ZICHERMAN: Thanks, Chris. That's a--it's a--it's always funny to hear your bio read out loud

because you realize you're very sensitive to every like word--I wrote that bio so I--it's

my writing, yes. So, you're very sensitive to every word. And then also, no matter what

my accomplishments are, I'm humbled by the quality of your kitchens. I think it's like

one day I aspire to have a company that has kitchens like that, where today I made my

own espresso, which I'll enjoy for a second. So, as you heard my name is Gabe Zicherman.

I do a bunch of stuff around gamification. And today I wanted to talk with you guys about--it's

a little bit presumptuous to use the phrase "mastering" with something as new and as slippery

as gamification, but we'll do our best. I'm going to share some of the top insights gleaned

from researching the book, Game-Based Marketing, which came out in April, work that we do with

brands big and small everyday. I work on the Summit and the research that goes into the

new book, Gamification by Design, which is, as Chris mentioned, a techbook that will come

out at the beginning of the year. So, when biting off a topic like gamification, or any

topic for example, I like metaphors. So I thought a pretty good metaphor--I realized

that pretty good metaphors can be found in the movie Mary Poppins. And if you're too

young or too straight to know this basic story of Mary Poppins, I'm going to recount it for

you. It's the story of a hard-hearted but turns out fundamentally nice guy with two

really, really, super sweet children, really, really darling children. And they need a nanny

so they write up an ad and this woman on an umbrella comes flying into their lives. She

has magic powers like being able to levitate or jump into a chalk drawing and at the end

all is well, which is an important part of the story. All ends well in the story of Mary

Poppins. So think of me as your "Mary Poppins," down the sort of rabbit hole of gamification.

I mixed literary metaphors there. Well, if you would like to talk about Alice in Wonderland

later, we can talk about that. So, as Chris mentioned, I'm the author of these books,

Game-Based Marketing, which you can get now. I blog at gamification.co. It's a gamification

blog. We talk all about the subject. I advise startups. I talk about interesting things.

And then, as Chris also mentioned, we have some upcoming events related to gamification.

If you are currently working on a gamification project, either from a product, or marketing,

or design side, you might be interested in November 12th's San Francisco Bay's Gamification

Workshp. Amy, Joe, Kim and I will give a hands-on full day, come in with your problems and we

solve them working together workshop. It's actually almost sold out but if you're interested

in going, let me know. There's really like one seat left at it. And then in January,

we're running here in San Francisco again the Gamification Summit which is a full day

of--a full day event focused on the subject. Bringing together some of the most interesting

thought leaders like Jane McGonagall, who'll be revealing her new book. I'll be giving

a keynote on metrics which I know you guys love. We'll talk about all that kind of stuff.

Okay, so let's begin with a simple word definition. Gamification is the use of game thinking and

game mechanics to solve problems and engage audiences. Four square. Not the product, but

the four squares there. So, it's game thinking and game mechanics. And this is really super

important, game thinking is the product of three generations of game players. I'm 36

years old. I'm the old--hi, my name is Gabe. I'm 36 years old and I'm the oldest cohort

of people who grew up with games as a core type of entertainment in their lives. Today's

youngest children, you know, kids were--well, the youngest children will be like just born.

But kids who are, you know, maybe five years old today are growing up with games as their

principal form of entertainment and that multi-generational exposure has simply affected the way that

we think. You know, if Shakespeare was a real person--this is the best analogy--if Shakespeare

was a real person, he wrote--he or she wrote, "All the world is a stage," famously, right?

But if Shakespeare were alive today, wouldn't he have written, "All the world is a game,"

because isn't it just a better metaphor for how we think about interactivity in the world.

And that really gets to the heart of what game thinking is. It's solving problems and

engaging audiences using a rubric that comes from games. Okay, so let's talk about some

of the main things that we've learned from it. How many of you in the audience recognize

some of the things up on the board right now? Any of them? Okay. These are some of the top

selling games of the last five years. And they include--I'm not kidding--being a male

technician, diapering a baby, being a waitress, running a farm, being an air traffic controller,

which as many of you know is the highest suicide, highest stress position in the entire world.

I mean, if you would come into a game publisher five years ago and said, "I've got a great

idea. We're going to make a game where you play an air traffic controller, planes could

crash, what do you think? Sound good," right? You'll be laughed out of the room. That doesn't

sound like fun. That doesn't sound like fun at all. It highlights a really important conclusion

which is fun and the theme of the thing which are fun are actually not connected. If you've

been in a casino before and you've seen the Oprah Winfrey branded slot machine and the

Harley Davidson branded slot machine and the neutral slot machine, you all as science-oriented

people are aware, the slot machine acts on your brain the exact same way. Once you choose

to sit down in front of that slot machine, same behavior in your brain, same engagement

loop, same reaction. "Ding, ding, ding, oh, yeah, ding, ding, ding," right? It's the same

thing. It doesn't matter which brand is on the front of the slot machine. Theme is a

lure to bring people in to an engaging experience. It's a lure. And that has important implications.

That means, if air traffic control can be fun my friends, anything can be fun, right?

It's an opportunity. It means we can turn government. we can make government fun. We

can make getting fit fun. We can make searching fun or more fun. All right, so it, of course,

begs the question, you know, "What is fun?" So, I put some words in a word generator.

And I put them up on the board. Some--the words on the top are things which normally

people associate with fun and the words on the bottom are words that normally people

associate with work. And what's interesting is, you know, there's a big bright line drawn

between the two of them in my childhood. You know, I grew up in a house in which my mom

said, "Eat your vegetables and then you can have dessert," right? "Eat your vegetables

and then you can go out to play." There is a theme around vegetables. So, these things

though are arbitrary distinctions. They're arbitrary. These are lines drawn by people

in the air that say, "This is fun and this is not." If you're a parent in the room, if

I could deliver for you a piece of cake that had the same nutritive value as broccoli,

the exact same nutritive value as broccoli, can you honestly tell me that you would never

cave and give your kids broccoli cake, right? The point is these lines are arbitrary. They--them--they're

meaningless. We can make anything fun or anything work depending on its design. And that's a

very important kind of like switch that's being flipped in people's heads and they're

going, "Oh, okay." So, I can make anything engaging--and you really can--which brings

you a question my favorite allegory in this whole story. So I played a game that many

of you might recognize called, "Where in the World is Carmen Sandiego?" If you played it,

put your hand up. If you played it on the Apple II, keep your hand up. Okay, so now

I know how old you are, so. Okay, so it's the '80s and I'm playing "Where in the World

is Carmen Sandiego?" on my Apple II, green screen, lots of fun. Would it surprise you

to know that that was the last really successful educational game in history? Would it surprise

you to know that since then 1,200 startups, $4 billion have been spent on "edutainment"

software and not a single hit like, "Where in the World is Carmen Sandiego?" And that's

it's a completely captive market. There are 60 million children. It is a captive market.

What's happened? Here's what went wrong. Parents and teachers got involved in the design of

the games. And as soon as they did, kids could smell that shit a mile away. That's not fun,

that's work, right? In parallel, incidentally, Civilization and Sim City have taught hundreds

of millions of people basic, basic tenants of the human historical arch and how cities

function in civics, basics, completely unintentionally. Sid nor--neither Sid nor Will will tell you

they were on a pedantic pedestal trying to teach people with those games. They simply

chose that as the framework for a game, a setting for a game that they thought compelling.

They thought the real world would be more compelling than a fantasy world. And it turns

out that that's true. Non-fiction has a big advantage over fiction and gamification is,

think of it as, non-fiction gaming. It's gaming with your real friends and your real money

and your real stuff in the real world. It's non-fiction gaming. So, it, of course, going

back to Mary Poppins, there's a famous song in Mary Poppins called "The Spoonful of Sugar,"

and the premise of that song is, "If I make the medicine sweet enough, you won't know

that its medicine and you'll take it," right? Creating the objective, which is, of course,

is a good analogy. If any of you are marker--marketers in the room, a word that marketers sometimes

use to describe that phenomenon is loyalty program, right? Loyalty programs, let's just

do a simple working definition, are intended to get a user to take an action in your favor

when all competing options are mostly equal, right? Mostly equal. When things are really

unequal, loyalty programs are not that effective. But when their mostly equal, loyalty programs

have the effect of getting people to take a choice in your favor. Okay, so here's a

brief history of loyalty programs throughout history, 19th century, you go down to a local

mercantile in Boston and you're wearing heavy woolens and you haven't showered in a while

and you're like, "I need 10 pounds of sugar." And the merchant is like, "Aarr, you get a

pound for free." I don't know why it's a pirate merchant. I'm just--okay, because all the

people in the 19th century to me are pirates. It's like, "Aarr, pound of sugar." Okay, so

buy 10 get 1 free. That turns out to be a really sticky mean, right? We're still doing

buy 10 get 1 free as this sort of dominant model for loyalty programs. I don't know why.

I've asked lots of researchers, if any of you are interested in doing a PhD on buy 10

get 1 free, let me know. I think I can find you funding. It's like we got figure this

out, we don't know why. Okay, that stays about the same until the 1930s, when a company called

S&H launches their Green Stamps program. It was very simple. Instead of buying 10 and

get 1 free, you went to participating merchants, they gave you these little green stamps which

you licked and stuck into a book and you save them up and when you had enough, you went

to the S&H store or to the catalogue and you redeem them for stuff. The brilliant thing

about the S&H Green Stamps program was it completely, by creating a virtual currency,

it completely broke the users ability to keep track of a redemption rate, right? It used

to be 10 to 1. I buy 10 pounds of sugar, I get one for free. Now, I have no idea how

much I'm earning in virtual currency as expressed in redemption, right, because it was actually

totally variable. S&H knew what every green stamp was "worth" to them but the end user

couldn't keep track of it. They had no idea. Is 10 green stamps the same, you know, is

10 green stamps for a T-shirt the same as 60 green stamps for a transistor radio? It's

almost impossible to figure that. It turns out virtual currency is very powerful that

way. Okay, that's today's dominant model until 1981 when American Airlines launches AAdvantage

and a week later TWA and the United launched their programs, which turns out to be a good

metaphor for that whole industry. And what American figured out, and what TWA and United

aped, is that actually, it's not about rewards at all. It's about status. Status is what

drives loyalty. And if any of you tried to redeem your frequent flier program points

this summer for a trip to Europe, you'll know that redemption is not the core value proposition

of a frequent flier program, or for that matter, a loyalty program. And that's today's dominant

model until just a few years ago in which loyalty programs emerged like Foursquare in

which you cannot redeem for anything in the real world. There's not even the notional

concept of redemption, right? They just dispensed with it altogether. Let's be super clear.

I want us to be super clear on this. You cannot extract one dollar from FarmVille. There is

not a T-shirt, a hat, a badge in the real world you can get for your FarmVille credits.

Not a goddamn thing. In fact, it's all money in and no money out in FarmVille to the point

that when Zynga did that super successful campaign with 7-Eleven for the slushies, you

know, the "Get a Slurpee, get FarmVille credits?" It wasn't, "Get FarmVille credits for every

Slurpee," it wasn't, "Redeem your FarmVille credits for every Slurpee," right? It was

"Buy a Slurpee and get FarmVille credits." Let's be clear, no real world redemptions.

Money in, nothing comes out. It's brilliant, right? So, the corillary, which is probably

even more powerful, is that while the cost of an incremental unit of loyalty--let's think

of a customer making a choice of your product, a choice in favor of your product when all

things are being equal--the cost of delivering that incremental unit of loyalty is dropping

precipitously. It used to be 10 cents. It was 10 to 1. It was 10 cents. That number

is now closing in to zero as completely virtual loyalty programs start cropping up out of

the weeds. The other thing which has become very important is that the loyalty choices

now become public. Loyalty used to be a private decision, right? How did I convey to you that

I preferred KitchenAid mixers over Cuisinart mixers in the past? You had to be in my house

for starters, right? We had to go through this ridiculous dance where I somehow bring

up the subject of, you know, mixers to you. It's like, "Hey, do you like my mixer?" And