Peter:
Peter Crosby coming to you from the Cape Cod studios of the DSI. Rob is on from the Berkshires. Hey Rob.
Rob:
Hello there! I like how you're calling your place studios now?
Peter:
Well It's all I got. I might as well pretend with my super special mic here. So, you know it's the best I can do. So Rob, you know I spend some time on Twitter occasionally and one of the more sort of frightening wake up calls that I got came from Doug Stevens on December 6th at 9:06 AM or he tweets, G commerce. Yes, G dash commerce, the next hundred billion dollar consumer goods channel. And he was linking G commerce to gaming commerce. He was linking to this article about Balenciaga revealing its fall 2021 collection in a video game. And you would actually just post the same article in our podcasts back channel Slack channel. And I was wondering one, are you buying what Doug Stevens has laid down here on Twitter and other than your undying obsession with futuristic couture, what was it that caught your interest about this bull NCR?
Rob:
That is pretty good. I would. So, you know, I do have a thing for cyberpunk and steampunk.
Peter:
I can see it and what you're wearing right now. It's amazing.
Rob:
That's right, man. Well, you know what, uh, the, the video game cyberpunk 20, 77 long anticipated just launched yesterday. So, uh, anyway, the, uh, as an aside that I, I'm a huge believer in video games as the future calls the future dominant mass media of the, of the world full stop. Wow. Um, they've already a few years ago, uh, surpassed movies in terms of total, top line revenue. And, and so they're already on some measure, a lot more important than movies. And if you look at the amount of time that people spend playing video games compared to the amount of time that people spend watching movies, it's not even close that video games are already the dominant mass media of the 21st century.
Peter:
Yeah, the, the, um, sorry, just, I just got to kick in with a stat here. When you talked about time Twitch in 2020, 1030 7 billion minutes watched this year.
Rob:
Yeah, man, that's, it's a lot of minutes. I mean, I think people that are, especially if you're little bit older and you didn't grow up with video games, you know, like the, the, the Nintendo was launched when I was a kid. Um, and it, and so we played a lot of video games when I was especially a teenager, but if you didn't play with play video games back then, and in particular, if you don't play video games as like a middle-aged adult, um, you might, underappreciated how absolutely dominant they are as a cultural force. And, and so, so I'm a hundred percent, I, I, the fact that Balenciaga of all brands, you know, I don't exactly think of them as technical innovators are the first major brand to do a fashion show in a video game is, I mean, I just hats off to them. I mean, it's an amazing achievement. The only issue I have with the whole article is that he calls it G commerce.
Peter:
It's
Rob:
Like hard enough to roll my eyes as much as I need to be able to roll my eyes with that phrase. But otherwise I'm all in
Peter:
Doug Stevens loves a good tag. Yeah. There's no question about it. Um, yeah, because, and actually it's been happening in fashion, a Burberry did its most recent show on Twitch. Dr. Mann is doing the same, uh, later this week, Louis Vuitton designed custom scans and a trophy case for the battle arena game league of legends. I just think, yeah,
Rob:
Well the, so the, the, the, the, the Twitch Twitch can be used for live streaming and live streaming of fashion show is not the same thing as what Balenciaga did, which is [inaudible] created a virtual environment using, you know, the unreal engine in which you're literally walking around virtually and seeing the clothing line, right. That's totally different than, than, than a live stream.
Peter:
It's sort of, it's sort of game play. I mean, you have 20 minutes to traverse five zones to see the full collection, but there's no, you know, it's not a very complex journey. Let's put it that way, but it's fun and it's engaging.
Rob:
Yeah. And what I, what I might, you know, hats off to them for the attempt, my view here is that they're trying a little too hard to take an in-person experience and translate it almost directly into a virtual setting, using the unreal engine. And generally speaking, the first attempt at taking an art form and moving it into another medium, if you're, you're mimicking what, you know, and then it evolves into something totally different. So for example, when, when movies first started, Oh, you over a hundred years ago, now, the way that the first movies were set up was like a stage play. It was basically taking the stage play and putting it into video form. And over time people realize, well, you could do closeups. You can move the camera closer. You can do wide shots, you can do all this other stuff. And all of a sudden over time, the stage play in the movie form diverged, really quite a bit to the, you know, to the point that they're not really recognizable, um, as the same sort of thing anymore. Right? And so the first attempt is you take a fashion show and you put it into the unreal engine and you let people walk around virtually what a fashion show is going to look like after people mess around with this for five years, it's going to be unrecognizable. It's not going to look anything like the fashion shows of somebody walking down a runway.
Peter:
And so you really do buy the next a hundred billion dollar consumer goods channel sort of G commerce name aside
Rob:
That it's a hundred percent. I don't even think that there's a close second alternative. And actually my, my favorite thought leader in this, in this particular space is a guy named Matthew Ball. And you can find out from Matthew ball.vc, he wrote an article, uh, January 4th, seven reasons why video gaming will take over. And this is pre COVID. All right. Um, number one, the dominant attention, medium television has peaked and its time is being redistributed. All right. I bought that one. And actually, if you look at where it's getting redistributed, you say, well, Netflix and digital streaming is one place, but actually video games are disproportionately taking TB time. The video games are the number one Leacher of previous TV attention.
Peter:
Yeah. And it was in Britain seeing. Um, and just to cap that before you go on to number two, it's attracts all gender, like 63% of mobile players are women and girls, which is
Rob:
Fantastic. Yeah. If you're young, you're playing video games full stop. You know, I mean, it's like I'm middle aged, I have kids, all my friends have kids. A lot of my friends spend a crazy amount of hours still playing video games.
Peter:
Yeah. 59% of the U S classifies themselves as gamers, 90% of gen Zs.
Rob:
Totally. Yeah. I joke with my wife that that's when I retire, that's what I'm going to do. I'm just gonna, I'm just gonna play video games or I'm going to play all the videos. I haven't had a chance to play well, I've been busy doing other things.
Peter:
Do they have a divorce video game yet?
Rob:
Now that's where this is going. Right? It's like the divorce lawyer meets you virtually in a room
Peter:
Exactly. And walks you out.
Rob:
Uh, okay. Number two, gaming is replicating the TV package. Now this one is really, really interesting because the TV package is basically, you know, a bajillion channels that you can't really opt out of. So the most basic cable package, you get like more channels than you could ever possibly watch. Right. But, but so the bundle has power. The only thing that's holding the bundle together is live news and live sports right now. The rest of it doesn't have to be watched live. It can be strained at any time that you want. And so the bundle of TV is just breaking apart, increasingly becoming more or less a sports bundle. The bundle is re conglomerating, uh, in the, in the form of gaming. Um,
Peter:
So when you saw you, when you say that, cause the bundle was put together because it advantaged the cable companies and, and, uh, the creators, are you saying that people were being forced to buy bundles in the gaming? What, what do you, what do you mean by that?
Rob:
Okay, so, so, so let me just, this is a lengthy quote, but it's so good. Right? Okay. Um, pay TV was still an incredible package. One that bundled together and offered one and an abundance of content in both volume and variety. Two ease of access TVs were everywhere. It's content, universally accessible, and immediately viewable. You could go to your friend's house, a bar in another state, uh, et cetera, three frictionless content discovery and sampling aside from basically three channels. All content was immediately accessible. Uh, indeed much of it was found by accident or while simply channel surfing during commercials for a wide range of different use cases and functions. Some content was designed to inform others to entertain, babysit, teach, tap into local tribalism, et cetera, five, a range of different engagement levels. Viewers could lean in and be totally immersed, lean back and just watch or turn the TV on in the background.
Rob:
Six, achieving a cultural tipping point because quote enough, people watch TV. It became a water cooler discussion in dominant pop culture, forcing many people to simply watch TV simply to participate in society. Similar to social smokers who only smoke with when, uh, with smokers who are smoking. I like that. That's just a number. Number six is amazing. Basically like a lot of people are watching TV because they feel peer pressured into watching them want to be left out. And number seven, incredible competition that continually drove more value in format diversity innovation. So basically there's a bunch of jobs to be done that TV has bundled together. So one way to think about a bundle is all the channels, but those channels, some of them are live. Some of them are, uh, engaging. Some of them are immersive. Some of them are background. Some of them are shopping.
Rob:
Um, and they're, you know, they're all for different people. So we buy cable, you know, I might watch football, my wife, my wife might watch HGTV. They both come with the general, the general cable package. So there's a little kind of something for everybody. Um, and so on and so forth. And so that he then goes and says, uh, when atomized, meaning when taking each of these seven value propositions together, it's clear that essentially every single element of the TV experience is now being replicated by the gaming ecosystem. And he then goes in and goes into detail about how each of those jobs can be done in each of the ways that you think about bundling the channels and the entertainment values of the television network, get conglomerate, Rican, glomeration within gaming.
Peter:
So what do you think all this means to, you know, our audience brand, brand executives, brand leaders that are trying to figure out where, where do I need to show up? And it's beginning to feel they don't feel it already that for, you know, it's early days, but a lot of brands are going to a lot of big consumer brands are going to show up here.
Rob:
Yeah. I mean, Mark Pritchard, the CMO of Proctor and gamble said a couple months ago, they're not signing up fronts anymore. Immediate media contracts, everyone. I mean, television advertising to some extent, feels like a game of musical chairs. At some point they're out, you're out of chairs. Uh, the household penetration is below 70%. If you look at millennials and millennials, it's much lower than that. And so it feels like there's this set of brands. And instead of distribution channels that have been really heavily reliant on television as a media mass media strategy that have to find somewhere else to go, there's still a ton of money being spent on TV. TV is becoming less and less effective with less and less reach the money's got to go somewhere. And, and you could tell how desperate the situation is when the Macy's day parade during COVID, when there's not a lot of people going out to watch the Macy's day parade sold about as much advertising as they did last year. And, and the like, that's just crazy. I think that the number was like 21 million something last year, and it was 20 million or something this year. And so it's like these types of it's, that's a sign that people just don't know what else to do with the money, even though it's not as effective as it once was. Right.
Peter:
And group M just put out their end of year forecast. And they said during 2021, we estimate the digital advertising will account for 55% of all advertising we track. And that national TV advertising will see a decline of 7.9% during 2020. And they're expecting, it will be bound to grow by 6.6% during 21 before returning to a flat or slightly declining, longer term trend than every other category of media still, other than digital. But it seems like gaming is going to come up.
Rob:
And yeah, I mean, I don't know, you look at, you look at like, uh, advertising through newspapers and it, you know, it, it took a hit and the.com crash and then came back and peaked around 2008 and then just fell off a cliff and never came back. And, and to me, I think TV's have got to have a newspaper moment. I don't, I think that 6.6% growth next year is wildly optimistic. Um, so anyway, let's, let's go back through these seven, cause I think it's important. Number one, that the dominant attention media and television has peaked and is being redistributed to gaming is replicating the TV package. Three gaming has unprecedented content leverage. Um, I mean, basically content that you create in a video game is like Disney content. You know, when you create a Disney movie, um, you then have all of the Disney princess paper plates and costumes and dolls and posters, and the theme park in all of this stuff that you do, that's around it. Video games have that same thing,
Peter:
As Melbrook said in Spaceballs merchandising, merchandising, toilet paper.
Rob:
Yeah. I mean, there's a, there's a few, uh, franchises that have that in, you know, it's, you know, who does this really well as the Japanese? Like if you look at like top 10, most valuable brands on Wikipedia, a bunch of them are Japanese brands that just do a really, really good job of exploding the brand and to different media. Like hello, kitty is just an absolute dominant brand. Pokemon is a dominant brand Pokemons, an example, a video game, and then selling Virgilian things off of a video game, video games have that content leverage. And then some, because there's, there's a social angle to it. So video games, if you look at not just the engagement with the video game and the purchase of the video game, but all of the surround sound commerce that goes along with it and social engagement it's, I mean, TV or any other media that's ever existed, doesn't even hold a candle to it.
Rob:
Number four, social signals affect and reinforce. I mean, you know, we were talking about smoke. There are social smokers who only smoke with other smokers, they're social TV pokes that only watch TV because their friends are watching a TV video. Gaming is way more than that. I mean, you really will play the video games cause your friends are playing them, but you also play them together. You put your headset on, you're giving each other crap over, uh, over the headset while you're playing the same game, num number five, Titus feedback loops and culture. The video game, when you release it into the world, like World of Warcraft, has been around for almost 20 years now and they keep adding to it and they keep evolving it. And they have all this data that lets them keep the same video game, keep the same audience and just keep deepening the engagement with it over time and adding new content, adding new software. Um, it's like, it's like star Wars with the Mandalorian and with the, you know, the, the new movies that are coming out with the theme parks and, um, number six, consistent growth through new devices, categories, technology, and content, and number seven, IP kill. I mean this, so I'm not even going to go into those last two because I've just been talking too much, but
Peter:
No, it's a, it's a convincing list. And, and we're starting to see that when you think about what I thought was interesting, because I would think gamers would be, um, you know, would want to sort of have a, a commercial-free experience. But in fact, 82% of Twitch users said that sponsorships are good for the gaming industry. And 80% are open to brands sponsoring a specific game or team. So they want the, the, this sort of this generation of gamers wants this, um, universe to work and to thrive. And I think they, that that's, that re represents an interesting opportunity for brands to play without feeling like you're, you're yelling at people.
Rob:
I think people love brands. People love brands, right? I mean, I was, I was just looking at, um, uh, some of the Yeezys th the, the sneakerhead marketplace, not because I'm a sneakerhead, I was just curious about it. But, you know, people spent a stupid amount of money on these sneakers that they will never wear. You know, they're, they're, they're almost like trophies, right. And, uh, there's a lot of, there's a lot of brand love brand loyalty brand affinity there. I think people love brands, people. It's just one of those tribal, very human things. Um, and so, yeah, of course, gamers are going to be open to this type of thing. And you see a lot of gamers that, you know, traditionally back in the eighties and nineties, people liked tabs and stuff like that that were high in caffeine. And it was a big part of the hacker community and the land gaming community.
Rob:
And, uh, and, and they would have a lot of, you know, just obscene loyalty to the tap product. And I think there's a lot of room for beverage manufacturers, fashion manufacturers, snack food manufacturers right now, just based on where gamers, attention and loyalty and everything lie to, to have a big impact with this community. Uh, and not only that, but these, the gamers what's really interesting about this space is it's, it's truly a mass medium. You have people that are relatively low income and people that are very high income playing the same video game, interacting in the same space. So you can reach a ridiculously wide market by advertising through here, but because it's digital, you can also get tightly segmented and reach very sites, sub segments of the market. And because it's all a virtual experience, you have more brand control and creative expression capability than you've ever had in almost any other medium. And so I think that the reason that brands should care about this is this is the future of the mass market branding period.
Peter:
And yet to your point at the same time, it can be very niche as well, like all in one thing, which has not really been able to be achieved very well in the, in the TV industry. You know, local advertising might be the best example, but it's really tough to target, but this actually will be really powerful
Rob:
Targeting. Yeah. And like, you know, Nielsen says that they're going to put out this, uh, on television, uh, Mo the ability to more tightly target advertising based on segment and this and that, and blah, blah, blah. The reality is, you know, if, if people are increasingly opting out of television, who cares how good your segmentation is, right, right. You know what I mean? That's why Google and Facebook and, and snap and Twitter, and tick-tock are so powerful because they have mass market reach and video games have the mass market reach, but also are a lot more immersive and have a lot more loyalty. And so I think that the brands that invest in learning how to engage through those platforms are going to be ahead of the curve. And you're going to, going to actually get brand loyalty from, from a, from a section of the market. That's an addressable any other way. If you're spending 20 hours a week playing video,
Peter:
You're not watching TV, right. You're probably not doing much.
Rob:
Let me give you another stat here. This was on March 29th, Matthew Ball put this out. According to Verizon, the Corona virus has led to a 12% increase in digital video traffic. And at 20% increase in web traffic. Well, Nielsen reports, total TV time, digital and linear is up 20%. On average video gaming, meanwhile is up and astounding, 75% off of an already larger base than these other ones. So you look at, um, I'm looking at Robox LA roadblocks, which is IPO going, right. Uh, in 20, uh, in February, um, they were getting about 2.8 million peak concurrent users, uh, per week. And by the end of March, they were getting over 4 million peak concurrent users per week. Right. And, and it's significantly higher even now. So, the growth in these platforms, I mean, what television shows have, you know, four, 10 million peak, weekly concurrent users every single week. And they're not on it for just half an hour, they're on it for hours at a time. And they're on it for hours at a time while not doing other things. It's not in the background. It's the thing that they're doing.
Peter:
You can't do anything, but play that game. Yeah.
Rob:
It's like, how do you, I mean, that, that is like attention ownership right there.
Peter:
Yeah, no, I'm, um, one example of brand engagement Wendy's just recently won the social influencer grand Prix at con after creating a digital avatar for fortnight that looked just like their Wendy's, um, mascot. And they pitted in Fortnite emission, the pitted team pizza against Dean team burger and Wendy's joint team pizza. So it could sabotage team burgers because the restaurants in the game were stocked with freezers until the brand's avatar destroyed them. So they were making their whole sort of freshness comparison and saying, destroy those places would their freezers. This was a 10 hour live stream. Wendy's earned 7,400 followers and 43,500 comments without spending a dollar.
Rob:
Th th there's some of these old school mascots that people would definitely pay money to have, like, if you, if you could use Colonel Sanders as your mascot in fortnight, you would pay money to do that. Have the Colonel going out, kicking butt taking names.
Peter:
Yeah. Um, Paul Jan Koski said there were really two primary avenues for getting your brand into the gaming industry, one pursuing partnerships or sponsorships with gaming events. So essentially what you would do if you were sponsoring, you know, NASCAR or something, but in this case, you're, you're participating there or facilitating or enabling gaming behavior. And that's, that's really what Wendy's did here, which I think is, is, is brilliant.
Rob:
Yeah. I mean, so some of the fast food brands have, have been the most innovative when it comes to new gorilla marketing channels. Um, burger King perennially comes to mind there. I mean, Wendy's, I,
Peter:
I think the only thing you can do, well, the only thing you can do while you're, while you're gaming is his snack. So it's, uh, makes you want to call up door dash or whoever and get a burger and,
Rob:
Oh God. So I wouldn't give right now to have like a whole weekend where I could just eat pizza and play video games.
Peter:
That again goes under the divorce lawyer.
Rob:
Yeah, I know, right? Yeah. I mean, this sounds like a terrible parent, but bye, bye. My daughter, I'm trying to get her a little into Mario and I, and she can't quite play the video game yet, but I've, I bought her a bunch of Mario Legos. So we play, we go down to the basement and we play Mario games together where we got these Mario levels that are all made out of Legos. And so she knows Mario, she likes Mario. So I think we're going to, we're going to try to do the video gaming thing together,
Peter:
Her on the path. Oh my God. That'll be so much fun someday.
Rob:
I know it will be, it'll be awesome. And then, you know, like, what's, what's the divorce lawyer gonna say, it's like, no, I'm spending time with my kid.
Peter:
I don't know what's wrong with this.
Peter:
There is a whole, uh, naturally when there's this much energy behind something, there's a whole ecosystem that's rapidly growing around this. And there's some innovation happening there. There's different platforms that are coming up. Like Anjou a N Z U is an end game advertising platform where they allow grants to enter the game space in a, you know, what they describe as a native, creative and dynamically updateable way. Uh, Scooty is a, actually a retail marketplace that, um, it's through the games allows brands to sell and ship direct to game players and game players get points for their games as a result of going on shopping inside of this marketplace. And they sort of game rewards that will benefit their gameplay while they're shopping. So it's sort of diverting them into a shopping moment that then helps them in their play. And then of course, agencies are getting into this.
Peter:
I mean, WPP, I think isn't a heavy investor in Anjou. Um, but also, you know, our friend Mark power at podium, uh, the Amazon agency, they announced a new agency this week called live craft, which is all around, um, live advertising, live content creation. So they worked with elf cosmetics and teamed up with a top Twitch content creator and influencer named loser fruit, 12, Lou Fu. She has across her platforms, including Tik TOK, YouTube, and Instagram, 8 million followers. And what she's doing is she's essentially working with Elf to sort of teach people how to do cosmetics, for gaming. So like she's doing a whole YouTube video around, this is the, you know, in a YouTube, uh, sorry, uh, elf cosmetics, like influencer came on and was like teaching her how to do makeup. And our audience loves that. And they're going to launch an elf university to support female gamers, um, through this. So you can just see where there's some influencer gaming, influencer connections to brands that can be really authentic.
Rob:
Yeah. Look, I, I think the influencer angle is huge and I think some of those early ad platform and engagement, uh, startups are well worth running experiments for, I mean, if I, if I were a large CPG, I would have under the CMO, a video gaming like strike team right now with the budget that they could start running experiments today. Yeah. No, it's an absolute, no brainer. No, absolutely no brainer. And there's not a, there's not a segment where this wouldn't work. I mean, plumbers are playing video games. Electricians are playing video games or, you know, autumn automotive repair specialists are playing video games. There's not a market segment where the people engaged in the segment, aren't, aren't engaging in video games. And the question is, if that's where all the intention is going, what are you going to do about it? And so, so yeah, for me, I think that there's right now, we're in that area where it's just really chaotic. There's a lot of experiments. There's going to be breakouts, breakout successes here and there, like the elf story. Um, there's a lot of, there's a lot of ability for companies like Balenciaga to make big splashes because they're the first to do things. And, and so why not? I mean, this is, this is, this is a no brainer place to put some of those TV dollars that aren't working for you as much as they used to,
Peter:
Especially when you think, I mean, you've made this point and it's really striking me now that the, if you take the scale of TV ad in community happening right. In the experience. So, you know, there would be like fan groups that would say that Stu and, and all of course used to spin up around different TV shows and things like this, but this is actually making all of that happen in the same place. And then having so carefully inside of that same experience, it's like sort of putting all of it together in one place.
Rob:
A really interesting thing is that, you know, in, in, in TV, there is a community for live TV and it's called Twitter, watching the NBA you're on Twitter. Right. Um, but, but other than that TV has been that people aren't watching it concurrently, right. So there's no community for like, Oh, I happened to be binge watching the 13 episodes of the crown or whatever, whatever it is that you happen to be watching and other people, other people are not watching it at the same time that you are. So there's no community, video games are concurrent. You're doing the same thing with, with a group of people at the same time. Yeah. I don't know. There's just, there's so much to like, hear about what Balenciaga is trying to do and what's possible. Um, but yeah, it's, it's early innings. It's early innings. Despite the fact that T that video games make more money than Hollywood, that video games already take more attention. I, I forget the exact numbers, but it's, it's more attention than just about any other medium it's coming. It's coming up on TV in terms of the number of hours spent. It's just a, it's, it's like a mass medium that is wildly underdeveloped from a branding perspective and is right for brands to start jumping in.
Peter:
And that kind of, that kind of closes it up because really, you know, the, the, the overall it's the, the number of channels that brands now need to think about is, is truly overwhelming. And this sort of piles another one on top of it. So again, that test and learning perspective that let's try let's, you know, put some energy into it and see what comes back. That's just going to be as important as ever and particularly in G commerce exciting times. So, thanks Rob, before I let you go. And our audience as well, the DSI is an economist in residence to find. Willis has authored a new research report for us on the 20, 20 X recession as we call it the not knowing when it would end, but we certainly know when it's starting and that's in 2020. And we w he, he took a look at a lot of the lessons from the last great recession through the economic data, as well as insights from new consumer behavior during COVID.
Peter:
He got some really valuable takeaways in this report for finding opportunities. We navigate through this upcoming period of recession, and he will link to it in the show notes. Um, I'll just give you the link anyway, cause it's pretty easy. Digital shelf institute.org/two zero, two X stash for session. Um, it's really worth a read. I think you'll find it valuable. And of course, as always on the DSI, it is not gated. So just come and get it, share it out. Um, so thanks as always for joining us, Rob, appreciate it. And thanks to all of you for being part of our community.
