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  • If you're like the estimated 74%

  • of adults in the US who use YouTube,

  • this might be what your home screen looks like.

  • An algorithmically curated look into what you like to watch.

  • Maybe some tips on how to prepare a new meal

  • or your favorite vlogger's latest video.

  • But if you're a parent

  • who shares your phone with your children,

  • it probably looks a little more like this.

  • Kid's content on YouTube is huge.

  • Views for videos can reach into the billions.

  • Five of the top 10 videos in all of YouTube's history

  • are either music videos or kids' videos,

  • with Baby Shark having more views than people on the planet.

  • Daddy shark doo doo doo doo doo doo

  • Daddy shark

  • Grandma shark doo doo

  • YouTube has created a revolution, not an evolution,

  • in the way kids and families consume video content.

  • And that extends then into how they view toys and play

  • and all of the associated things that go with that.

  • Kids YouTube, for the unaware, can be adorable.

  • It can be boring.

  • It can also just be flat out strange.

  • Here I am, here I am, how do you do

  • But often, it involves toys.

  • And for toy makers who embraced the platform,

  • it led to record success.

  • I think L.O.L. Surprise

  • unquestionably is the biggest phenomenon

  • that has ever happened in the toy industry.

  • This is the story of how YouTube

  • changed kids' toys.

  • Play patterns, the way children play, is timeless

  • but how we deliver on those play patterns through product

  • and how we market that to children

  • has changed quite a bit over the years.

  • And I would say that the last five to 10 years

  • really ranks right up there with the 1950s,

  • when TV commercials directed to children

  • was first launched by Mattel.

  • This is Nancy Zwiers.

  • She lead the Barbie brand during the '90s

  • and spent four years as the Chief Marketing Officer

  • for Spin Master.

  • It used to be that there would be a few play things

  • that parents would bring into the home

  • or that children would create themselves

  • like a stick and a ball becomes a play thing.

  • And the industry was at a certain level of volume

  • at that point.

  • Mattel was very innovative

  • and actually put the first product on TV

  • and advertised it to children.

  • Let's play house.

  • This created a huge explosion in the toy industry

  • that unfolded across decades.

  • The hit of the day when you're ready to play

  • Everyone knows the Slinky

  • Here he comes, here he comes

  • Greatest toy you've ever seen

  • And his name is Mr. Machine

  • ♪ G.I. Joe, G.I. Joe

  • Fighting man from head to toe

  • On the land, on the sea

  • In the air

  • When you go back to the 1980s,

  • what do you think of in terms of hit shows?

  • You think of things like Masters of the Universe,

  • you think of the original Transformers and Care Bears.

  • The joke was they were 22 minute commercials.

  • Just close your eyes and care.

  • Let's make a TV show which is really promotion

  • for our property or IP to help sell toys.

  • There were a lot of those famous characters

  • in which kids absolutely loved it.

  • They were totally entertained

  • but there were huge toy lines behind them.

  • This is Jim Silver,

  • a 37 year veteran of the toys industry.

  • In 1999, he started a consumer toy review magazine

  • called Toy Wishes.

  • And now, he's the CEO

  • of an influencer talent management group, TTPM.

  • Regulations changed through the years

  • and also parents became aware

  • that they were purely commercials.

  • And you saw a lot of the new channels,

  • the Disney Channel and Nickelodeon,

  • they realized that wouldn't work anymore.

  • And to them, entertainment came before licensing.

  • What happened over time was that

  • toys started to become designed for a 30-second commercial.

  • Closed, it's a mild-mannered tool box.

  • Open, it's a Micro Machines USA.

  • Cruise your mini Micro Machines vehicles, planes and boats

  • to the police station, the marina,

  • the mini motorcycle repair shop, the gas station,

  • the construction office.

  • Work the real working draw bridge,

  • highway, passenger wrap and garage doors.

  • So if you couldn't explain it in a 30-second commercial,

  • cost reduce it out of the product

  • and just stick with what you could say.

  • And features of toys, magical features using electronics,

  • lights and sounds, and mechanical movements,

  • that magic, like they don't know how it happens,

  • that became more and more important.

  • The sound of power is heard.

  • It's firebolt Batman.

  • See ya, Batman.

  • Batman's turbo-powered Batmobile

  • flies into high gear.

  • Since 2000 with the cable channels dedicated to kids,

  • Disney Channel, Nickelodeon, Cartoon Network,

  • there became the opportunity to reach kids

  • in mass numbers every day of the week.

  • And so the toy industries continued to grow.

  • The toy industry for the most part

  • was a pretty solid business,

  • just, you know, growing a couple percent a year

  • here and there.

  • There'd be big, big years here and there

  • when there was maybe a hit movie

  • like a Star Wars movie come out,

  • you know, drive a lot of toy sales.

  • From 2014 to 2019,

  • the global toy industry would grow by 15%.

  • At about the same time, those major cable networks

  • of Nickelodeon, Disney Channel and Cartoon Network

  • would lose half their total audience.

  • 2017 also saw the bankruptcy of Toys R US,

  • as both parents and kids

  • discovered and bought more toys online.

  • If you think about kids, they're usually

  • the first adopters of a new medium.

  • Kids weren't watching things like Nickelodeon

  • as much as they used to.

  • They were watching things on YouTube.

  • YouTube started in early 2005.

  • And this was like the very early

  • web 2.0, this beginning of sort of like

  • what at the time was known as user-generated content.

  • Like web-blogging was really big,

  • MySpace was the biggest thing on the internet back then.

  • There was an early video of a Brazilian soccer legend

  • doing the stunt tricks that just exploded on the site,

  • one of the first viral videos.

  • Lazy Sunday, if you remember that SNL short.

  • Pass that chronic-what-cles of Narnia

  • Ouch, Charlie!

  • Oh, Charlie bit me.

  • If you remember those earliest viral hits.

  • YouTube in the early days was definitely comedy and music.

  • It was a place of experimentation.

  • I was the Chief Audience Officer at Maker Studios.

  • I oversaw essentially the creator partnerships

  • all over the world.

  • Maker Studios was one of the largest

  • multi-channel networks on YouTube

  • and had partnered with some of the biggest YouTube channels

  • of the time, before being sold to Disney in 2014.

  • Chris is now the CEO of Pocketwatch

  • which represents some of the largest kids' stars on YouTube

  • including Ryan's World and Love, Diana

  • who can amass over a couple billion views every month.

  • The truth is one of the very biggest

  • and earliest videos on all of YouTube

  • was by a creator and star named iJustine

  • where she unboxed her first mobile phone bill

  • for her brand new iPhone, and it came in a box.

  • And this ultimately morphed into many different formats

  • associated with unboxing

  • and tech was actually really big.

  • And those became fairly successful pretty early on

  • on the platform.

  • And you saw them expand from tech products

  • to beauty products, and then around 2012 and 2013,

  • we saw this explosion into toys.

  • So here's the Furby inside right here.

  • We used to call them hands channels, okay?

  • And a hands channel was literally a top-down view

  • of someone's hands unboxing typically a toy,

  • and they'd unbox it, they'd show each component.

  • We just got Uncle Scrooge.

  • I would speak to many of those creators.

  • We signed many of those creators at Maker Studios

  • to be our partners.

  • And it was fascinating in that it was this whole new genre

  • and this whole new format and that corresponded

  • with a rise of kids and family viewership on YouTube

  • that was stark, that was hard to miss.

  • And you would see it in the data.

  • And we had access to a lot of data

  • at Maker Studios, around YouTube.

  • Let's see what's inside.

  • First up, we have the Stormtrooper Pig.

  • You saw the launch of EvanTube

  • who I consider the first child, so to speak, unboxing star.

  • And they would open toys

  • and kids were just mesmerized by it.

  • They loved watching it.

  • And next thing you know, you had literally 50 unboxings.

  • They were unboxing just about every toy, you know?

  • And people were just really excited.

  • You'd open the toy and you'd see a toy pop out

  • and kids just got excited seeing it piece by piece.

  • Yeah, he's in a bathrobe, he's eating a lobster.

  • You know, the early days of these unboxing videos,

  • the videos were, you know, from adults' perspective,

  • just terrible, I mean, they were 10 minutes long.

  • They were boring, there was a shaky camera.

  • There was absolutely no production value.

  • And if you think about these executives, you know,

  • they're trying to figure out how to reach this new audience.

  • And they're brought these videos

  • and say, "Well, look at this video,

  • it has 200,000 views on it, and it's terrible.

  • When I first heard of it,

  • I thought it was the weirdest thing.

  • It just seemed kind of bizarre.

  • Who would want to watch someone opening a toy,

  • taking it out of the box?

  • But then when I started thinking about

  • this idea of exploration and discovery

  • as a core play pattern,

  • the most fundamental play pattern there is,

  • it started to make sense.

  • And I think that I have to say that the company

  • that really jumped on that in the most concerted way was MGA

  • with their launch of L.O.L.

  • ♪ L.O.L. Surprise. ♪

  • L.O.L. Surprise had three key elements.

  • Doll play, which is basically

  • the most popular play pattern there is.

  • Collectible, so within each L.O.L. Surprise,

  • you'd get a little sheet that showed you

  • all the other dolls you could collect.

  • And then the surprise factor.

  • You didn't know which doll you were getting.

  • It was a blind pack as they call it.

  • An L.O.L. was made by this company called MGA.

  • Back then, you know, 2016, they were a small player

  • in the toy industry, founded by this guy named Isaac Larian.

  • He's the CEO and founder.

  • I have three adult kids and they were making fun of me

  • that, "Oh, you're old, you don't know anything about

  • what's happening in today's scene."

  • And I said, "Like what?"

  • And they said, "For example, there is,

  • do you know about these iPhone unboxing videos

  • that get millions and millions of views?"

  • So I thought they were pulling my leg.

  • As children do, to make fun of their parents.

  • And then I did go and look one night

  • and I was frankly shocked and flabbergasted

  • that why would anybody buy an iPhone

  • take it home and open the box and show it on the camera

  • and everybody can go watch it?

  • So I typed toy unboxing, and my God,

  • I saw so many different videos

  • and people, kids and adults, buying toys like an Apple,

  • and unboxing it on video and posting it.

  • So that gave me an idea

  • that why not come up with the ultimate?

  • And that's the first L.O.L. Surprise.

  • All right, oh yes, we've got a gold ball.

  • L.O.L. changed the way you opened with toys,

  • and everybody saw that.

  • And the packaging became part of the play

  • which became part of the entertainment.

  • So normally, if you get a package

  • that you just open a package, and you take the toy out,

  • that's not exciting.

  • You open up L.O.L., you peel it away, you open up inside,

  • you have seven surprises.

  • And it took off like wildfire

  • and quickly became the top toy in the country.

  • By December of 2018,

  • eight of the top 10 toys sold

  • were all L.O.L. Surprise brand.

  • And according to MGA, from 2016 to 2020,

  • L.O.L. would generate over $10 billion

  • in retail sales worldwide.

  • L.O.L. was bigger than Star Wars,

  • it's bigger than Marvel, it's bigger than Barbie.

  • These brands with huge advertising budgets

  • are known basically by everyone.

  • You don't have to, you know,

  • figure out what Marvel or Star Wars is.

  • And L.O.L. eclipsed them all.

  • In the toy world,

  • blind bag or blind box toys have been growing in popularity.

  • The most famous example in recent years is Pokemon cards,

  • where you open packs in hopes of getting a Charizard,

  • but more often wind up with something common

  • like Gligar here.

  • Two years before the launch of L.O.L. in 2014,

  • the Australian toy company, Moose Toys,

  • launched a blind bag collectible called Shopkins.

  • And in 2016, Spin Master would launch

  • a more expensive blind box toy it called Hatchimals.

  • But the thing that sets L.O.L. Surprise apart

  • is that it mainly focused on YouTube

  • and not putting ads on YouTube,

  • but working with creators and influencers

  • to get their products in the hands of these kids

  • doing the unboxing videos.

  • For MGA, actually, the move towards YouTube

  • was kind of a bit lucky and almost out of necessity.

  • In late 2015,

  • Nickelodeon parent company, Viacom,

  • would sue MGA for breach of contract

  • after it failed to pay $3.5 million

  • for the production of a TV series

  • based on their Lalaloopsy dolls.

  • They tried to flex their muscle,

  • and they said, "Well, if you don't agree

  • to our way of seeing things in the conflict that we had,

  • a separate conflict,

  • we are going to stop your advertisement of toys.

  • At the time, Nickelodeon was the number one ranked

  • children's network,

  • and not to be able to advertise on Nickelodeon

  • could have been a death knell,

  • but MGA, necessity is the mother of invention,

  • that caused them to lean into digital advertising

  • far more than any big brand had ever done before

  • because they had to.

  • They had to find a new way to reach kids.

  • The court would ultimately rule

  • in favor of Viacom, both in LA federal court,

  • and on appeal in the Ninth Circuit.

  • Larian blamed the court defeat

  • on what he contends was judicial bias.

  • Nickelodeon parent company, Viacom,

  • didn't respond to a request for comment.

  • So that by itself forced us to go and say,

  • "Okay, the hell with Nickelodeon.

  • Let's find another way to reach to children.

  • And that's how we went

  • and doubled up on YouTube, especially,

  • and the rest, as they say, is history.

  • So early on, MGA partnered with YouTube creators

  • with huge audiences like Cookie Swirl C.

  • Good morning, Chocolatey Chippy Cookies,

  • we are gonna be spending the morning

  • with this L.O.L. Surprise baby, Fancy.

  • They took it another step further.

  • They actually helped kids

  • learn how to do their own unboxing videos.

  • They gave them support and learning and tools,

  • and so all these kids got to be

  • kind of a little, mini influencer themselves

  • as they were unboxing their L.O.L. products.

  • So just to give you a flavor

  • of how popular these videos are,

  • go onto YouTube and search L.O.L. Surprise,

  • and you'll see videos with a million views,

  • 10 million, 25 million, 50 million, and even 100 million.

  • There's lots of them, and kids are watching these videos,

  • and they're probably watching them over and over again.

  • The old way toy manufacturers would do things

  • is they'd buy TV, which was about 90% of their ad spend.

  • And then traditional PR, get on the big morning shows.

  • It's an entirely different formula.

  • It's much harder for toy companies right now

  • because the formula is so complicated.

  • You have to really take a deep dive into each platform.

  • Am I promoting on Twitter?

  • Am I promoting on Instagram?

  • Am I promoting on TikTok?

  • What am I doing on YouTube?

  • You have to look at every possible social channel.

  • By 2017, big toy brands like Mattel

  • had shifted nearly 50% of their marketing budget

  • to social platform advertising.

  • Brands would help seed videos of their toys

  • and if they were lucky, that could kick off

  • a wave of creators making their own content

  • around the product.

  • In 2020 alone, Tubular Labs estimated

  • that L.O.L. related content had amassed 5.1 billion views.

  • This idea of imitation.

  • So when you see kids playing with product,

  • it kind of excites the same neurons in your brain

  • that happen when you do it yourself.

  • The more we could show children having this experience,

  • the more kids felt what it would be like to have it,

  • and then wanted to experience it themselves.

  • You know, one of the criticisms

  • of this whole influencer movement among kids

  • is that kids are young, they don't understand

  • what's necessarily an advertisement versus real content.

  • And that's a big criticism of this industry,

  • is that a lot of kids are getting on YouTube at young ages,

  • not being supervised by their parents

  • and just watching these videos.

  • And they don't realize that maybe that influencer

  • is getting paid by the brand to do that video,

  • or there's some other compensation.

  • And that, you know, blurs the lines for kids

  • as they're sort of developing

  • and figuring out how to consume media.

  • Questionable advertising concerns aside,

  • kids YouTube creators would take off.

  • Channels like Ryan's World would grow

  • to almost 30 million subscribers,

  • and a whole industry formed around them.

  • When we first started working with influencers,

  • they were very happy to work for free product.

  • You give them the product, and they'd do something for you.

  • And gradually, influencers got smarter

  • and started, you know, charging for their services

  • as they started building a following.

  • Now because it is such a big business,

  • the dollars can be significant

  • investing in big influencers.

  • When Spin Master launched one of its new TV series

  • and associated product,

  • we made it a point to buy an advertising package

  • with Ryan's World to ensure

  • that we could get really quick, big reach right away.

  • This is an advertisement for Spin Master.

  • So from these unboxing videos,

  • the content's gotten a lot more sophisticated.

  • They're creating narratives around the toys

  • with voices and meta-universes, if you will.

  • And it's really engaging content even more so

  • than the original unboxing videos for these kids.

  • And the content is coming out maybe

  • once a week or even daily.

  • So if you think about it, what they've done

  • is they've created basically like a TV show around a toy.

  • It's not unlike what we saw back in the '80s

  • which was criticized back then, by the way,

  • when you had toys like G.I. Joe

  • turn into an animated series,

  • or Masters of the Universe, or Transformers.

  • So we've kind of seen this full circle now, right?

  • So back to where we were content

  • and basically, mini television shows

  • created around toys on YouTube.

  • Kid's content on YouTube

  • is likely to face increased regulation in the coming years.

  • In 2019, the company would agree

  • on a $170 million settlement with the FTC

  • for serving ads based on personal data to kids on YouTube.

  • YouTube would put more emphasis

  • behind its made for kids platform, YouTube Kids,

  • and each video uploaded to YouTube

  • must be flagged as either made for kids or not.

  • In a statement outlining changes to the site,

  • YouTube would say that

  • "responsibility is our number one priority at YouTube,

  • and this includes protecting kids and their privacy."

  • Still the site is far less regulated

  • than traditional television.

  • I do think parents have a better understanding

  • of YouTube now, and the new genres and formats there

  • that they didn't prior.

  • And they now notice things like

  • their kid isn't watching a toy unboxing,

  • that's a commercial for a toy.

  • Their kid is watching other kids play with toys

  • in an imaginative way,

  • which inspires them to go play with things in the real world

  • in an imaginative way.

  • In just a few short years,

  • YouTube had caused a transfer of power

  • from toy and network executives

  • to nine-year-olds and their families.

  • The Kaji family may have started out as toy reviewers,

  • but now Ryan has launched his own line of toys,

  • a cartoon series,

  • he was even a blimp in the 2020 Macy's Thanksgiving parade.

  • You or I might think about Spider-Man or Snoopy

  • but today's kids see that blimp of Ryan

  • and they relate to him.

  • He's the character they want to grow up with.

  • He's the character they want to engage with.

  • And as we go forward, these influencers are becoming

  • more and more like big, giant global brands.

  • And that has profound effects

  • for entertainment going forward.

If you're like the estimated 74%

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