, the current screens for Time Surfers are set out below in Figure surfer/id ?mt=8 5 sims- freeplay/id ?mt=8 6 of- clans/id ?mt=8 Page 8

9 Figure 1 - App Store reference to IAP on game description and list of IAP for Timesurfer As mentioned above, users are able to purchase the virtual currencies for each of these games through IAPs. The current screens to purchase such virtual currencies are set out below in Figure 2, Figure 3 and Figure 4. Page 9

10 Figure 2 Time Surfer - Online store to purchase Cakes Figure 3 - The Sims Freeplay - Online store to purchase Life Points Page 10

11 Figure 4 - Clash of Clans - Online store to purchase Gems The above screens demonstrate how IAPs are often sold within games. These IAPs clearly indicate the price of the IAP and allow the user to make an informed decision about their purchase. Once the user has selected an IAP, an official prompt from the device is displayed on the screen to confirm the user s purchase. Examples of the prompts for each of the games are set out in Figure 5, Figure 6 and Figure 7. Page 11

12 Figure 5 Time Surfer - Prompt confirming purchase Figure 6 - The Sims Freeplay - Prompt confirming purchase Page 12

13 Figure 7 - Clash of Clans - Prompt confirming purchase Once the user confirms that they wish to buy the IAP, a further prompt from the device is displayed requesting an Apple ID password to proceed with the purchase. Figure 8 sets out how this prompt is currently displayed. Page 13

14 Figure 8 - Request for Apple ID password Once the user provides their secure password, the IAP is complete and the purchased content is delivered within the game. Currently by default and as a matter of convenience to users, once a user has submitted their username and password, the device does not require the user to resubmit their username and password for the following 15 minutes. Users can change this device setting to ensure a username and password is required for all purchases. Within a reasonable time after the IAP, the authorised address associated with the Apple ID will receive an containing details about the transaction. On this , the IAP will be listed along with the purchase price and a link enabling the user to Report a Problem. If an account holder queries an IAP, they are able to follow the prompts to report the issue to Apple through the Report a Problem link. The above process highlights the many steps, cautions, notifications and systems that have been implemented by a platform to ensure that IAPs are handled properly. These systems have been implemented to address consumer demands and concerns. Page 14