Chinese education app developer BabyBus produces pre-school educational games and other content, distributing them through mobile app stores and more recently app platforms on smart TVs. Since 2010, when the company started focusing on mobile, it has developed more than 80 apps.
Tang Guangyu, BabyBus founder and CEO, agrees with many Chinese tech entrepreneurs that digital content and apps should be offered for free and revenues will in time be generated through cross-subsidies instead of premium offerings. Qihoo 360 is often cited as a successful example of this model that has monetized the user base gained with a free online security service through advertising, channeling users to third-party games and search marketing.
But unlike Qihoo 360, whose major market is mainland China, BabyBus has been exporting apps since 2011. While many Chinese app developers have focused on overseas markets because they believe Apple’s App Store users are used to paying for apps, Baby Bus believes the free model can work everywhere. But offering apps for free isn’t enough. Mr. Tang added that the quality must be the best as there’s no cost for users to switch to other free apps.
Content licensing and pre-installs on connected devices are the company’s two main revenue sources. BabyBus has also received investment from Shunwei Capital Partners, the venture capital firm co-founded by Xiaomi CEO Lei Jun, and TAL Education Group, in 2013 and 2014 respectively.
Services exported overseas are available in nine languages. The company claims to have a total of more than 40 million users, with more than half in mainland China and over 3.5 million in other parts of Greater China, and in Taiwan, Hong Kong and Macau.
Its overseas expansion began in Japan and other Asian countries, with its content familiar to Asian cultures. All the apps by BabyBus star a pair of pandas. The company believes children not only in Asian but around the world like pandas though they are native to China. BabyBus has hired staff from around the world to ensure content is acceptable to parents and kids living there.
The company has had no problems with its content but has encountered challenges. It was warned by the Federal Trade Commission of the U.S. (FTC) in December 2014 for failing to obtain parental permission before collecting users’ geolocation data. BabyBus found the geolocation information was collected by a partner analytics service and disabled it accordingly, according to the company.