0:00:03 > 0:00:05We live in a world where spending never stops.
0:00:06 > 0:00:11Cherie? Cherie? You're going to need to be tannoying this.
0:00:11 > 0:00:15- OVER TANNOY:- Ladies and gentlemen, can you please stop panicking?
0:00:15 > 0:00:17But why DO we buy what we buy?
0:00:17 > 0:00:21And how is our desire to spend manipulated?
0:00:21 > 0:00:24Every other company on Earth is trying to get you to spend money
0:00:24 > 0:00:27and they're putting all their effort into getting you
0:00:27 > 0:00:29to spend your money on stuff all the time.
0:00:30 > 0:00:32'I'm Jacques Peretti and, in this series,
0:00:32 > 0:00:35'I'm going to investigate the men who've made us spend.'
0:00:37 > 0:00:39'I'll look at how children
0:00:39 > 0:00:42'were turned into consumerism's greatest weapon...'
0:00:42 > 0:00:44We had trained a generation of kids to think,
0:00:44 > 0:00:47"There's got to be a product, there's got to be toys."
0:00:47 > 0:00:49Good luck. '..reveal how play
0:00:49 > 0:00:53'became a serious business when targeted at grown-ups.'
0:00:53 > 0:00:56What was the money that was being generated for these games?
0:00:56 > 0:00:59I mean, the money is astounding.
0:00:59 > 0:01:03Within a week, you're talking about billions.
0:01:04 > 0:01:08'And how the techniques first used to sell to kids were used on adults,
0:01:08 > 0:01:12'giving us licence to behave like children.'
0:01:12 > 0:01:15The trouble with adult consumers is they think too much.
0:01:15 > 0:01:19That's the last thing that those who sell to consumers want.
0:01:19 > 0:01:22They'd much rather have adults go in and say, "Oooh, look at that,
0:01:22 > 0:01:24"I want it, I want it now!" Like a child.
0:01:44 > 0:01:48In less than 50 years, children have become prized consumers,
0:01:48 > 0:01:53with British and American kids worth £700 billion a year.
0:01:56 > 0:01:58Open to selling and impulsive when buying,
0:01:58 > 0:02:01children are valued for their own spending power,
0:02:01 > 0:02:04as well as the unique access they give to the family purse.
0:02:10 > 0:02:11It is through these young consumers
0:02:11 > 0:02:15the business learned to sell using fun and play.
0:02:17 > 0:02:20Techniques that are now being used to sell billions of pounds' worth
0:02:20 > 0:02:24of products to all of us - whether we need them or not.
0:02:35 > 0:02:37And when it comes to the very young,
0:02:37 > 0:02:40the key lies in creating a character which, if successful,
0:02:40 > 0:02:44will be used to sell hundreds of different products.
0:02:45 > 0:02:48Peppa Pig? All right. What's your favourite thing to play, Jeremiah?
0:02:48 > 0:02:51This looks like a play centre, but it isn't.
0:02:51 > 0:02:56Here, Dr Alison Bryant road tests new characters for the toy industry.
0:02:56 > 0:02:59PEPPA PIG SNORTS
0:02:59 > 0:03:01THEY SNORT, LAUGHTER
0:03:01 > 0:03:04They're playing a Peppa Pig app, which they actually asked to play.
0:03:04 > 0:03:07They saw it on the iPad and they said, "Oh, Peppa Pig, Peppa Pig!"
0:03:07 > 0:03:09And then, as I started the app,
0:03:09 > 0:03:11they were actually singing the theme song.
0:03:11 > 0:03:13So, they really love the character.
0:03:13 > 0:03:17'By ten, children can identify up to 400 brands,
0:03:17 > 0:03:21'so it's vital for industry to target them very young.'
0:03:21 > 0:03:25At what age do children start to have these relationships
0:03:25 > 0:03:27- with characters? - Oh, it can start incredibly early.
0:03:27 > 0:03:30I mean, we see children start to identify with characters,
0:03:30 > 0:03:32you know, at one and two.
0:03:32 > 0:03:34It's different, though, at that age, because they're, sort of,
0:03:34 > 0:03:36"I like this character".
0:03:36 > 0:03:40As they get a little bit older, it's, "I'M like this character".
0:03:40 > 0:03:43'If it's a hit, the character will appear on everything,
0:03:43 > 0:03:47'from bedding to biscuits, increasing the price tag by 50%.
0:03:47 > 0:03:49'This is known as licensing.
0:03:49 > 0:03:51'For adults, it's just as lucrative.
0:03:51 > 0:03:55'Peppa Pig replaced by David Beckham or Kate Moss.'
0:03:55 > 0:03:59How valuable is licensing to selling product?
0:03:59 > 0:04:01Er, I mean, licensing really
0:04:01 > 0:04:03can make or break a product at this point in time.
0:04:03 > 0:04:07I mean, if there's no way to create revenue outside of a TV show
0:04:07 > 0:04:10or a movie or whatever it is that's establishing the characters,
0:04:10 > 0:04:14it's very hard to make money in the kids' media space.
0:04:14 > 0:04:15Now, of course, we see it with Marvel,
0:04:15 > 0:04:17which was just purchased by Disney.
0:04:17 > 0:04:20And every kid, even if they haven't seen the movies,
0:04:20 > 0:04:21they want the products.
0:04:21 > 0:04:23'It wasn't always like this.'
0:04:23 > 0:04:26As late as the '60s,
0:04:26 > 0:04:29only a few toys were advertised directly to children.
0:04:29 > 0:04:33Barbie was one of the first to be widely marketed.
0:04:33 > 0:04:36There wasn't the endless range of licensed products we see today.
0:04:39 > 0:04:42Few toymakers saw children as spenders.
0:04:42 > 0:04:46It was the parents that held the purse strings. And it was THEY
0:04:46 > 0:04:49that needed persuading to buy new toys for their children.
0:04:50 > 0:04:52To change this mindset,
0:04:52 > 0:04:55the toy industry needed not just a new product...
0:04:56 > 0:04:58..but a cultural phenomenon
0:04:58 > 0:05:00that would change the way we were sold to.
0:05:04 > 0:05:07Great shot, kid, that was one in a million!
0:05:07 > 0:05:11- OBI-WAN KENOBI:- 'Remember, the Force will be with you...always.'
0:05:18 > 0:05:23Star Wars was the singular vision of one man - George Lucas.
0:05:23 > 0:05:26A sci-fi trilogy, pitching Luke Skywalker
0:05:26 > 0:05:28in an epic battle against the evil Darth Vader.
0:05:30 > 0:05:32Lucas may not have been a toymaker,
0:05:32 > 0:05:35but he was about to turn children into voracious consumers.
0:05:41 > 0:05:45I've come to California, where, in 1977, the film-maker was struggling
0:05:45 > 0:05:49to find a studio to back the unpromising sci-fi project
0:05:49 > 0:05:53he described to would-be investors as "cowboys and Indians in space".
0:05:55 > 0:05:59To raise money, Lucas wanted to do something unheard of -
0:05:59 > 0:06:02create a toy franchise, not just for the hero,
0:06:02 > 0:06:04but the entire world he'd invented.
0:06:07 > 0:06:08Steve.
0:06:08 > 0:06:10Hi, Jacques. How are you?
0:06:10 > 0:06:14- Welcome to Rancho Obi-Wan.- Thank you for having me!- You're welcome.
0:06:15 > 0:06:21'Steve Sansweet worked at Lucasfilm for 15 years, marketing Star Wars.'
0:06:24 > 0:06:28MUSIC: "The Imperial March" from Star Wars
0:06:28 > 0:06:30It's phenomenal.
0:06:32 > 0:06:35Well, er, this is Rancho Obi-Wan.
0:06:37 > 0:06:38That's amazing.
0:06:40 > 0:06:42I, erm, I'm not often lost for words.
0:06:42 > 0:06:44LAUGHTER
0:06:44 > 0:06:45But I am today.
0:06:45 > 0:06:49So...this...Darth Vader... This is THE Darth Vader?
0:06:49 > 0:06:53Lots of it are parts from the original movie costume
0:06:53 > 0:06:56from Star Wars and The Empire Strikes Back.
0:06:56 > 0:06:59- Can I touch...?- Yes, absolutely.
0:06:59 > 0:07:03It's like, um... it's like my generation's equivalent
0:07:03 > 0:07:06- of the Turin Shroud or something. - LAUGHTER
0:07:06 > 0:07:08You said it, I didn't!
0:07:11 > 0:07:15When Star Wars opened in cinemas, its tale of good battling evil
0:07:15 > 0:07:19enthralled children around the world, including me.
0:07:19 > 0:07:20CHEERING
0:07:20 > 0:07:23The franchise had been created and the world of selling to children
0:07:23 > 0:07:26and adults would never be the same again.
0:07:26 > 0:07:30These are the action figures and these are the things that
0:07:30 > 0:07:36really cemented fans' appreciation for Star Wars, I think.
0:07:36 > 0:07:39So this Luke Skywalker was the first ever toy?
0:07:39 > 0:07:42There were 12 toys that came out
0:07:42 > 0:07:45- and so you can see on the back of the package...- Mm.
0:07:45 > 0:07:49But even predating that, there had never been
0:07:49 > 0:07:53a successfully merchandised movie, until Star Wars.
0:07:53 > 0:07:55'For the next six years, Star Wars cemented itself
0:07:55 > 0:07:59'not as a movie or a toy, but an industry.'
0:07:59 > 0:08:01This is ridiculously fantastic.
0:08:01 > 0:08:04'But when Lucas took his idea to big toymakers...'
0:08:04 > 0:08:05Whoosh!
0:08:05 > 0:08:07'..none spotted its potential.'
0:08:07 > 0:08:10When he first came up with the idea of Star Wars,
0:08:10 > 0:08:13did he approach any toy manufacturers?
0:08:13 > 0:08:16They passed on it, they passed on it. They weren't interested.
0:08:16 > 0:08:20And in fact, the two guys from Fox and Lucasfilm who went
0:08:20 > 0:08:24to Toy Fair International, got, literally, thrown out of
0:08:24 > 0:08:28one of the toy showrooms of one of the largest toy makers at the time.
0:08:28 > 0:08:32'George Lucas's idea was finally picked up by toy company Kenner.
0:08:35 > 0:08:39'Together, they came up with a simple but revolutionary idea
0:08:39 > 0:08:42'that would dramatically increase the volume of toys sold.'
0:08:44 > 0:08:48At the time, figures were either seven inches
0:08:48 > 0:08:50or the 12-inch GI Joe figures,
0:08:50 > 0:08:55but having figures this size let you build environments, play sets,
0:08:55 > 0:09:00vehicles. That was really the key to Star Wars' success.
0:09:00 > 0:09:04And what's clever is that, by selling these small figures cheaply,
0:09:04 > 0:09:08you're actually creating rolling demand for much bigger purchases
0:09:08 > 0:09:12which will be like the Millennium Falcon or the big, big, set pieces.
0:09:12 > 0:09:15Yeah, absolutely, because originally, these were priced in the US
0:09:15 > 0:09:19at 1.97 and, of course, the marketing was all -
0:09:19 > 0:09:21"Collect them all".
0:09:21 > 0:09:24Star Wars set the template, not only for the toys,
0:09:24 > 0:09:28but for all kinds of merchandise - apparel, bedding, you name it.
0:09:28 > 0:09:32Profits increased as the range expanded, with Star Wars branding
0:09:32 > 0:09:36- on everything.- 'Video games, clothing, bubble bath.'
0:09:36 > 0:09:39All of which showed just how much money could be made
0:09:39 > 0:09:40through selling directly to kids.
0:09:43 > 0:09:46Business also learned that licensed products like this
0:09:46 > 0:09:47could be sold to adults.
0:09:47 > 0:09:49PHONE RINGS
0:09:49 > 0:09:50Hello?
0:09:54 > 0:09:58Since the launch of the first film, £13 billion pounds' worth
0:09:58 > 0:10:01of Star Wars-branded products have been sold worldwide.
0:10:05 > 0:10:09Star Wars heralded a new era in selling to children.
0:10:09 > 0:10:13Film and TV would combine with the toy industry
0:10:13 > 0:10:16to create brands that would stay with us for ever.
0:10:18 > 0:10:22The 1970s saw a new conduit for selling - colour television.
0:10:22 > 0:10:24The perfect medium for marketers
0:10:24 > 0:10:27to drive home sales to a young audience.
0:10:32 > 0:10:37Professor Benjamin Barber has studied the politics of selling.
0:10:37 > 0:10:41The challenge for vendors, the challenge for producers,
0:10:41 > 0:10:43was how to get to the children,
0:10:43 > 0:10:46because between them and the children stood gatekeepers -
0:10:46 > 0:10:50parents, teachers, government regulators.
0:10:50 > 0:10:53So, how to bypass them, how to get around them, was crucial
0:10:53 > 0:10:57and one of the things that was very, very important was television.
0:10:57 > 0:11:01Because those who controlled what was on the screens
0:11:01 > 0:11:04were in a position to market directly to the children.
0:11:07 > 0:11:10Airtime quickly became cluttered with ads selling sugary foods
0:11:10 > 0:11:15and toys, as children were targeted increasingly aggressively.
0:11:15 > 0:11:17There was a backlash against this attempt
0:11:17 > 0:11:20to turn kids into mini-consumers.
0:11:20 > 0:11:22As the children's market
0:11:22 > 0:11:25began opening up in ways previously undreamt of,
0:11:25 > 0:11:28in the US, the Federal Trade Commission began lobbying lawmakers
0:11:28 > 0:11:33to curb advertising to children. The fall-out from this battle
0:11:33 > 0:11:36would change the way children across the world were sold to.
0:11:39 > 0:11:42The FTC had been urged into action by an unlikely coalition
0:11:42 > 0:11:46of consumer lobbyists and traditional family-value groups.
0:11:47 > 0:11:51They pointed to research that showed children to be the consumer group
0:11:51 > 0:11:53most susceptible to TV advertising
0:11:53 > 0:11:56because their ideas were still being formed.
0:11:56 > 0:12:00Kids are being told the biggest lie they will ever hear in their lives.
0:12:00 > 0:12:03A lie that says they should
0:12:03 > 0:12:05shove candy into their mouths,
0:12:05 > 0:12:10a lie that says that 12, 20 and 30 toys work perfectly every time.
0:12:10 > 0:12:12That all the other kids have them
0:12:12 > 0:12:15and that they, too, must have them in order to be happy.
0:12:15 > 0:12:19But their attempt to protect kids was doomed to failure.
0:12:19 > 0:12:22At hearings in Washington, industry fought back.
0:12:24 > 0:12:27The man defending big business was Fred Furth.
0:12:27 > 0:12:30One of America's leading lawyers, Furth represented Kellogg's,
0:12:30 > 0:12:34a company that advertised heavily around children's programming.
0:12:34 > 0:12:38In an American democratic capitalistic society,
0:12:38 > 0:12:42we all must learn, top to bottom, to care for ourselves and what
0:12:42 > 0:12:47the last thing we need in the next 20 years is a national nanny.
0:12:47 > 0:12:51The idea was to ban foods, er,
0:12:51 > 0:12:55which advertised to children that had sugar in them and, er,
0:12:55 > 0:13:00this was way beyond the authority of the FTC.
0:13:00 > 0:13:04I mean, the FTC had substantial responsibilities, in regard to
0:13:04 > 0:13:08mergers and acquisitions and other matters
0:13:08 > 0:13:13but they're not a social agency that goes out on liberal crusades.
0:13:13 > 0:13:17The people who are supposed to keep the children from eating too much sugar
0:13:17 > 0:13:21are called parents and grandparents and uncles and aunts.
0:13:21 > 0:13:23'With such powerful opponents,
0:13:23 > 0:13:26'the government agency was soon in retreat.'
0:13:26 > 0:13:29It was one of those ideas that cost millions and millions
0:13:29 > 0:13:34of dollars to lots of people, cost the FTC a lot of time,
0:13:34 > 0:13:38made them look foolish and it went nowhere.
0:13:38 > 0:13:42'But those opposing advertising to kids hadn't just lost the battle.'
0:13:44 > 0:13:48At the end of the 1970s, the US economy was in recession
0:13:48 > 0:13:53and the proposed ban was portrayed in Washington as an attack on trade.
0:13:53 > 0:13:56The resulting backlash gave newly-elected president,
0:13:56 > 0:14:01Ronald Reagan, a mandate for huge deregulation.
0:14:01 > 0:14:04As you know, I have never liked big government
0:14:04 > 0:14:05and I think you would agree
0:14:05 > 0:14:09there's no reason to substitute the judgment of Washington bureaucrats
0:14:09 > 0:14:12for that of professional broadcasters.
0:14:12 > 0:14:13APPLAUSE
0:14:17 > 0:14:19The government set about dismantling the rules
0:14:19 > 0:14:23that protected children from advertising.
0:14:23 > 0:14:27Looking back now, do you not have any qualms about preventing
0:14:27 > 0:14:32legislation going through that was designed to protect children?
0:14:32 > 0:14:36I never prevented any legislation from going through.
0:14:36 > 0:14:40If this was such a grievous affair,
0:14:40 > 0:14:45certainly the Congress of the United States would step forward
0:14:45 > 0:14:49to protect five-year-old children, if that was the great issue.
0:14:53 > 0:14:57The way was clear for toy marketing to step up another gear.
0:14:57 > 0:15:00US television was now free to screen programmes that were
0:15:00 > 0:15:03little more than advertising slots for toys
0:15:03 > 0:15:06and these would be seen by children across the world.
0:15:06 > 0:15:11For the children's market, still in its infancy, it was a gold rush.
0:15:12 > 0:15:14The world's largest toymakers,
0:15:14 > 0:15:18Hasbro and Mattel, were the first companies to cash in.
0:15:18 > 0:15:20Having seen the profits Lucas had made,
0:15:20 > 0:15:25they now wanted to use television in a new way to sell their toys.
0:15:25 > 0:15:29Their cunning plan was to create the toy and then invent a story.
0:15:31 > 0:15:35The first and most successful to use this strategy was Transformers.
0:15:35 > 0:15:39Paul Kurnit was one of the team tasked with making it happen.
0:15:41 > 0:15:44You flipped the Star Wars model, didn't you, in a way?
0:15:44 > 0:15:46Well, in a way, because the product came first.
0:15:46 > 0:15:48We took it from this three-dimensional toy
0:15:48 > 0:15:50that didn't have a lot of meaning
0:15:50 > 0:15:55to a completely unique storyline that kids could get excited about.
0:15:55 > 0:15:58And we had trained a generation of kids to think,
0:15:58 > 0:16:01"There's got to be product, there's got to be toys."
0:16:02 > 0:16:04The Transformers' back story
0:16:04 > 0:16:07was to be developed by ad agency Griffin-Bacal.
0:16:09 > 0:16:14My two partners, Tom Griffin and Joe Bacal, and the head of marketing
0:16:14 > 0:16:18for Hasbro, Steve Schwartz, were driving back to New York that night.
0:16:18 > 0:16:21And we got in the car and just started talking.
0:16:21 > 0:16:25And it was kind of like being with your best buddies on a schoolyard
0:16:25 > 0:16:30and just jamming and coming up with a story that had real legs.
0:16:30 > 0:16:34Because in that... three-hour car drive,
0:16:34 > 0:16:38we invented the entire story of Transformers.
0:16:38 > 0:16:40By giving the toys characters,
0:16:40 > 0:16:44they could then script a TV programme around them.
0:16:44 > 0:16:48The product line was fixed - there were six cars, six planes,
0:16:48 > 0:16:51a truck and a gun.
0:16:51 > 0:16:54And we started coming up with names, right?
0:16:54 > 0:16:56Like Autobots for cars.
0:16:56 > 0:17:00Decepticons because deceptive is not a good thing.
0:17:00 > 0:17:03And so, once we had our Autobots and our Decepticons,
0:17:03 > 0:17:05we had the good-versus-evil, kind of, storyline
0:17:05 > 0:17:10which in boys' toy play is really rather classic.
0:17:11 > 0:17:14'There was an aggressive campaign behind the Transformers' launch -
0:17:14 > 0:17:19'the TV mini-series, a range of toys and a Marvel comic book.
0:17:19 > 0:17:21'But that was just the beginning.'
0:17:21 > 0:17:24Licensing opportunities became really big,
0:17:24 > 0:17:28where, if a child loved Transformers, the child would want
0:17:28 > 0:17:31Transformers bedding, pillows, blankets.
0:17:31 > 0:17:34A child would want to go as Optimus Prime
0:17:34 > 0:17:37or Megatron on Halloween as their costume.
0:17:37 > 0:17:41A child would want to carry a Transformers lunch box
0:17:41 > 0:17:42or thermos with them to school.
0:17:43 > 0:17:48Within two years, sales of the toy had reached 300m.
0:17:49 > 0:17:53But, to its critics, Transformers shows were adverts
0:17:53 > 0:17:58masquerading as programmes - half an hour of hard sell to young children.
0:17:58 > 0:18:02How did you get away with making 30- minute commercials in a mini-series?
0:18:02 > 0:18:06Now you're being very controversial. We did not feel they were adverts.
0:18:06 > 0:18:08We were very serious about the work that we were doing.
0:18:08 > 0:18:10And it was quality television programming.
0:18:10 > 0:18:15Some of the finest television programming for children at the time.
0:18:15 > 0:18:17But you don't feel it was a, kind of, more aggressive,
0:18:17 > 0:18:20naked way of selling a product?
0:18:20 > 0:18:24I think that is a cynical view and I think it sells kids short.
0:18:24 > 0:18:28I think that the idea of creating worlds in which there is open-ended
0:18:28 > 0:18:32play...and understanding that kids can breathe their own storyline,
0:18:32 > 0:18:36their own excitement into it, is a really joyful thing to do.
0:18:41 > 0:18:44'Meanwhile, Mattel created He-Man Masters Of The Universe,
0:18:44 > 0:18:48'a 65-part animated TV series,
0:18:48 > 0:18:52'designed to promote a new line of toys that would rival Transformers.'
0:18:52 > 0:18:55- All right, Teresa, you haven't seen this for some time.- Mm-hm.
0:18:55 > 0:18:57SHE CHUCKLES
0:18:57 > 0:18:59- ANNOUNCER: - '..and The Masters of the Universe!'
0:18:59 > 0:19:01For years...
0:19:01 > 0:19:04'The hard sell of these shows was frowned on in Britain.
0:19:04 > 0:19:07'But they were attractive to TV executives
0:19:07 > 0:19:09'as they were cheap and popular.
0:19:09 > 0:19:13'In 1984, Theresa Plummer-Andrews was a programme buyer for ITV.'
0:19:13 > 0:19:15By the power of Grayskull...
0:19:15 > 0:19:18- You know it better than I do! - Yeah, I used to watch this.
0:19:18 > 0:19:23'And I became He-Man, the most powerful man in the universe..'
0:19:23 > 0:19:25It was very different from the kind of shows that were
0:19:25 > 0:19:29shown before, wasn't it? It was brashly commercial?
0:19:29 > 0:19:32Hugely commercial. Everybody was concerned
0:19:32 > 0:19:34but it was going to happen.
0:19:34 > 0:19:38You know, there was no way we could hold the floodgates back
0:19:38 > 0:19:41from this onslaught of American material.
0:19:41 > 0:19:46So, despite initial resistance, the need to attract viewers won out
0:19:46 > 0:19:48and He-Man was shown by ITV.
0:19:48 > 0:19:53That year, toy sales in Britain rocketed by an unprecedented 25%,
0:19:53 > 0:19:58to £450 million, with He-Man leading the charge.
0:19:58 > 0:20:01Which means that Masters of the Universe have muscled in
0:20:01 > 0:20:03as masters of Santa's grotto.
0:20:05 > 0:20:09Isn't a part of you thinking, "These shows really shouldn't be
0:20:09 > 0:20:12"shown to kids because they are ads for toys?"
0:20:12 > 0:20:16They're not coming from a place that's about imagination
0:20:16 > 0:20:19and creativity. It's about cynical selling.
0:20:19 > 0:20:22If I'm an investor and I'm investing in your programme,
0:20:22 > 0:20:25I'm not going to give you two million quid
0:20:25 > 0:20:27to go away and play with it. I want my money back.
0:20:27 > 0:20:31And the only way you're going to get your money back is toys,
0:20:31 > 0:20:37books, DVDs, apps nowadays, etc, etc. It's...it's commercial.
0:20:41 > 0:20:43Children's programming was
0:20:43 > 0:20:47now used to prime kids to want the latest licensed toy.
0:20:47 > 0:20:51In time, children would help the market understand the full power
0:20:51 > 0:20:54of narrative and franchising in selling to all of us.
0:20:56 > 0:21:00But the project to develop them into the super-consumers of today
0:21:00 > 0:21:01was just beginning.
0:21:03 > 0:21:06It would be turbo-charged, thanks to a kids TV channel,
0:21:06 > 0:21:08now familiar for its distinctive branding.
0:21:11 > 0:21:15POPPING
0:21:15 > 0:21:21Nickelodeon, the US kids' network, launched in Britain in 1993.
0:21:21 > 0:21:23Heidi Diamond would help make
0:21:23 > 0:21:27this aggressively-commercial new channel a success in the UK.
0:21:28 > 0:21:31She was the executive vice-president tasked with winning over
0:21:31 > 0:21:34the many critics of its brash approach.
0:21:35 > 0:21:38We got a lot of, "Yankee, go home",
0:21:38 > 0:21:44because they thought that Watch With Mother time was very sacrosanct
0:21:44 > 0:21:46and the idea of children
0:21:46 > 0:21:51to be wild and children to be loud and outspoken and effervescent,
0:21:51 > 0:21:57that was not what the British population was used to at that time.
0:21:57 > 0:22:01Heidi, how valuable was Nickelodeon to advertisers?
0:22:01 > 0:22:06All of a sudden, there was a way to reach children with...
0:22:06 > 0:22:10volume and frequency. It meant a lot.
0:22:10 > 0:22:15And particularly, when you're selling cereal or sweets or toys.
0:22:15 > 0:22:17It took a little while to catch on,
0:22:17 > 0:22:22because, certainly, you know, the notion that, "Oh, my goodness,
0:22:22 > 0:22:26"all of a sudden, you're doing too much programming to kids."
0:22:26 > 0:22:28But advertisers started to see the light
0:22:28 > 0:22:33and that here was an opportunity to message to them regularly -
0:22:33 > 0:22:34before they went to school,
0:22:34 > 0:22:38after they came home from school, before they went to bed.
0:22:38 > 0:22:41'By 2007, the average British child
0:22:41 > 0:22:45'was watching 10,000 TV adverts in a year.'
0:22:45 > 0:22:47Don't you think there's something slightly immoral
0:22:47 > 0:22:53about the idea of targeting people who really haven't the capacity
0:22:53 > 0:22:57to judge whether it's right to be wanting that object?
0:22:57 > 0:22:59You know, fair enough, the question.
0:22:59 > 0:23:03But kids are consumers, the same way adults are consumers.
0:23:03 > 0:23:07They get pocket money, they do chores, they earn money,
0:23:07 > 0:23:12they want to go to the newsagent, they want to buy their magazines,
0:23:12 > 0:23:15they want to buy their Kit Kat bars or their Mars Bars,
0:23:15 > 0:23:18so why not talk to them on a level
0:23:18 > 0:23:23that appreciates that they're a consumer, the same as you and I?
0:23:23 > 0:23:26'Ads on Nickelodeon were not just aimed at children, but also
0:23:26 > 0:23:30'at parents, who, it was assumed, would watch TV with their kids.
0:23:30 > 0:23:33'But research by Nickelodeon found that children watched alone
0:23:33 > 0:23:35'and it was they that saw the ads for holidays
0:23:35 > 0:23:38'and cars that were aimed at their parents.'
0:23:38 > 0:23:40It became evident to us
0:23:40 > 0:23:46that kids had such a firm influence on their parents' decisions.
0:23:46 > 0:23:49Besides saying, "Mummy, Mummy, I want this kind of ice cream."
0:23:49 > 0:23:53When it came time to purchase the family car,
0:23:53 > 0:23:55the children's voice was heard.
0:23:56 > 0:24:00Children were, of course, primary targets for marketers
0:24:00 > 0:24:04and advertisers, but increasingly, it was apparent that kids
0:24:04 > 0:24:07also had considerable influence on adults as well.
0:24:07 > 0:24:12They were in a position to go to their parents and not just say,
0:24:12 > 0:24:16"I want this particular game, I want this particular video,"
0:24:16 > 0:24:21but to also say, "Why don't we have this kind of a television?"
0:24:21 > 0:24:27So, the old gatekeepers, in a sense, now became the new targets
0:24:27 > 0:24:29of the very children they were supposed to be gatekeeping,
0:24:29 > 0:24:33in influencing them in what they buy.
0:24:33 > 0:24:36By 1996, it was estimated that British children
0:24:36 > 0:24:41influenced around £31 million of adult spending each year.
0:24:41 > 0:24:45Advertisers looked at children with fresh eyes.
0:24:45 > 0:24:49They now saw kids as a Trojan Horse. Get the message to the child
0:24:49 > 0:24:51and they would take it straight into the family home,
0:24:51 > 0:24:55to the unsuspecting parent. Ads for large family purchases
0:24:55 > 0:24:59would now be targeted at kids, as well as adults.
0:24:59 > 0:25:03Manufacturers didn't stop at advertising to kids.
0:25:03 > 0:25:05They began to redesign the very product,
0:25:05 > 0:25:07according to what children wanted.
0:25:08 > 0:25:13The first to do this was the Japanese car manufacturer Toyota.
0:25:13 > 0:25:14In the late '90s,
0:25:14 > 0:25:17sales of the people carrier went into sharp decline.
0:25:17 > 0:25:21Mum and Dad thought it looked boring when compared to the SUV.
0:25:21 > 0:25:26So, engineers at this American plant in Detroit came up with an idea.
0:25:26 > 0:25:29If they couldn't sell the people carrier to parents,
0:25:29 > 0:25:32why not try and sell it to the kids?
0:25:32 > 0:25:35Andy Lund came up with the new child-friendly design.
0:25:35 > 0:25:40We did not think the word "cool" and "people carrier" had to be opposites.
0:25:40 > 0:25:43We wanted to make a cool van.
0:25:43 > 0:25:47'Toyota weren't sure what "cool" might be for 7-14 year olds,
0:25:47 > 0:25:50'so they travelled from coast to coast to find out.'
0:25:50 > 0:25:52We decided that, if we're going to learn,
0:25:52 > 0:25:55we have to go and listen to the children and watch the children.
0:25:55 > 0:25:58What were the things that kids were saying they wanted?
0:25:58 > 0:26:00There were several features. Let me show you two.
0:26:00 > 0:26:01The first one is the seat.
0:26:01 > 0:26:05It is a captain's chair, it's designed after the driver seat.
0:26:05 > 0:26:09so the people who sit here don't feel they're stuck way back there.
0:26:09 > 0:26:11A key member of the vehicle.
0:26:11 > 0:26:14And so that was the first thing.
0:26:14 > 0:26:17The second thing was a wide-screen rear-seat entertainment,
0:26:17 > 0:26:19They're here...
0:26:19 > 0:26:23An advertising campaign was launched to promote the new child-led design.
0:26:23 > 0:26:27- Hi, ladies.- Are you ready to get started?- Shall we...?
0:26:27 > 0:26:30- I want 100 cup holders. - How about 14?- OK.
0:26:30 > 0:26:32Put a TV there, make this prettier..
0:26:32 > 0:26:34- This is working well.- Yeah.
0:26:34 > 0:26:37How did these changes affect sales?
0:26:37 > 0:26:40Well, focusing on what children want did help our sales of our minivan.
0:26:40 > 0:26:44We always believe that, if you listen to the customer,
0:26:44 > 0:26:47and if you give the customer what they want, they will reward you
0:26:47 > 0:26:49by purchasing the vehicle.
0:26:49 > 0:26:51- CHILDREN CHATTER - In fact, Andy Lund's redesign
0:26:51 > 0:26:54led to a rapid surge in orders,
0:26:54 > 0:26:58reversing the downward trend in sales of people carriers.
0:26:58 > 0:27:00- Looks like you still have a job. - APPLAUSE
0:27:00 > 0:27:01Thanks.
0:27:01 > 0:27:04ANNOUNCER: It has everything kids want and everything you need.
0:27:09 > 0:27:12The children's market had proved to be hugely lucrative.
0:27:12 > 0:27:16Kids were model consumers, with untold influence
0:27:16 > 0:27:19and the power to change the fortunes of a product or brand.
0:27:20 > 0:27:26One fascinating consequence of the increasing focus on children
0:27:26 > 0:27:28was that marketers begin to realise
0:27:28 > 0:27:32if they could get adults to behave more like children,
0:27:32 > 0:27:37they would become better buyers, better consumers.
0:27:37 > 0:27:41In the early '90s, business began to encourage adults
0:27:41 > 0:27:45to channel their inner child, spend money and have fun.
0:27:47 > 0:27:50Children and adults were swapping places,
0:27:50 > 0:27:53an idea explored in the Hollywood comedy Big.
0:27:57 > 0:27:59Make my wish.
0:28:01 > 0:28:03I wish I were big.
0:28:03 > 0:28:05In this clever and prescient film,
0:28:05 > 0:28:09Josh Baskin is a boy who desires to become big
0:28:09 > 0:28:13and wakes up the next day in the body of a man, played by Tom Hanks.
0:28:13 > 0:28:15KEYBOARD MUSIC
0:28:15 > 0:28:17Neat!
0:28:19 > 0:28:21As a grown-up, he finds work in a toy company,
0:28:21 > 0:28:26but it is the child inside him - impetuous, innocent and endlessly
0:28:26 > 0:28:30delighting in toys and play - that offers the key to the market.
0:28:30 > 0:28:34THEY PLAY "Chopsticks"
0:28:34 > 0:28:38'Today, we're all encouraged to indulge the child within us.'
0:28:38 > 0:28:40Hey! Brilliant.
0:28:42 > 0:28:45Those that, like me, grew up with Star Wars,
0:28:45 > 0:28:48have been conditioned to consume from an early age.
0:28:49 > 0:28:53This is Comic-Con, where adults and children come together to see
0:28:53 > 0:28:56the latest in comic books, games and toys.
0:28:57 > 0:29:01Manufacturers now see an opportunity to grow their markets
0:29:01 > 0:29:04and increase their profits by keeping us playing.
0:29:13 > 0:29:17Do you think there isn't really a divide between adults and children any more?
0:29:17 > 0:29:22We, sort of, just consume things that are childish, but as adults?
0:29:22 > 0:29:24In every man, there is still a boy left,
0:29:24 > 0:29:27because men never truly grow up.
0:29:27 > 0:29:30I certainly haven't put away all my childish things.
0:29:30 > 0:29:32I have Lego myself that they're not allowed to play with,
0:29:32 > 0:29:36so I think my parents stopped playing a lot earlier than I have.
0:29:36 > 0:29:40I came here today to support my kids. Because I've always made them
0:29:40 > 0:29:42costumes since they were that high...
0:29:42 > 0:29:44And now they're 30 and 28!
0:29:44 > 0:29:45SHE LAUGHS
0:29:46 > 0:29:48Erm... They're here.
0:29:50 > 0:29:53It's a different world to what we had.
0:29:53 > 0:29:57'We had to grow up when you was 18 and that was all there was to it!'
0:29:57 > 0:29:59Your bone's hanging out.
0:29:59 > 0:30:01The boundaries separating the adult
0:30:01 > 0:30:03and children's markets are invisible here.
0:30:08 > 0:30:11Perfect. You look brilliant.
0:30:11 > 0:30:14- Really?- It's Pikachu.
0:30:14 > 0:30:17Everyone loves Pikachu and you even have a tail.
0:30:17 > 0:30:19What more could you ask for?
0:30:19 > 0:30:25Increasingly, adults and children find pleasure in the same purchases.
0:30:25 > 0:30:30One can notice a gradual transformation, a convergence,
0:30:30 > 0:30:33of desires. Last century,
0:30:33 > 0:30:37children wanted games and toys and adults wanted books and instruments
0:30:37 > 0:30:40that helped them live well and take care of their families.
0:30:40 > 0:30:44Today, everybody wants smartphones, everybody wants the new video games.
0:30:44 > 0:30:46- Are you wanting to jump in? - Yeah, of course, yeah.
0:30:46 > 0:30:48- Good luck. - Go.. go, go, go. Go for it.
0:30:48 > 0:30:50Whoa. No.
0:30:50 > 0:30:53- Whoa, no! - Out, out, out, there you go.
0:30:53 > 0:30:56- Have I bashed you yet?- No. - No!- I've already finished.
0:30:56 > 0:30:58Have you?! Oh, no!
0:31:00 > 0:31:04'Today, the gaming industry is worth £40 billion.
0:31:04 > 0:31:07'And adults happily admit to owning a gaming console.'
0:31:09 > 0:31:13But in the '80s, playing games was something kids did.
0:31:13 > 0:31:15Sega and Nintendo led the market,
0:31:15 > 0:31:19with games depicting cartoon-style characters, like Mario and Sonic.
0:31:21 > 0:31:26- Where the hell am I, what am I doing? - Look, I spun him around.
0:31:26 > 0:31:28- Oh, I want to fly. - I've got three tails, look...
0:31:28 > 0:31:30Look... I get all coins, look.
0:31:30 > 0:31:34But everything was to change in the '90s,
0:31:34 > 0:31:38when large multinationals saw the real cash possible in gaming.
0:31:38 > 0:31:40If they could extend the market to everyone,
0:31:40 > 0:31:44they'd create an entertainment industry to rival Hollywood.
0:31:44 > 0:31:47The hunt was now on for games that adults would play.
0:31:48 > 0:31:52One of the men who pioneered this new multi-billion-pound market
0:31:52 > 0:31:54was Peter Molyneux.
0:31:54 > 0:31:56'Now one of the world's leading games developers.'
0:31:56 > 0:32:01- Can I be the prince?- Yeah, you be the prince, and remember you...
0:32:01 > 0:32:06The point of this game is that you are, um, going to become a king.
0:32:06 > 0:32:08- And so...- That's good.
0:32:08 > 0:32:13Eventually you can wreak revenge on every single person
0:32:13 > 0:32:16- that is going to do bad to you in this game.- That sounds great.- Yeah.
0:32:19 > 0:32:21'Among Molyneux's biggest-selling games was Fable,
0:32:21 > 0:32:23'which spawned two sequels.'
0:32:25 > 0:32:27Who was the game aimed at, Peter?
0:32:27 > 0:32:31- Well, it was aimed at 25-35 year-olds.- Yeah.
0:32:31 > 0:32:37- How successful was the game?- Er, this sold almost five million units
0:32:37 > 0:32:40- and, erm....- How much did you make out of that? A lot?
0:32:40 > 0:32:42Well... Microsoft made the money,
0:32:42 > 0:32:44not me, personally... JACQUES LAUGHS
0:32:44 > 0:32:46..but, you know, in the hundreds of millions, yeah.
0:32:46 > 0:32:50In the hundreds of millions! I like the way you say that!
0:32:50 > 0:32:53'When Sony introduced the PlayStation in 1994,
0:32:53 > 0:32:56'its goal was to create gaming for a mass market.
0:32:56 > 0:33:00'This was a revolutionary new console for adults.
0:33:00 > 0:33:04'Ideal for the darker, violent games being developed.
0:33:04 > 0:33:06'And it had a rival in Microsoft's Xbox.'
0:33:08 > 0:33:12The consoles were powerful enough that the guns sounded liked guns
0:33:12 > 0:33:17and the blood looked like blood, and so all of those things came together
0:33:17 > 0:33:23to create what is now an entire genre, the first-person action genre.
0:33:23 > 0:33:26We're making games not for kids,
0:33:26 > 0:33:30we're making them for adults, and we're making them for adults
0:33:30 > 0:33:33that like the horror and the brutality of those moments.
0:33:37 > 0:33:40It was almost as if we took a gun and shot Mario,
0:33:40 > 0:33:43that cute moustache, you know, the baggy pants,
0:33:43 > 0:33:47the plumber - we as adults didn't want to play that any more.
0:33:47 > 0:33:51We wanted to shoot things and it was as if we blew Mario out of the park.
0:33:53 > 0:33:56Suddenly, men spent hours playing games like the all-conquering,
0:33:56 > 0:33:59military shooter series Call of Duty.
0:33:59 > 0:34:02With violent action games, the industry had found a winner.
0:34:03 > 0:34:08This was a new golden goose in the mid-'90s and we had
0:34:08 > 0:34:11Microsoft with Halo, that was set in space.
0:34:11 > 0:34:15We had Activision, they came out with Call of Duty, which now...
0:34:15 > 0:34:17got super, super-successful.
0:34:17 > 0:34:19We had EA with Medal of Honor.
0:34:19 > 0:34:21They were all vying against each other.
0:34:21 > 0:34:25What was the money that was being generated for these games?
0:34:25 > 0:34:30I mean, the money is astounding. Within a week, you are talking
0:34:30 > 0:34:36about billons of dollars of revenue and over the Christmas period...
0:34:36 > 0:34:39you know, they were huge successes,
0:34:39 > 0:34:43far more successful than almost every Hollywood film.
0:34:43 > 0:34:49The fantastic thing about this is this is a renewable franchise.
0:34:49 > 0:34:51You're not talking about one year,
0:34:51 > 0:34:54you're talking about multiple year after year after year.
0:34:54 > 0:34:58For years, I've lived a double life. In the day, I do my job,
0:34:58 > 0:35:01roll up my sleeves with the hoi polloi,
0:35:01 > 0:35:04but at night, I live a life of exhilaration.
0:35:04 > 0:35:06Of missed heartbeats and adrenaline.
0:35:06 > 0:35:09Sony's unconventional appeal to an adult audience,
0:35:09 > 0:35:13as seen in this dramatic PlayStation ad, had paid off.
0:35:13 > 0:35:14And conquered worlds.
0:35:14 > 0:35:16And though I've...
0:35:16 > 0:35:18Games were increasingly dystopian.
0:35:18 > 0:35:20..I've lived.
0:35:21 > 0:35:24A third of all homes now had a console,
0:35:24 > 0:35:27but the market was heavily skewed towards men.
0:35:27 > 0:35:30The problem we had was that we were making these games -
0:35:30 > 0:35:34they were becoming more and more dark,
0:35:34 > 0:35:36more and more brutal, more and more horrific,
0:35:36 > 0:35:40they were becoming more challenging, more hard, they were actually
0:35:40 > 0:35:43constraining the audience a little bit.
0:35:43 > 0:35:46And Nintendo came out and they said, "Well, you've forgotten
0:35:46 > 0:35:49"about someone, you've forgotten about the rest of the world."
0:35:52 > 0:35:55This is what Nintendo came up with - the Wii.
0:35:55 > 0:35:59It was fun and easy to use. There were no dark,
0:35:59 > 0:36:02shoot 'em up games and, instead, it was bowling, dancing and karaoke.
0:36:05 > 0:36:08Importantly, it put the console back in the living room.
0:36:08 > 0:36:11This was gaming for all, no matter what your age.
0:36:13 > 0:36:16Finish! Second.
0:36:16 > 0:36:18Mario was alive and kicking
0:36:18 > 0:36:24and finding a whole new audience of 9-95-year-olds, men AND women.
0:36:24 > 0:36:28Up till that point when any consumers, especially women, funny enough,
0:36:28 > 0:36:32picked up a game, the same thing would happen - they would use
0:36:32 > 0:36:36the thumb stick and their character would run against the wall.
0:36:36 > 0:36:39They'd feel stupid, they'd feel foolish at playing a game,
0:36:39 > 0:36:42they'd just put down the controller and say, "The game's not for me."
0:36:42 > 0:36:46Along came the Wii, they picked up the controller
0:36:46 > 0:36:50and they move this hand and the tennis racket moved.
0:36:50 > 0:36:54You didn't have to learn that X button did this and Y button did that
0:36:54 > 0:36:57and press red and press yellow and use the thumb stick.
0:36:57 > 0:37:02With that one moment, we drew millions of new consumers
0:37:02 > 0:37:07into this market, and one segment of society
0:37:07 > 0:37:10could start playing games for the first time. And that was women.
0:37:10 > 0:37:14The Wii was an instant success. 600,000 were sold
0:37:14 > 0:37:18within a week of its launch, as supply struggled to meet demand.
0:37:20 > 0:37:23Playing games is now considered acceptable to all generations,
0:37:23 > 0:37:26from children to pensioners.
0:37:26 > 0:37:30And last year, in the UK, games outsold music and video.
0:37:32 > 0:37:35Now companies outside gaming gathered to exploit
0:37:35 > 0:37:39the opportunities it opened up to sell other products.
0:37:39 > 0:37:42And the people who would do that were two British students -
0:37:42 > 0:37:45Adam and Donna Powell.
0:37:45 > 0:37:48The couple created the online website, Neopets,
0:37:48 > 0:37:50which would sow the seeds
0:37:50 > 0:37:54for an entirely new way of doing business, worth billions.
0:37:54 > 0:37:57So, this is the Neopets website and it might not look like it could
0:37:57 > 0:38:00change the nature of selling, but these cute little characters
0:38:00 > 0:38:03drew in 35 million players,
0:38:03 > 0:38:06many of them - and here's the key thing - adults.
0:38:06 > 0:38:10And the reason why was simple - it was fiendishly compulsive.
0:38:13 > 0:38:15In order to keep your virtual pet alive,
0:38:15 > 0:38:19you needed to visit the site again and again to check on it.
0:38:19 > 0:38:22They had created something called "stickiness"
0:38:22 > 0:38:26and it was about to change the way the world was sold to.
0:38:27 > 0:38:32Neopets was the stickiest site on the web. By stickiest site, we mean
0:38:32 > 0:38:35was the site where the people spent, you know,
0:38:35 > 0:38:37the longest period of time on there.
0:38:37 > 0:38:39We had people that were spending hours and hours a day
0:38:39 > 0:38:41and were returning on a daily basis.
0:38:41 > 0:38:44And we had a lot of players, a lot of eyeballs,
0:38:44 > 0:38:46we had 50 million accounts.
0:38:46 > 0:38:49- 50 million?! - Yeah, it was huge in the States.
0:38:49 > 0:38:52Australia, we had a lot of players in Australia
0:38:52 > 0:38:57and Singapore, it was hugely popular. It was a vast, vast, percentage
0:38:57 > 0:39:00of the population played in Singapore.
0:39:00 > 0:39:05Half the population of Singapore, at one point, were playing Neopets!
0:39:05 > 0:39:09Yeah, it was... Yeah, pretty insane.
0:39:09 > 0:39:12Stickiness was a games innovation,
0:39:12 > 0:39:16but business was about to exploit it to get us to spend money.
0:39:16 > 0:39:19Within two years, global corporations
0:39:19 > 0:39:23like McDonalds, Disney and Colgate, began to advertise on Neopets.
0:39:25 > 0:39:28How important was it to these companies
0:39:28 > 0:39:30to get in on something like Neopets?
0:39:30 > 0:39:33It was hugely important for them.
0:39:33 > 0:39:38They never had an opportunity before to reach such a captive audience
0:39:38 > 0:39:42that they could present their brands to, in a completely new way.
0:39:42 > 0:39:46I mean, this was something that people were going nuts for.
0:39:46 > 0:39:49It's the thing that marketers dream of.
0:39:50 > 0:39:54Neopets offered big companies the chance to integrate their branding
0:39:54 > 0:39:58into the site's content, often as part of a game.
0:39:58 > 0:40:01In this way, players engaged directly with the brand.
0:40:01 > 0:40:03It was called "immersive advertising".
0:40:04 > 0:40:08What did they do, in terms of this immersive advertising?
0:40:08 > 0:40:11Basically, we made tailored mini-games for them
0:40:11 > 0:40:13which involved McDonalds' products,
0:40:13 > 0:40:17where you would build a burger and things like that.
0:40:17 > 0:40:22Colgate wanted Wheel of Brush which...
0:40:22 > 0:40:25I'm not kidding here! SHE CHUCKLES
0:40:25 > 0:40:29You basically spun a wheel and it was a toothbrush and you won a prize,
0:40:29 > 0:40:32depending on where the toothbrush head landed.
0:40:32 > 0:40:34'The Powells say they grew uncomfortable
0:40:34 > 0:40:37'with the increasing commercialisation of the website.'
0:40:37 > 0:40:43It kind of turned a little bit... too heavily towards the sponsor side.
0:40:43 > 0:40:46At one point, we had five developers working on sponsor games
0:40:46 > 0:40:50and one developer working on our own content.
0:40:50 > 0:40:53'In 2005, Neopets was sold
0:40:53 > 0:40:57'to global media corporation Viacom for £100 million.'
0:40:57 > 0:41:01People have accused Neopets of being quite cynical about creating
0:41:01 > 0:41:05this stickiness, about people coming back to the game again and again.
0:41:05 > 0:41:09- Mm-hm.- So...was that deliberate when you designed the game?
0:41:09 > 0:41:12We didn't deliberately decide to make something that would
0:41:12 > 0:41:15make people's lives hell if they didn't log on on a daily basis.
0:41:15 > 0:41:18We just wanted to make something that, you know, people would
0:41:18 > 0:41:22want to come back and there would be new things for them to do.
0:41:22 > 0:41:25But this stickiness was something that other people have picked up on
0:41:25 > 0:41:29and then have used cynically to keep people going back again and again.
0:41:29 > 0:41:32Erm, yeah, I know...but...
0:41:32 > 0:41:36But you did create those techniques, you know?
0:41:36 > 0:41:39Yeah, I mean, we were very young, very naive
0:41:39 > 0:41:43and we just wanted to try to create the best game we possibly could.
0:41:44 > 0:41:47Business learned something profound from Neopets.
0:41:47 > 0:41:49Consumers could be drawn back
0:41:49 > 0:41:53more frequently if play combined challenges with reward.
0:41:53 > 0:41:57Angry Birds put this into action. This led to games
0:41:57 > 0:42:00become increasingly compulsive and involving.
0:42:00 > 0:42:04We started to realise, if we compare scores,
0:42:04 > 0:42:06then we can give you a ranking.
0:42:06 > 0:42:09How were you better than your friends?
0:42:09 > 0:42:13And that's how we could make you play more, because it wasn't
0:42:13 > 0:42:16just about beating the game, it was beating your friends.
0:42:16 > 0:42:19And then we introduced something called achievements.
0:42:19 > 0:42:21Achievements were fantastic -
0:42:21 > 0:42:25there were little bizarre things that you did in the game,
0:42:25 > 0:42:28you got a gold star for doing an achievement
0:42:28 > 0:42:31and that again encouraged you to keep playing the game. If you're
0:42:31 > 0:42:33playing my game, you're not playing someone else's game.
0:42:38 > 0:42:42Having tapped into our innate human drive to seek out easy rewards,
0:42:42 > 0:42:45gaming was turning into selling.
0:42:47 > 0:42:49Our brains are wired in a very specific way,
0:42:49 > 0:42:53which is called intrinsic reinforcement. And how it works is,
0:42:53 > 0:42:56any time you challenge yourself to something,
0:42:56 > 0:42:59and then you achieve that thing, your brain secretes
0:42:59 > 0:43:02a little bit of this magical neurotransmitter called dopamine.
0:43:02 > 0:43:04And dopamine is, sort of, like a little bit of a high,
0:43:04 > 0:43:07but it also makes you want to do that thing again.
0:43:07 > 0:43:10So, challenge, achievement, dopamine.
0:43:10 > 0:43:12And experts like Gabe Zichermann
0:43:12 > 0:43:14began to proselytise about how marketers could take
0:43:14 > 0:43:17the best ideas from games and apply them to shopping.
0:43:17 > 0:43:20In a game setting, that challenge-achievement loop
0:43:20 > 0:43:22is done hundreds of times per hour.
0:43:22 > 0:43:26In contrast, in the real world, and most of the things people do,
0:43:26 > 0:43:29whether that's work or buying stuff, there is very little of that.
0:43:29 > 0:43:32We've taken all the challenge out of most things,
0:43:32 > 0:43:34so we're not getting that dopamine rush.
0:43:39 > 0:43:41Marketers realised that if they could inject
0:43:41 > 0:43:43the same excitement and compulsion
0:43:43 > 0:43:46into their products, they could dramatically increase sales,
0:43:46 > 0:43:49so they began to look at ways of using gaming techniques,
0:43:49 > 0:43:52such as rewards, levels and achievements,
0:43:52 > 0:43:55to sell us everything from running shoes to groceries.
0:43:56 > 0:43:59This cereal, Krave, has its own gaming app.
0:44:00 > 0:44:05Pirates of the Caribbean - comes with its own reward scheme.
0:44:07 > 0:44:10And these sausages have their own Facebook page.
0:44:10 > 0:44:14'This technique became known as gamification. Manufacturers use it
0:44:14 > 0:44:18'to create "stickiness" with the product and the brand.'
0:44:18 > 0:44:21McDonald's Best Chance Monopoly is still on. This means...
0:44:21 > 0:44:24One early and profitable example of this is the McDonald's Monopoly
0:44:24 > 0:44:27promotion, which ran in the UK, as well as the US.
0:44:27 > 0:44:31Based on the popular board game, shiny ads like this cleverly
0:44:31 > 0:44:35lured customers, offering the chance to win wheelbarrows of cash.
0:44:35 > 0:44:37We haven't won any food prizes or instant-win prizes yet,
0:44:37 > 0:44:41but we got six chances, so here we go.
0:44:43 > 0:44:46It looks like a simple tear-and-win game
0:44:46 > 0:44:49but to make it more compulsive, players needed to collect
0:44:49 > 0:44:52all the properties on the Monopoly board to win the jackpot.
0:44:52 > 0:44:56McDonalds had turned a visit to their restaurant into a game.
0:44:56 > 0:44:59In the United States, that game, which is played
0:44:59 > 0:45:02for one month a year, every year for the last ten years,
0:45:02 > 0:45:05is responsible single-handedly for an increase
0:45:05 > 0:45:09of about 3% in same-store sales in the US alone.
0:45:09 > 0:45:11So, this game alone is worth
0:45:11 > 0:45:14nearly three quarters of a billion dollars in revenue to McDonalds.
0:45:14 > 0:45:19Oh-oh-oh, guess what? I am a winner today - that's right.
0:45:19 > 0:45:21I just won a medium order of French fries.
0:45:21 > 0:45:24Every other company on Earth is trying to get you to spend money
0:45:24 > 0:45:27and they are putting all their effort into getting you
0:45:27 > 0:45:30to spend your money on stuff all the time and gamification
0:45:30 > 0:45:33is one of the tools that companies might use to accomplish their goals.
0:45:33 > 0:45:36Just like they incorporated television advertising 50 years ago,
0:45:36 > 0:45:38gamification is the new tool set.
0:45:38 > 0:45:40So, fun isn't this frivolous thing at all?
0:45:40 > 0:45:43It's actually a hard-nosed currency for selling now?
0:45:43 > 0:45:46Make no mistake - the house always wins.
0:45:46 > 0:45:48And that's a key thing for consumers to understand.
0:45:48 > 0:45:53This thing that's fun and engaging and useful, they're paying for that,
0:45:53 > 0:45:56one way or the other, whether that's in cash or time.
0:45:57 > 0:46:00Business had learned from selling to children how the adult market
0:46:00 > 0:46:02could be turned into a game.
0:46:03 > 0:46:06But there was another childish trait
0:46:06 > 0:46:09which business needed to tease out of adults.
0:46:10 > 0:46:13The trouble with adult consumers is they think too much.
0:46:13 > 0:46:15They walk down there and say,
0:46:15 > 0:46:17"I don't think I really need that,
0:46:17 > 0:46:19"I think I'll put off that shoe purchase till next week."
0:46:19 > 0:46:23That's the last thing that those who sell to consumers want -
0:46:23 > 0:46:27that kind of reflective, deliberative approach.
0:46:27 > 0:46:30They'd much rather have adults go in and say, "Oooh, look at that!
0:46:30 > 0:46:32"I want it, I want it now!" Like a child.
0:46:34 > 0:46:37The last 30 years of selling have been about getting us
0:46:37 > 0:46:40to give in to this instant gratification.
0:46:41 > 0:46:45And the greatest enabler of this is credit.
0:46:47 > 0:46:53The consumer merchandisers came up with a magic bullet -
0:46:53 > 0:46:55the credit card.
0:46:55 > 0:46:59Cards boomed following the deregulation of credit in the 1980s.
0:46:59 > 0:47:02They transformed our attitude to spending.
0:47:02 > 0:47:09By infantilising us, we could now buy whatever we want without saving.
0:47:09 > 0:47:15The credit card becomes the facilitator of impetuous,
0:47:15 > 0:47:19narcissistic, buy-now consumerism, because you don't have
0:47:19 > 0:47:23to wait a second, you've always got that credit card. You can always...
0:47:23 > 0:47:25CLICKS FINGERS ..make your purchase like that.
0:47:28 > 0:47:31We bought on impulse, knowing that we could pay later.
0:47:31 > 0:47:33But that wasn't all.
0:47:33 > 0:47:36'Studies of brain activity show that we experience
0:47:36 > 0:47:39'a discomfort akin to pain when we hand over cash.'
0:47:39 > 0:47:41- Hi there.- Good morning!
0:47:41 > 0:47:43- Thank you.- Thank you.
0:47:43 > 0:47:45Put simply, when I pay with cash,
0:47:45 > 0:47:48I'll think more carefully about what I'm spending.
0:47:48 > 0:47:49That's 7.20, please.
0:47:52 > 0:47:54Right, thanks...
0:47:54 > 0:47:58But when I spend with cards, I'm far more likely to spend more.
0:47:58 > 0:48:00Up to 100% more.
0:48:01 > 0:48:03That's 66.70, please.
0:48:07 > 0:48:10'Evidence of this was provided by Drazen Prelec,
0:48:10 > 0:48:13'a professor of behavioural economics.
0:48:13 > 0:48:17'He and fellow academic Duncan Simester carried out an experiment.
0:48:17 > 0:48:19'They set up an auction.
0:48:19 > 0:48:23'And students were asked to bid for tickets at a basketball game.'
0:48:23 > 0:48:26Students who were interested in basketball,
0:48:26 > 0:48:31walking through the door, they received a bid sheet.
0:48:31 > 0:48:34'Half of the students were told that, if their bids won the auction,
0:48:34 > 0:48:36'they would have to pay with a credit card.
0:48:36 > 0:48:39'The other half were told they would pay for their winning bid in cash.
0:48:40 > 0:48:43'The results were extraordinary.'
0:48:43 > 0:48:45The bids with the credit card condition
0:48:45 > 0:48:51were about twice as high and, in fact, there were no cash bids
0:48:51 > 0:48:55- up to 100, but the credit card bids went to 300 or 400.- Wow.
0:48:56 > 0:48:59Somehow, with a credit card, your tendency to purchase
0:48:59 > 0:49:02is released and you're more comfortable with high figures.
0:49:02 > 0:49:05You lost the tight connection between the purchase
0:49:05 > 0:49:07and the actual payment itself.
0:49:07 > 0:49:10- The tight connection...- The tight connection.- What do you mean by that?
0:49:10 > 0:49:13Well, a tight connection is when you take out your wallet
0:49:13 > 0:49:15and pay in cash, because there is the purchase
0:49:15 > 0:49:19and then there is the cash that you see that you don't have any more.
0:49:19 > 0:49:22Try to pay for everything in cash for a week
0:49:22 > 0:49:24and just watch how that feels.
0:49:25 > 0:49:28Just go for a cash system.
0:49:28 > 0:49:30Pay your rent in cash if you can.
0:49:31 > 0:49:34It's...painful, it's painful.
0:49:35 > 0:49:38So what you've done with a credit card is
0:49:38 > 0:49:40you've deferred the pain down the road?
0:49:40 > 0:49:43Yes, you defer the pain and you have diffused it,
0:49:43 > 0:49:46you have disconnected it from the purchases.
0:49:46 > 0:49:49- That's the important bit. - That's the important thing.
0:49:49 > 0:49:51By the late '90s, an entire shopping culture had been
0:49:51 > 0:49:55built around credit and the glamorous life it could buy,
0:49:55 > 0:49:56creating a new syndrome.
0:49:58 > 0:50:02- The green scarf, please! - Good choice, it's the last one.
0:50:02 > 0:50:05In lively comedy, Confessions Of A Shopaholic,
0:50:05 > 0:50:07a smart, successful woman shops compulsively.
0:50:07 > 0:50:09Can you put 30 on this card?
0:50:11 > 0:50:13BEEPS
0:50:13 > 0:50:15Ten on there?
0:50:15 > 0:50:18Reflecting our growing reliance on credit, her shopping habits
0:50:18 > 0:50:22run out of control, as she continues to spend money she doesn't have.
0:50:22 > 0:50:25- Declined.- Really?!
0:50:25 > 0:50:28Could you just, could you try it again?
0:50:28 > 0:50:29BEEPS
0:50:29 > 0:50:31Really declined.
0:50:31 > 0:50:34For several years, Avis Cardella was the real version,
0:50:34 > 0:50:37struggling to bring her own shopping habit under control.
0:50:37 > 0:50:40She wrote a book analysing how credit cards
0:50:40 > 0:50:43have fed our compulsion to spend.
0:50:43 > 0:50:46I remember, for me, with my first credit card,
0:50:46 > 0:50:48it felt a little bit like magic.
0:50:48 > 0:50:50How many credit cards did you have?
0:50:50 > 0:50:53I think, at one point, I had eight or ten cards,
0:50:53 > 0:50:57but when I first got them, I was this very,
0:50:57 > 0:51:01very serious, responsible credit card user.
0:51:01 > 0:51:05I would keep a very strict, er, record of everything that
0:51:05 > 0:51:07I spent and the payments I made.
0:51:07 > 0:51:12- So, you started off as a, kind of, responsible consumer?- Very much so.
0:51:12 > 0:51:14And as you got more and more credit,
0:51:14 > 0:51:18you became, for various reasons, less responsible.
0:51:18 > 0:51:20I think, by that point, I was indoctrinated into this
0:51:20 > 0:51:24way of believing that, you know, you had these credit cards
0:51:24 > 0:51:27and you just continued to use them.
0:51:29 > 0:51:33Research has found that credit cards play to our innate tendency
0:51:33 > 0:51:35to believe the future will be better.
0:51:35 > 0:51:38So many of us believe that, by the time the bill arrives,
0:51:38 > 0:51:40we'll be able to pay it.
0:51:40 > 0:51:43And in allowing us to behave like children,
0:51:43 > 0:51:46the credit card industry has become immensely profitable.
0:51:49 > 0:51:54The adult might want a BMW, the child might want a video game,
0:51:54 > 0:51:58but what's now the same is that both want it now.
0:51:58 > 0:52:02Neither deliberate, neither defer their gratification, neither
0:52:02 > 0:52:07feel they have to earn it. Both feel they can and should have it now and
0:52:07 > 0:52:13it's that change in attitude that I think has infantilised adults.
0:52:15 > 0:52:17For me, shopping was really like a candy land.
0:52:17 > 0:52:20It was a place you could go and you'd see all these fabulous
0:52:20 > 0:52:24things and almost, like a child, you'd want to see things that were
0:52:24 > 0:52:29shiny or things that you want to hold and possess, ultimately.
0:52:32 > 0:52:36Britons now owe a record £1.4 trillion.
0:52:36 > 0:52:39Far from putting the brakes on spending, the new millennium
0:52:39 > 0:52:42saw the process speeded up and made easier.
0:52:47 > 0:52:49The internet brought the shopping mall into our homes
0:52:49 > 0:52:52allowing us to pick and choose whatever we desire,
0:52:52 > 0:52:55with no opening and closing times to delay our purchasing.
0:52:57 > 0:53:01Two of the men behind this new multibillion dollar candy land
0:53:01 > 0:53:05were Max Levchin and Peter Thiel.
0:53:05 > 0:53:08The Silicon Valley pioneers recognised that whoever
0:53:08 > 0:53:11created a speedy and secure way of transferring money
0:53:11 > 0:53:14on the internet would reinvent shopping.
0:53:15 > 0:53:18- ANNOUNCER:- At PayPal, we securely store your payment options
0:53:18 > 0:53:22- all in one place... - Their solution was PayPal.
0:53:22 > 0:53:23As its ads emphasise,
0:53:23 > 0:53:26there would be no need to enter credit card numbers.
0:53:26 > 0:53:30Purchasing had become instantaneous.
0:53:30 > 0:53:33And with two clicks, PayPal had further disconnected
0:53:33 > 0:53:37the consumer from the cash transaction and pain of payment.
0:53:37 > 0:53:39MUSIC: "I Want Candy" by Bow Wow Wow
0:53:46 > 0:53:49So, Narik, I want to buy this sandwich, how do I pay with PayPal?
0:53:49 > 0:53:50There you go.
0:53:50 > 0:53:53- So you start the PayPal app... - Excellent...
0:53:53 > 0:53:55'PayPal's Narik Patel is finding ever newer,
0:53:55 > 0:53:58'pain-free ways of getting us to pay.'
0:53:58 > 0:54:04- There you go.- Great.- That's it. - Brilliant, we've just paid with PayPal.- Yeah.- Fantastic.
0:54:05 > 0:54:08The big thing about it is you just needed an e-mail address
0:54:08 > 0:54:12to create a PayPal account and the funding source behind it.
0:54:12 > 0:54:16Everyone is marching in the same direction - quicker, simpler...
0:54:16 > 0:54:19Yes, of course, businesses are trying to
0:54:19 > 0:54:22look at it from their perspective of "how do I sell you more?"
0:54:22 > 0:54:27We're looking at it from a shopping experience - "How do we make it better?"
0:54:27 > 0:54:30And payment happens to be one of the parts of that equation.
0:54:30 > 0:54:36We're doing around 5,500 per second going through our system.
0:54:37 > 0:54:40And, you know, that gives you an idea of the scale
0:54:40 > 0:54:43and the amount of different payments from different parts of the world.
0:54:45 > 0:54:49The lure of one-click shopping is irresistible to Britons -
0:54:49 > 0:54:53the biggest online shoppers in the world, our annual spending
0:54:53 > 0:54:55soon likely to hit £100 billion.
0:54:55 > 0:54:58It is a constant battle and a constant war
0:54:58 > 0:55:00to try and make purchase as easy as possible.
0:55:00 > 0:55:04Technology is moving on at a time that enables us to get more things
0:55:04 > 0:55:07more quickly, so that process is speeding up all the time.
0:55:07 > 0:55:09And that stops us from
0:55:09 > 0:55:11taking a moment to think about what we're doing.
0:55:11 > 0:55:15Yes. What you are doing is you're taking away phases
0:55:15 > 0:55:20during which they may doubt or question or consider alternatives.
0:55:20 > 0:55:23If you can make a purchase process automatic,
0:55:23 > 0:55:25if you can buy something in one click
0:55:25 > 0:55:28without having to put in lots of details, without having to go
0:55:28 > 0:55:32through some big process, you will be much more likely to make a purchase.
0:55:33 > 0:55:38- Narik, PayPal's slogan is "Want it, get it".- Yeah.
0:55:38 > 0:55:41- So, it really is about instant gratification, isn't it?- Yes!
0:55:41 > 0:55:45The way we see ourselves is shortening that distance
0:55:45 > 0:55:48between what you want and what you get.
0:55:48 > 0:55:53You can buy something in two clicks. It is quite magical that you can
0:55:53 > 0:55:56see an advert for a product or something, search for it,
0:55:56 > 0:56:00buy it and, next day, it's at your house.
0:56:00 > 0:56:03'By removing any moment at which we may pause
0:56:03 > 0:56:06'to think about a purchase, consumerism now uses tactics
0:56:06 > 0:56:09'first developed on kids to sell to all of us.'
0:56:11 > 0:56:15It's the latest attempt to perfect the machine that is consumerism.
0:56:16 > 0:56:19As we've seem in this series, it began when industry
0:56:19 > 0:56:22developed the idea of planned obsolescence -
0:56:22 > 0:56:24deliberately designing items to break.
0:56:24 > 0:56:27Well, planned obsolescence is an open secret.
0:56:27 > 0:56:31When I'm talking to professional management people, they all say -
0:56:31 > 0:56:32"Well, we all know this."
0:56:34 > 0:56:37It's an idea which has evolved into the world of almost
0:56:37 > 0:56:40instantaneous obsolescence we inhabit today.
0:56:40 > 0:56:42Pushing us on to keep spending.
0:56:42 > 0:56:43CHEERING
0:56:43 > 0:56:45We want the new thing. It's hard-wired into our brain
0:56:45 > 0:56:47to be looking for new stuff.
0:56:47 > 0:56:50The marketers have figured out how to take advantage of that.
0:56:50 > 0:56:55'The often-irresistible urge to buy is further driven by fear...
0:56:55 > 0:56:58ANNOUNCER: Poor Marge, she'll never hold a man
0:56:58 > 0:57:00until she does something about her breath.
0:57:00 > 0:57:04'..as business summons our deepest anxieties
0:57:04 > 0:57:05'and then offers us a solution.'
0:57:05 > 0:57:09I relieve the fear. I relieve the anxiety.
0:57:09 > 0:57:14'It's hard-wired into us by training that begins almost from birth.'
0:57:17 > 0:57:19The British were once disparagingly described
0:57:19 > 0:57:24as a nation of shopkeepers, but now we're a nation of shoppers.
0:57:24 > 0:57:28And it's through spending that we are able to express who we are
0:57:28 > 0:57:30and who we want to be.
0:57:30 > 0:57:34But this entire world of consumerism was actually the result
0:57:34 > 0:57:38of cleverly-crafted strategies by the men who made us spend.
0:57:40 > 0:57:41But what's cleverest of all
0:57:41 > 0:57:44is that the desires they created can never be satisfied.
0:57:44 > 0:57:49Whatever we own, there'll always be something more, something better,
0:57:49 > 0:57:51and that's what keeps us spending.
0:57:56 > 0:57:59What secret methods do shops use to make you buy?
0:57:59 > 0:58:03Take a ride on the Open University shopping carousel and find out
0:58:03 > 0:58:10what influences you while you're shopping. Go to...
0:58:10 > 0:58:12Follow the links to the Open University.