Tuesday, April 02, 2024

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

How Non-Stop Gaming Gave Way to Non-Stop Gambling

March Madness has never been madder from a wagering point of view. And whether it's sports or meme stocks or crypto, there's a new generation now hooked on the rush of phone-enabled risk taking, which won't benefit anyone. 

 

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

APR 2, 2024

 

As the founder and CEO of Imagination Pilots, a CD-ROM computer game developer, I spent many years writing, designing, and building games in the industry's infancy. I apologize.

We knew that games were a gateway to many things, but we hoped that our game users would come to understand the healthy message that failure was a totally accepted outcome in the early stages of any game or other endeavor, that overcoming these bumps and obstacles was a productive learning experience (unlike in school, where "failure" was constantly stigmatized), and that there was a clear path to continued improvement if you worked at it and kept trying to get better. Imagination Pilots was all about iteration and perseverance -- important life skills -- and about dedicated practice and eventual mastery, which are powerful builders of pride and self-esteem.

But, at the same time, one of the most critical design objectives in creating these products - which were intended to become immersive, entertaining, and addictive -- was to make sure that the games delivered a recurring series of dopamine jolts and emotional triggers, elevating levels and acknowledged accomplishments, growing rewards and measurable incentives. In short, compelling reasons to continue playing. In the same way that movies and TV shows are built on multiple storylines, beats, and cliffhangers to heighten and extend attention and interest levels, games were also designed to pull the players into new engaging and imaginary worlds and prolong their participation. Games are all about manufacturing the need for next.01:23

If this all sounds sadly familiar in terms of today's world of mobile-enabled, social media addiction, destructive and manipulative disinformation, and enragement driven by continued exposure to lies and garbage, that's partly on me.  Because we built some of the earliest programs and algorithms that were foundational elements to this debacle. An entire generation has grown up with the continued need for speed and stimulation and there's very little we can do to slow the pace or the momentum. Adrenaline and virality are everything. Worse yet, in our college students and even more critically, in the waves of new employees joining our businesses, we are seeing the effects and debilitating symptoms of a generation raised and educated in a world where nearly every waking hour is spent glued to and interacting with their phones. If you don't think this impacts the effectiveness and productivity of your team members, you haven't walked around your semi-empty offices lately.

  Many years later, as partial penance, I started a high-end vocational college devoted to the digital arts including video, animation, and game design as an alternative for creative kids who weren't interested in and unlikely to be successful in the traditional, four-year, painfully expensive college education. Part of the pedagogical foundation of the new Tribeca Flashpoint school was the idea that we could reform and transform the typical education methodology into a new energetic learning process that equipped students with actual job skills and serious employment prospects. Our digital-centric course offerings were team-based, engaging, informative, and educational all at the same time. This idea was based in part on Marshall McLuhan's dictum that: "anyone who tries to make a distinction between education and entertainment doesn't know the first thing about either".

By making each day activity-based, constructive, and exciting, we were able to reawaken an interest in learning in students who had previously failed at or given up on continuing their education. The thought was that, if the students loved school, they'd stick around and learn sometimes in spite of themselves. Here again, the operational mindset, the affirmative attitudes, and the various emotional drivers we had drawn from our game development history were employed to create educational environments of adventure, accomplishment, and achievement. Turning what they had regarded as a drag and sheer drudgery into demonstrations of desire, peer commitment, and delight. The same enthusiasm and energy that these kids had spent for countless hours every day on their game play could be rechanneled and redirected into productive learning and work skills. And, as their parents would consistently attest, the strategy not only worked, but it also literally transformed their kids, their work ethic, and their attitudes.

Having invested a great deal of time and money developing education and entertainment businesses at the intersection of gaming, new technologies and training, I never imagined that the engagement tools and strategies we built would lead to anything as disturbing and harmful as we see today. And I fear that we're about to see things become even worse -- especially for Gen Z guys continuing to enter the workforce - as the desires, addictions, and dopamine-driven emotional demands embedded over years of Xbox, Nintendo and PlayStation-based gaming are now beginning to quickly morph into mobile device-enabled gambling. At least the early computers and the video-game consoles were place-based; today, the 24/7 smartphone connectivity means that the problems are growing exponentially and will quickly spread across the workplace.

While there's plenty of blame to go around, there is no question in my mind that the entire adrenaline-driven gaming world was irrevocably changed around 2007 when the smart cellphone and high-speed internet brought ubiquitous access and instantaneous responses to half the country. The guardrails began to disappear: anyone who thinks that age limitations and other alleged restrictions had the slightest impact on the inventiveness and activities of millions of under-aged kids is a moron.

With the same obliviousness that we applied to the risks and painful ills of indiscriminate and unregulated social media, we're now casually inviting several immature and uninformed generations into the two biggest virtual casinos in history - the stock market and sports betting - and, once again, kidding ourselves in thinking that everything will work out well.

The craziness started in earnest a couple of years before the pandemic, courtesy of firms such as Robinhood, which added millions of untrained and unsophisticated players to the markets and precipitated the rise and insane gyrations of meme stocks like GameStop. The recent IPO of Reddit  (another prime player in the meme stock mess and related rumormongering) can't be good news for anyone looking for the markets to ever return to some level of rational behavior. And, of course, the cult-like trading insanity surrounding the Trump Media & Technology Group Corp., with revenues for 2023 of around $4 million and losses approaching $60 million, has simply turned everything into a nihilistic game where the MAGAts think they're teaching a lesson to "the man" and rooting for their guy at the same time.

Encouraging young men who can't afford and don't remotely appreciate the complexity and risks of the stocks they trade on their phone - rewarded by confetti, sound effects, and other dopamine drivers similar to games - - isn't likely to move the needle forward on financial literacy any time soon. Not when trading activity is based on Trumpist politics, made-up rumors, fake posts, TikTok screeds, and other careful "research."  But it is entirely likely to drive a few more people to financial ruin and suicide. We're already seeing the workplace results in our younger employees - lost focus, indifference and a world of "whatever,"  less interest in connection and peers, and a basic angry belief that life's not fair and there's no longer any prospect that they will have a chance to get theirs.

The returning crypto frenzy with new Bitcoin highs and the FOMO effect in an expanding tech-driven stock market with equities reaching new heights are making things even worse. Investing has become a game - with high pleasure and reward levels - and little or no effort, study or analysis required. Crypto is so crazy that when some anonymous idiot developer recently told his followers that he accidentally wiped out $10 million of their early investments in his Slerf memecoin, the news was met with a mere shrug and then a big bump in the coin's price when it was next issued. There's been no regulatory response or any recourse for the people who lost their money.

I'm reluctant to call these crypto, NFT and meme idiots "investors" or their actions "investments" for obvious reasons. The few high-visibility lawsuits and lockups that have happened are mixed blessings based on the media treatment because for kids of a certain age the main mistake these folks seem to have made was not being smart enough to avoid getting caught rather than defrauding thousands of suckers out of millions of dollars. When the Trump meme scam finally does collapse, all those victims will also be blaming everyone but themselves.

If the stock and crypto issues aren't bad enough, we've now upped the frantic ante by adding digital sports betting to the mix. Just try to pry your folks away from their phones and screens during March Madness when the office betting pools represent a mere pittance compared with the bucks they've bet with their online bookies on the big games. Or take a gander at the Cubs opening day in Chicago where a gigantic new DraftKings Sportsbook (which looks like some ugly cancerous growth attached to the glorious Wrigley Field ivy) is also opening the same day.

There's a storm coming, there are no easy answers, the success of your business and the futures of your kids could hang in the balance, and you've been warned.