Subtitles section Play video Print subtitles 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?