The idea of Moshi Monsters in crisis is strange, given that the children's virtual world has more than 80m registered users, and a thriving business in magazines, merchandise, toys and 2013's official movie.

A philosophical crisis? More likely: Moshi Monsters' parent company Mind Candy has spent the past couple of years racking its brains over this challenge: how to release mobile apps that are as popular with children as its web-based virtual world was in the past.

In July 2012, chief executive Michael Acton Smith said that Mind Candy was about to launch an iPad app version of Moshi Monsters.

"We're hopefully going to launch Pocket Moshi or Moshi-on-the-Move or whatever it's called in the next few months," said Smith, in an appearance at the Children's Media Conference (CMC) in Sheffield. "We're going to make it free, and hopefully have millions of kids playing it."

The app never came out. Instead, Mind Candy has released some smaller apps – a guide to its world's Moshlings characters, a virtual pet game, a music videos app and a digital version of its print magazine, for example – without any of them really catching fire on the app stores.

This month, Smith was back at CMC to provide an update, including a characteristically-honest assessment of his company's past efforts. "We thought it would be easy to move our web stuff to mobile, and it wasn't. It was extraordinarily difficult," Smith told delegates during the conference's closing keynote speech.

"There are so many new challenges, not least how the commercial side of things works. We certainly haven't cracked it yet, despite trying very hard with a well-established brand."

Smith added that Mind Candy has been tracking wider trends around children and apps, noting two in particular: their interest in playing "free-to-play" games – the ones that make their money from a mixture of ads and in-app purchases – intended for an older audience; and the fact that they're turning up in increasing numbers on social networks that in theory are for over-13s only.

"Kids don't have their own app where their voice and creativity can be heard, so they are joining up to grown-up social networks in their droves. Facebook, Tumblr, Snapchat and Instagram in particular are hugely popular with kids," said Smith.



This is clearly a concern for Mind Candy, faced with the prospect of Moshi Monsters losing relevance for under-13s who'd rather be playing Clash of Clans and Candy Crush Saga, or sharing photos on Instagram and Snapchat.

Facebook Twitter Pinterest Mind Candy's PopJam app.

PopJam: social sharing but safely

Enter PopJam, which is Mind Candy's latest app, unveiled by Smith during his CMC keynote, although it was actually launched quietly in October 2013 under a different name: JellyChat.

Then, it was a cross between WhatsApp and SnapChat but for kids, focused on text chat and private photo-sharing, with digital scribbling and stickers included.

Its public launch as PopJam sees it shifting to more of an Instagram-for-kids approach: private chat is still a feature, but the emphasis is much more on a public feed of shared photos. Smith pitched it as a safer alternative to the grown-up social networking apps.

"With these environments, there are all sorts of issues. Why not give kids their own space where kids can be kids?" he asked. "We'd love to build a creative community that inspires, entertains and empowers all the kids in the world. Give kids the tools, and step back to see what they create."

PopJam is colourful and easy to use, aimed at 7-12 year-olds who can create their profiles, customise and share photos, and follow "channels" based around specific themes – from memes like Cats, Fail and LOL to specific brands: Minecraft, Lego, Doctor Who, One Direction, Adventure Time and more.

Smith was at CMC to launch PopJam partly to encourage children's TV, publishing and games companies to consider launching official channels within the app, although he stressed that – for now at least – Mind Candy won't be charging brands to have a presence within PopJam.

"For now, the core focus is that there's no commercial aspect to it: it's simply free, and if we can build an audience of millions and tens of millions of kids, then we can figure out how the commercial side will work," he said.

"One option could be to charge small amounts for sticker packs or extra ways of customising photos. We could do that, but it may not sit quite so comfortably with parents. That's why we feel maybe subscription is the way to go: parents pay a few pounds a month, they know exactly how much they're going to pay, we have predictable, recurring revenues, and kids get access to extra premium content."

Moderation is the key

Mind Candy hopes safety will be a key part of PopJam's appeal to parents, promising that a "big team of very experienced human moderators" are working on the app, including pre-moderating photos shared by newer users.

"If you're a new user, all the content you push into the app will go through human moderators. Once we get to know users a little better and how their behaviour is in the app, they may be treated differently," said Smith. "There's a lot of complexity behind the scenes."

Children are being discouraged from sharing selfies of their own faces unless they're disguised with stickers – virtual masks for example – and the app's messaging features will be closely monitored for children trying to share personal details like home addresses.

While testing PopJam with a fellow CMC attendee, a message sent with swearing saw those words replaced by # symbols – and a few days later, even that censored message had been deleted from the conversation.

"This is a very delicate balancing act we've got to get right," said Smith, on the balance between parents feeling safe and children feeling restricted. "I think we can do it: if kids don't have their own space, they're going to continue going to over-13 sites."

Human moderation isn't infallible – the downfall of children's virtual world Habbo Hotel in 2012 was a reminder of that – but Mind Candy hopes its experience on the web will persuade parents that PopJam can be trusted too, including for issues like data collection.

"We're going to be incredibly responsible just as we were with Moshi. There are no plans to monetise that, and there are very strict regulations around that," said Smith.

"Currently, when children sign up they have a unique user name, and we ask for an age. There is nothing more than that at this stage. For now there are no plans to collect huge amounts of data."

Doubters will inevitably pick up on the phrases "at this stage" and "for now", but PopJam, like the social networks for adults, will have to disclose any changes to its data collection policies, and is sure to be picked up on any expansion of the information that it is taking in on its young users.

Facebook Twitter Pinterest Moshling Rescue game's in-app purchases go up to £59.99.

Freemium risks

At CMC, I interviewed Smith on-stage after his keynote speech, and asked him about a different aspect of Mind Candy's mobile strategy: one that's been raising eyebrows within the children's entertainment industry. That's the company's expansion into freemium mobile games.

Moshi Monsters Village is a FarmVille-style strategy game that sells its "Rox" currency for up to £29.99 at a time as in-app purchases (IAP). Temple Run-style racing game Moshi Karts also goes up to £29.99 with its virtual currency shop, while Candy Crush-alike matching puzzle game Moshling Rescue's IAP goes all the way up to £59.99.

The latter in particular seemed a puzzling – and worrying – move for Mind Candy. The company's argument is that the game isn't for kids: it's for parents.

"It's a very delicate line and we are trying to balance this correctly. It's part of this experimental phase. We know there are a lot of mums who have played Moshi with their kids and love it, love the characters and the Moshlings, so why don't we try to create a brand for an older audience?" said Smith.

"We haven't actively promoted this new game Moshling Rescue to kids: it's aimed at a much older audience, and therefore we can be a little bit more liberal with the way the in-app purchase side of things works."

Smith sees games like Moshling Rescue as marking Mind Candy's transition into a company that makes entertainment for families, not just children.

"It's very hard to just create entertainment for kids. You have to bring some of the parents along as well. Some of the most successful companies in the world create entertainment for all ages," he said, citing Nintendo and Pixar as examples.

However, this may be the most dangerous balancing act facing Mind Candy, caught between its desire to make responsible, trusted entertainment for kids, and its frustration at not being able to make the kind of money being generated by (theoretically) adult freemium games like Supercell's Clash of Clans and King's Candy Crush Saga.

"It's very hard to generate the kind of income [from children's apps] that justifies the huge teams and multi-year projects that we want to do. I can't think of too many companies that have cracked this," he said.

"Toca Boca is often given as a good example, and their apps are wonderful, magical, amazing. But they are making a fraction of the money that some of the Kings and the Supercell and the others are. No one's quite cracked it: it's a really tricky problem."

While Mind Candy tries to crack it, Smith said it remains committed to the web-based virtual world that started off the Moshi Monsters phenomenon – "the beating heart of the property" – despite changing habits of children.

"We still love the web experience at Moshi, we still support it and have a team on it, but we feel the new centre of gravity will be mobile and tablets," he said.

"We're living in a world now where kids will have their own devices, not just to play games, but to read stories, listen to music, watch videos, and communicate with other kids around the world."

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