The Weekly Listen: Why AI Might Be Hitting a Wall, The Impact of Impending Tariffs, and More | Dec 13, 2024

Summary

Podcast Summary: Behind the Numbers: An eMarketer Podcast
Episode: The Weekly Listen: Why AI Might Be Hitting a Wall, The Impact of Impending Tariffs, and More
Release Date: December 13, 2024

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Introduction

In this episode of Behind the Numbers, hosts Marcus Johnson, Oscar Orozco, Zach, and Ethan Kramer Flood delve into pressing topics impacting digital media and marketing. The discussion spans the current state of Artificial Intelligence (AI), the potential repercussions of impending tariffs, the future of live sports in the age of highlights, and trends in children's sports participation. Engaging banter and insightful analysis make this episode a valuable listen for marketers, retailers, and advertisers navigating the ever-evolving digital landscape.

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1. Story of the Week: Is AI Hitting a Wall?

The panel kicks off with a critical examination of AI's progress, inspired by Alex Heath’s article from The Verge. The central question revolves around whether AI advancements are plateauing due to diminishing returns in data and computational investments.

Oscar Orozco's Position: AI Has Hit a Wall

At [04:55], Oscar argues that AI is encountering significant barriers:

• Cost Concerns: "We've seen numbers out there from a query costing about $0.36 to, you know, the upkeep, the daily upkeep of these platforms being close to $700,000 just to keep it going" (04:55).
• ROI Challenges: Citing Gartner’s prediction, Oscar mentions that "by 2028, more than 50% of enterprises that have built large AI models from scratch will abandon their efforts due to costs, complexity and technical debt in their deployments" (05:20).
• Public Sentiment: Highlighting a Pew study, he notes, "52% of Americans are more concerned and excited about AI in their life" (06:29), indicating a shift from skepticism to fear and fatigue.

Zach and Ethan's Counterpoints: AI's Potential Continues

Zach (08:11) and Ethan (09:00) contend that AI hasn't necessarily hit a wall:

• Long-Term Vision: Ethan emphasizes that current AI advancements are just "the tip of the iceberg," drawing parallels to smartphones’ evolution since 2007 (10:06).
• Application Focus: Zach suggests a pivot towards smaller, more targeted AI models that address specific consumer needs might sustain AI’s growth despite high operational costs (11:00).

Marcus's Conclusion

Marcus synthesizes the debate, acknowledging both the current challenges and the potential for future breakthroughs. He notes the increased public concern may not be entirely negative, allowing for a more measured approach to AI development (12:22).

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2. Weekly Game: Fortune Teller - The Fate of TikTok

The hosts engage in their weekly game segment, predicting outcomes related to pressing issues. This week, the focus is on the potential U.S. ban of TikTok.

Scenario:
A federal appeals court has upheld a nationwide ban on TikTok unless sold by its China-based parent, ByteDance. With Donald Trump as the incoming President, the panel discusses whether he will act to save TikTok.

Zach's Prediction (15:36):
Zach anticipates a temporary disappearance of TikTok from app stores post-ban but believes the platform will persist with business operations continuing. He questions Trump's commitment, suggesting the ban is more of a political bargaining chip than a priority (16:37).

Oscar Orozco's Prediction (16:39):
Oscar is more assertive, predicting that TikTok won’t be sold off. Instead, he foresees TikTok distancing itself from ByteDance through minor adjustments, viewed as a gesture to improve Sino-U.S. relations without actual divestiture (26:39).

Ethan Kramer Flood's Insight (16:39):
Ethan echoes Oscar, believing TikTok will survive into 2025 with US ad revenues expected to reach $15.5 billion. He acknowledges ongoing legal uncertainties and potential shifts in advertising dynamics should the ban proceed (15:36).

Outcome:
The debate highlights the complexities of geopolitical tensions impacting digital platforms, with no definitive resolution in sight.

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3. Random Scale: Is Live Sports Under Threat from Highlights?

The discussion shifts to the realm of sports, evaluating whether the rise of highlights and short-form content threatens live sports viewership.

Ethan's Argument (21:09): More Highlights Mean More Sports Viewership

Ethan posits that highlights actually bolster sports engagement:

• Accessibility: "Watching your favorite team can be expensive and a full game is a big time commitment" (21:09).
• Retention: Highlights keep fans engaged, ensuring sustained interest that can translate into live viewership when possible (22:11).
• Historical Precedent: Referencing ESPN’s SportsCenter, Ethan notes that highlights have historically driven interest in live games rather than detracting from them (22:31).

Oscar Orozco's Agreement (22:34):
Oscar concurs, viewing highlights as a complement rather than a replacement for live broadcasts. He references a YouGov survey indicating that while younger audiences prefer highlights, the majority across age groups still favor live game viewing (23:46).

Zach's Perspective (24:35):
Zach downplays the threat, likening current fears to past unfounded concerns about SportsCenter’s impact. He suggests that actual threats to sports viewership stem from accessibility and affordability issues, not highlights (24:35).

Marcus's Observation (25:00):
Marcus adds that varying participation rates across different sports and age groups further illustrate that highlights serve diverse audience preferences without undermining live viewership.

Consensus:
The panel largely agrees that highlights enhance rather than threaten live sports, serving as a strategic tool to maintain and grow fan bases.

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4. Fill in the Blank: The Impact of Impending Tariffs

The final segment involves predicting the effects of newly proposed tariffs on U.S. imports, particularly those from China.

Scenario:
President-elect Donald Trump has proposed universal tariffs of 10-20% on all imports to the U.S. and over 60% on goods from China. Historically, tariffs have raised consumer prices, with retail categories like appliances seeing costs rise by nearly 12% post-2018 tariffs.

Oscar Orozco's Prediction (26:39):
Oscar boldly fills in the blanks, stating that the impact of tariffs will be "catastrophic" for U.S. consumers. He supports his stance with data:

• Consumer Burden: Citing a University of Chicago survey, he notes that 98% of economists agree tariffs primarily burden consumers rather than businesses (26:48).
• Economic Impact: "The consumer is going to suffer," he asserts (27:00).

Zach's Counterpoint (27:47):
Zach moderates the prediction, suggesting that while tariffs will not be "catastrophic," they will exacerbate existing inflationary pressures. He highlights that companies have adapted supply chains since the last tariff wave, potentially mitigating some adverse effects (27:47).

Ethan Kramer Flood's Insight (28:55):
Ethan emphasizes the unexpected nature of tariffs for many consumers, noting significant financial impacts:

• Household Costs: "Tariffs could cost American households an additional $2,600 a year" (28:55).
• Supply Chain Adjustments: He points out that some companies have already adapted by offshoring from China to other regions, which may lessen the immediate impact (29:37).

Marcus's Addition (30:11):
Marcus references the National Retail Federation, highlighting that Trump’s proposed tariffs could raise costs across six retail categories by $362 to $624 per household annually. He also notes increased "buy now before tariffs kick in" messaging from retailers (30:11).

Conclusion:
The panel agrees that impending tariffs will significantly impact U.S. consumers, primarily through increased costs. However, there are varying opinions on the severity, with Oscar maintaining a dire outlook and Zach and Ethan suggesting a more measured impact.

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5. Trivia: Most Interesting Things Learned This Week

The hosts share intriguing insights and statistics from various domains:

a. Christmas Gift Spending Worldwide (33:03)

• Top Spenders: Germany leads with an average of $1,100 per person, followed by Canada ($946), and the U.S. ($826). The Netherlands ranks lowest in the top 10 at $327 (34:00).
• Insight: Advanced economies dominate spending on Christmas gifts, with cultural factors like Germany’s famous Christmas markets contributing to higher expenditures (35:27).

b. Time Spent Choosing What to Watch on TV (36:29)

• Statistics: The average American household subscribes to three streaming platforms, spending an average of 18 minutes deciding what to watch on Netflix—a 50% increase since 2019 (36:29).
• Implication: The growing complexity of streaming choices may influence consumer behavior and platform strategies (36:31).

c. Elephants' Vocalization Specificity (36:48)

• Discovery: Elephants in a Kenyan national park have been found to use unique vocalizations akin to names for individuals within their herd, marking the first non-human species to display this level of social communication (37:05).

d. Kids' Sports Participation Trends (41:18)

• Overall Participation: Organized sports participation among kids aged 6-17 has grown by 6% over the past decade, rising from 55% to 61%.
• Demographic Shifts: Participation among boys, particularly African American and Hispanic kids, has declined, while girls' participation saw a slight increase.
• Popular Sports: For ages 6-12, basketball leads at 14%, followed by baseball (12%) and outdoor soccer (8%). For ages 13-17, basketball remains the most popular at 16%, with baseball, golf, and tennis trailing (41:18).

Reflection:
These insights reveal shifting consumer behaviors and societal trends, from holiday spending patterns and media consumption habits to animal behavior studies and youth sports dynamics.

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Conclusion

This episode of Behind the Numbers offers a comprehensive exploration of critical issues shaping the digital and consumer landscape. From the potential stagnation of AI advancements and the geopolitical intricacies threatening platforms like TikTok, to the evolving nature of sports consumption and the impact of economic policies on consumers, the discussion provides valuable perspectives for industry stakeholders. Additionally, the trivia segment adds a layer of engaging, diverse knowledge, enriching the overall discourse.

Tune in next week for more in-depth analysis and thought-provoking topics to stay ahead in the dynamic world of digital media and marketing.

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Notable Quotes

• Oscar Orozco (04:55):
  "We're not seeing those expenses drop. ... the ongoing maintenance of them is really diminishing those returns."

• Ethan Kramer Flood (08:11):
  "People are underestimating what they're going to see in the long term when it comes to autonomous vehicles, when it comes to healthcare and other industries as well."

• Zach (22:11):
  "When we talk about highlights, let's talk about the OG highlights. ... it's a great way to get people to actually want to go ahead and watch live sports itself."

• Oscar Orozco (26:39):
  "The impact of tariffs will be catastrophic for the US Consumer."

• Ethan Kramer Flood (28:55):
  "Tariffs could cost American households an additional $2,600 a year."

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Timestamps Reference

• [04:55] to [06:29]: AI hitting a wall discussion
• [15:36] to [19:21]: TikTok ban predictions
• [21:09] to [24:35]: Live sports vs. highlights debate
• [26:39] to [31:25]: Impact of tariffs analysis
• [33:03] to [42:57]: Trivia and interesting insights

(Note: Actual timestamps in the transcript have been referenced accordingly for accuracy.)

Transcript

[Marcus Johnson]

Data collaboration enables innovative companies to uncover powerful new insights that transform customer experiences and fuel business growth. With Liveramp, Marketers get the industry's only interoperable platform for data collaboration across every cloud, walled garden and media platform. Learn [e-mail] hello everyone, and thanks for hanging out with us for the behind the Numbers Weekly Listen, an E Marketer podcast made possible by a live ramp. This is the Friday show that for years has been telling Oscar to hire him as his fantasy football offensive coordinator. Lord knows you need the help.

[Oscar Orozco]

I could have used you this year, Marcus, that's for sure.

[Marcus Johnson]

This year? How bad is it?

[Zach]

Y'all got Josh Allen?

[Oscar Orozco]

Yeah. No, of course not. No playoffs. But I'm still the reigning champ of when till I'm dethroned. I'm still the champ.

[Marcus Johnson]

You won last year.

[Oscar Orozco]

Of course, without your help, Marcus.

[Marcus Johnson]

What do you mean, without me? Then you fired me. And this is where you are now. This is where you find yourself. Salary, you ask? Speak my agent. I'm your host, Marcus Johnson, offensive coordinator for Oscar's fantasy football team. Next year. In today's show, is AI hitting a wall?

[Oscar Orozco]

We're not seeing those expenses drop. You know, we've seen numbers out there from a query costing about $0.36 to, you know, the upkeep, the daily upkeep of these platforms being close to $700,000 just to keep it going.

[Marcus Johnson]

When it's all said and done, what will happen to TikTok?

[Zach]

The question is whether or not Donald Trump actually cares enough to follow through on making a significant effort in rescuing TikTok because it would be a significant effort.

[Marcus Johnson]

Is live sports under threat from highlights?

[Ethan Kramer Flood]

When you look at ESPN's Sports Center Top 10 Countdown, would you ever say that that made people watch sports less? No. It was a great way to get people to actually want to go ahead and watch the live sports.

[Marcus Johnson]

So what will the impact of tariffs be and what is the most popular sport for kids to play? Join me for this episode. We have three people. Let's meet them. We start with our senior forecasting director. He is based in New York City and we call him Oscar Orozco.

[Oscar Orozco]

Hello, listeners. Hello, Marcus. Thanks for having me.

[Marcus Johnson]

Hey, fellow.

[Zach]

Of course.

[Marcus Johnson]

Thank you for being here. Also joined by. Everyone's on that team pretty much. But this chap goes by the title senior forecasting analyst. He is based in Colorado. It's Zach. Did I say that right?

[Ethan Kramer Flood]

Yep. My name is Zach. And Colorado Zach.

[Marcus Johnson]

No last name. His name's Zach.

[Zach]

You were going so well. Everything was fine.

[Marcus Johnson]

I always question where he is and I don't know why. Welcome, Zach.

[Ethan Kramer Flood]

Thank you. Thank you, Marcus.

[Marcus Johnson]

It's like Prince. Just the one name.

[Ethan Kramer Flood]

The forecaster formerly known as Zach.

[Marcus Johnson]

Extraordinary. We're also joined by Ethan Kramer Flood. He is our principal forecasting writer. He is also based in New York. Welcome, fella.

[Zach]

Merry holidays, gentlemen. Merry holidays in advance. No, too early.

[Marcus Johnson]

No one's ever said, well, it's not too early. It's just no one's ever phrased it that way.

[Oscar Orozco]

But is it Happy Christmas, Marcus? Is that what you should say?

[Marcus Johnson]

Anything else, I think other than Merry Holidays, but the same to you, Ethan. Thanks for saying all right, what do we have? What do we have in store for you? Story of the Week A game. And we end with some random trivia. Let's get to it. We start, of course, with the story of the week. Is AI hitting a wall? Great question. Alex Heath, deputy editor of the Verge, writes that until now the AI hype cycle has been predicated on the theory that throwing more data and compute at training new AI models will result in exponentially better results. But he says, as he first reported in the newsletter that he was writing for Google and others are starting to see diminishing returns from training their next models. This proverbial wall challenges the assumption that the next crop of major AI models will be dramatically smarter than what exists today. So just this idea that if you make models bigger, they're going to be smarter and that that can continue until the end of time, that's the theory that's being questioned now, even though I don't know if people actually promised that in the first place. But there's been that expectation given that ChatGPT came onto the scene two years ago and we've seen the of development in AI that we've witnessed up until this point, which just seems to be moving at such an accelerated rate. So the gents are going to argue the different positions here. Oscar's going to kick us off answering yes to the question has AI hit a war? Oscar is going to say why it has.

[Oscar Orozco]

I took this question and sort of split it into two, looking at it from the platform's perspective, but also from the consumers. Like how we're feeling about Gen AI now that we've seen it in place for years. Not years, I would say months. Many months at this point. So you said it yourself, Markus, the diminishing returns. OpenAI has admittedly said that the rate of improvement is slow, but I'm looking at it from an expense cost standpoint. We're not seeing those expenses drop. We've seen numbers out there from a query costing about $0.36 to the upkeep, the daily upkeep of these platforms being close to $700,000 a day just to keep it going. So the ongoing maintenance of them is really diminishing those returns. And so the ROI is just not there yet. I was looking at a stat or a prediction really from Gartner that said by 2028, more than 50% of enterprises that have built large AI models from scratch will abandon their efforts due to costs, complexity and technical debt in their deployments was what they said. Then from the other angle, the, you know, there's fatigue with it. And I think, you know, for example, a Pew study found 52% of Americans are more concerned and excited about AI in their life. Those that are familiar are concerned about the government regulating it enough. So there's a lot. What was skepticism has shifted to a bit of fear, even dislike.

[Marcus Johnson]

So and on that point that number's gone up. Right? You said, like you said, 52% of Americans are more concerned and excited about AI in their daily lives. That was 37% two years ago.

[Oscar Orozco]

There you go. Exactly. So these numbers are going up and as I said from just that skepticism, more of this dislike, this fear, this. I would even say just the fatigue aspect. So overall I think we are hitting this wall and I'm not quite sure what's to come in the next six to 12 months.

[Marcus Johnson]

Yeah, Zach, it's interesting you're going to be arguing that the maybe side of this to touch on something that Oscar said before you go. The cost. These things cost a lot to run and that's the current version. The smarter they get, the more they're going to cost to run. OpenAI saying that about 700 grand to run that model or its models every single day. Scale that number up, you see how expensive it can be to run these things, let alone improve them. Another thing that's a concern here is extremely high energy use that could put the brakes on AI use. Quanta Goldman Sachs data centers currently consume 1 to 2% of all global power. Specifically in the US that number data centers consuming 3 to 4% of the country's power that was in 2022, let alone where it's at now was projected to reach 8% by 2030, which is basically in five years time and in certain states is even higher. Currently this year in over five states in the U.S. data centers account for over 10% of electricity demand. So extremely high energy use could put the brakes on AI use. Oscar mentioned a couple of other factors as well which could maybe slow down the pace of development for AI. Zach, you're arguing the maybe case. Maybe AI has hit the wall. What do you think?

[Ethan Kramer Flood]

Yeah, Markus, I don't know if AI has necessarily hit a wall, but I can say for certain that Oscar's fantasy football team did. Yeah, thank you. It may be. But going back to both your point and Oscar's point about AI running up a budget or a deficit, when has the US ever cared about its debt? We care about the end results here, and I think that's what we're looking forward to. And for AI, just speaking of AI for a moment, when it comes to roi, I don't think that we're going to see the same return on investment that we did a couple years ago. And yes, that means that your Nvidia stock might not triple again in value this year. But when it comes to consumer facing end of AI, I think we now are seeing that the public has a so what? Approach to AI. That's because most of their visible impacts, their daily lives using AI have been incremental. Over the last year through the new models, they've experienced modest improvements like polished grammar with fewer errors. These enhancements, while they are noticeable, they aren't absolutely huge. I think that we can compare this to other technologies that were in its infancy. You could compare it to smartphones back in 2007 or the Internet in 1990s. Right now, what we're seeing with AI is it's only a year or two into the public actually using it at mass. Right now we're seeing the tip of the iceberg with these AI improvements. While they might seem small to us, I think we're going to be seeing big changes here in the future. I think that people are underestimating what they're going to see in the long term when it comes to autonomous vehicles, when it comes to healthcare and other industries as well. So while it might be hitting a slight wall at the moment, we're going to see vast changes to AI in the coming years.

[Marcus Johnson]

Ethan, do I still have to go?

[Zach]

I mean, I can. I. Zach just basically made my point for me.

[Marcus Johnson]

I was going to say that's dream case. As to why, hell no, AI has not hit a wall.

[Zach]

I don't know about hell no, but I agree. Everyone's making entirely reasonable points. When I saw this question, my reaction to what the AI community is talking about when they say that maybe they're hitting a wall was that this wall is not really that relevant to the average person out there. So the types of progress that they've been making, these computational advancements, this increase, exponential increase in power, has not really proven to be all that relevant to the average consumer or even the average business user anyway. Which is why I was like, who cares about this wall is not the wall. In fact, this could even be a hidden benefit. If they put less investment and energy and effort into constantly improving the processing power of these models and instead start focusing on applications, which has been the real problem since the beginning, then we might actually find a way forward. Because the reality is that here we are multiple years into this storyline and AI itself has little to no impact on the daily life of the average person, whether in. Whether the average consumer, in their private life, the average employee, right. Obviously it's become successful in certain corners of the business world and certain people use it every day for whatever reason, but most people, it just doesn't matter at all. So who cares if this processing power is 10 times stronger 3 months from now or not? Because so far they haven't cracked the code. On the consumer facing side, they already can. They just need to figure it out. In fact, probably what they need is smaller models, more targeted use of the capabilities that already exist, that can solve individual specific problems or give us specific functions and services on our mobile devices in the office in a way that actually does what we need it to do, instead of these generalized approaches that frankly don't really work that well. The stuff that's out there right now that most of us can't even figure out how it might help us do our job better because it's too general and needs to be more specific. They could start working on this now and then the ball starts to move forward.

[Marcus Johnson]

Yeah, yeah, it's a great point. Not just here's this thing, figure out how it's best to use it, but here's this very specific thing that's going to help you with a specific task and improve upon it significantly. Your point is well taken. Alex Heath of the Verge was saying a similar thing. Slowing AI progress might not be a bad thing. Basically, given how frenetic the past year has been, it might kind of let the world catch its breath on AI developments and the speed of it. To circle back to what Oscar was saying initially is partly why the share of Americans who are more concerned and excited about AI in their daily lives has gone up. So maybe it's not a bad thing if AI takes a breath and doesn't obsess over the next model or a faster model or a bigger model or whatever it might be. All right, gents, that's where we'll leave the story of the week. We move now to the game of the week. Today's game, the super Duper game. How does it work? Three rounds, Fortune Teller, the random scale and fill in the blank. The better the answers, the more points you get. We start with Ethan. For round one, we have Fortune Teller. That's where we predict the future. A court has upheld a U.S. ban of TikTok, writes Bobby Allen of NPR. He explains that last week a federal appeals court on Friday upheld a law banning TikTok nationwide unless the video app was sold off by its China based parent company. Rejecting TikTok's claim that the crackdown violates the free speech rights of millions of Americans, the court said TikTok's ownership by a China based company, ByteDance, represents a national security threat that surpasses the free speech concerns TikTok raised. However, the incoming President elect, Donald Trump has vowed to save TikTok. Appeals and case re examinations are likely. After that, the Supreme Court could be asked to weigh in. TikTok has asked the court to freeze the sale or ban law until the new administration gets into office. That's because the ban is for January 19th and the new president comes in on the 20th. But fortune teller, Ethan, when it's all said and done, what happens to TikTok.

[Zach]

When it's all said and done? That's tough. But I will go out on a limb and predict that on January 19, this is going to happen in as much as TikTok is going to disappear from the App Store on your Apple and Android devices and everyone is going to freak out. That's going to be big news. However, that doesn't mean anything's really going to happen, right? TikTok is still going to function. It's still going to be here. Business will proceed as normal for a while and then we'll start to see how this is going to play out. The question is whether or not Donald Trump actually cares enough to follow through on making a significant effort in rescuing TikTok, because it would be a significant effort right this. The ball is rolling now and it's going to take effort to stop the ball. It's a little different as opposed to sort of acting to block TikTok. Now it's going to happen. It's going to require effort to stop it. Why would he necessarily, why would anyone necessarily put in this effort? I think it's Going to get really interesting. I think we're going to have a lot of fun talking about this for a few months as we see how it plays out.

[Marcus Johnson]

Yeah. To Ethan's point, when it gets banned, it doesn't disappear from your device. You just can't download it anymore and you can't get updates for it anymore on the app stores, which means over time, the experience will get worse. People eventually stop using it. So that's what the ban means. It won't just disappear from your phones. Zach, what do you think?

[Ethan Kramer Flood]

My guess is as good as any. I think all signs are pointing towards the court siding against TikTok, even though we should expect there to continue to be further up appeals. But for better or worse, I truly believe the fate of TikTok stands in President Elect Trump's hands rather than that of the courts. He made a promise to the public that he would keep TikTok running. We'll see if he follows through with that promise. From advertising perspective, I believe that it's business as usual. We might see some advertisers hold back, some spend. But for our forecast, we're still expecting TikTok to exist in 2025 and the years to follow. Next year, we're expecting US TikTok ad business to reach $15.5 billion, which is a 25% increase versus 2025. That's a lot of money that's at risk that could fall into the hands of Meta, Snapchat, YouTube and other companies. Something we're going to continue to monitor, but really no one knows at this point.

[Marcus Johnson]

Yeah, good points, Oscar.

[Oscar Orozco]

Yeah, I mean, this is. This is a tough one, dare I say the toughest fortune teller question you've ever. Marcus. Really, it's anyone's guess, but I think I am ready to take a bolder or make a bolder statement than my colleagues here are making. And that said, I do think TikTok ultimately won't be sold off. I think President Elect Trump has. It's become an important enough issue for him that he will get involved. So what I think will happen was TikTok will take some minor steps to distance itself from its parent company. It'll be all more show than substantive, really. We'll see some vague declarations from President Trump saying that TikTok has taken enough steps, that it's enough, you know, he'll take credit for this as well, and it'll all be a part of some sort of larger brokerage deal that'll help with China US Relations. So there won't be an actual divestiture. But, you know, TikTok will take some sort of step to improve relations and to help with security concerns, all being that, you know, US consumers will stand to benefit from all this because TikTok will remain one of the more popular apps that people use in this country. So that's what I think will happen.

[Ethan Kramer Flood]

Oscar's pretty spot on.

[Zach]

Can I take 30 more seconds, please? Yeah, take 30 more seconds. Because I am cautious that the idea that Trump cares about this a lot may be a media creation. It's not clear that this is actually a huge priority. I mean, he tweeted about it once, like nine months ago, and then there's another line.

[Ethan Kramer Flood]

He truthed it.

[Zach]

Yeah, that was nine months ago. And then maybe there was one other sentence a few months back. And so to my point, the ball is already rolling now. So for him to come in and rescue TikTok, he is the type of person who would want something for that, right? This is now a bargaining chip against something else. Why would he do it for nothing? And meanwhile, the Chinese government is almost certainly not going to acquiesce to a straight sale. So you have all sorts of complexities. It's going to be a bargaining chip. He's going to want something in return from somebody for saving this, because if he doesn't save it, it doesn't matter. This is not that important. He can just let it go unless someone gives him a reason to save it. So I would not be that confident that this guy's just going to stick his neck out.

[Oscar Orozco]

I do. We've been hearing in the press that domestic analysts in China have been saying that the Chinese government would potentially be up for putting it on the auction block, the app. So I strongly. I mean, I think, you know, there is no.

[Zach]

There is no reason for them to do that.

[Ethan Kramer Flood]

$15 billion, Ethan. $15 billion in the US market, which is just under half of TikTok's global ad revenues.

[Zach]

But that's utterly inconsequential to the Chinese government. I mean, this is a private tech company. They don't care. It's not their money. This is purely about political, geopolitical face. They have no reason to give TikTok to an American investors to make money off of.

[Marcus Johnson]

It's also interesting because that the public has said that they would prefer it to be banned. If you look at most of the recent surveys that we've got, and now, you know, a few months old at this point, they all point to the majority of Americans saying, I'd prefer to ban it even though TikTok users would prefer to keep it and young people prefer to keep it. When you look at the population, most people say get rid of it because it is national security threat. So if he's taking the pulse of public opinion.

[Ethan Kramer Flood]

Yeah, that sentiment has been changing over the months, Marcus.

[Oscar Orozco]

If you look at Pew, that's been.

[Marcus Johnson]

Changing in the last couple of months.

[Oscar Orozco]

Yeah, interesting.

[Marcus Johnson]

Okay, okay, so maybe that moves the needle on his position. All right gents, let's move to round two. Great arguments for round one though. The random scale is what we have for round two where folks tell me where they land. Using the random scale, we're talking about whether Live Sports is Under Threat From Highlights so 2/3 of global sports executives are concerned about the relevance of live sports as more younger fans gravitate towards highlights, documentaries and short form videos from fans, teams and players over watching live games on video. According to Altman Solen's 2024 Global Sports Survey notes an advanced television article, Altman's Solon partner David Delia said, quote, we've reached the tipping point where content originally created to generate interest in the games highlights has become as sought after as the games themselves. Close quote. But Zach, we'll go to you first for the random scale. Is live sports under threat from highlights? Your possible choices one More highlights mean more sports viewership. So no two more highlights will slowly lessen sports viewership or three more highlights have already taken and will continue to take a huge bite out of sports viewership.

[Ethan Kramer Flood]

And my take here is that more highlights do mean more sports viewership. And to break this down I think we have to go into the root problem of sports as is at the moment, watching your favorite team can be expensive and number two, watching a full game is a big time commitment. What do you think about it? A college football game now averages like three and a half hours per game. In the article you sent over it listed that 2/3 of sports fans reported that they have a difficult time accessing their favorite live sports. So that goes along with it being expensive or maybe them not having live tv. So with the rise of highlights it actually draws in more people into sports than threatens with live viewership. Once you alienate your fans, you won't actually get them back. So by keeping them entertained and keeping their fandom through snippets that once they reach a different life stage and they can afford their sport or have the time of day interesting sit and watch that full game, I think those highlights are going to keep and prop up the sport for the years to come.

[Zach]

Okay.

[Ethan Kramer Flood]

Oh, one last thing I want to add as well. When we talk about highlights, let's talk about the OG highlights. When you look at ESPN's Sports Center Top 10 Countdown, would you ever say that that's made people watch sports less? No. It was a great way to get people to actually want to go ahead and watch live sports itself.

[Marcus Johnson]

Yeah, fair point. Oscar, what do you think, mate?

[Oscar Orozco]

I'm surprised by that, Zach. I thought as a Gen Z or you were going to say something else there, but I fully agree with you. I mean, I would go with that first option. More highlights means more sports viewership. I would even rephrase that as highlights are a great supplement to sports viewership. That's the way I'm interpreting it. Also, I think this story came potentially there's been various surveys on this, but the YouGov survey found that 18 to 24 year olds do prefer watching clips or highlights of live games more than watching games in their entirety. But if you look at the survey, almost a nearly identical number was a little bit less prefer watching live games while 25% of them enjoy watching both. So it was kind of split. And then when you looked at all the other age breakouts, there's clear indication that everyone else prefers to watch the actual game. Right. So I just think it's a nice supplement. It speaks to short video content that's become so popular social media use and that's where the media platforms and sports leagues are rightfully so they're shifting some of their content there, but it's just a supplement to what people are watching when they're watching their favorite sports teams play on live tv. Ethan?

[Zach]

Yeah, I mean this sounds like a whiny red herring to me. If the worldwide sports industry or, or the various leagues kill the golden goose, it's not going to be because of highlights and short form videos. It's going to be because they've made their own products so difficult to access or too expensive for young people to access and then build that sort of generational fandom because they're so incredibly greedy that they take the biggest possible check even if that puts their product somewhere that is harder for fans to see. To Zach's point, actually, I think people did say back in like the 80s and 90s that things like SportsCenter were possibly a risk. They did make this same sort of hair pulling, frantic argument. Oh, the highlight. Now those highlights are so accessible, people aren't going to watch the games. That was obviously ridiculous back then. And it's still ridiculous now, right? This is not going to be a problem.

[Marcus Johnson]

Yeah, there was an article the other day showing that you need at least three streaming services to watch all the NFL games. The different ones have different games, but you'll need at least a combination of three of the seven that you know that cover the the NFL to watch all of the games. So you know that is relatively prohibitive. It's really interesting by age and by sport as well. Some data from Manu Group for variety intelligence platform, they were showing that it really depends on if it's a longer season sport like MLB or NBA. A lot of fans will watch highlights there. Whereas if you look at something like NFL, close to half of the 18 to 34 year olds prefer watching highlights to full games. But when you look at 35 to 49 year olds, just 20% for fair highlights and even less for older folks. So it also depends on the sport quite greatly according to this research. All right gents, let's move to round three. Fill in the blank is what we have for our final round where folks, you get the point. Let's start with Oscar. The impact of.

[Zach]

You got to explain how fill in the blank works. You think our audience just understands it's.

[Marcus Johnson]

Mainly for Oscar, but I think he's got it by the impact of impending tariffs is what we have for our final round. Many retailers came through relatively unscathed by Donald Trump's tariffs imposed starting in 2018. This time around, though, tariffs have the potential to bite more, writes Jinju Lee of the Journal. She explains that President elect Donald Trump has proposed a universal tariff of 10 to 20% on all imports to the US and a 60% or more tariff on goods from China. The tariff impact was clearest for retail categories hit in 2018. For example, a 20% tariff went into effect on imported residential washing machines in early 2018, she writes, saying in the response the prices of washers rose by nearly 12% in the months following the tariffs, according to a 2019 study from economists at the Federal Reserve Board and University of Chicago, implying that consumers absorbed most, but not all of the tariff cost. But Oscar, fill in the blank. The impact of tariffs. These tariffs will be blank, blank.

[Oscar Orozco]

Let's fill it in with catastrophic and I think we're all going to agree on this, right guys? For the US Consumer, don't you try.

[Marcus Johnson]

And influence the panel?

[Oscar Orozco]

Well, I mean it's true. I mean it's true and I have a couple data points here. Shout out to some BBC research, which was great on this, but as you said studies of the impact of new tariffs that Trump did impose in his first term showed that ultimately the economic burden was borne by the US Consumer, not by the importing firm or by the foreign exporter, because they supposedly would choose to lower the cost of their wholesale price or the wholesale price of the goods. It's just not how it works. I would even point out a recent survey from the University of Chicago. They asked a group of respected economists about the statement that imposing tariffs would result in a substantial portion of the tariffs being borne by consumers of the country that enact the tariffs. 98% agreed with this statement, meaning that it's the consumer who's going to suffer. So that's ultimately what would happen.

[Marcus Johnson]

Okay, Ethan.

[Zach]

I mean, catastrophic is kind of a strong word. I would have said the impact of tariffs will be less than people fear, but more than people want. We just saw in November that imports from China to the US Were at their highest level in almost three years because retailers and manufacturers were frontloading their inputs so that they can keep this under control, at least over the short and medium term. Also, structurally, we have now finally gotten sort of into a cyclical reduction in inflation. So the type of terrible inflation that we've been through the last few years is finally going away. What this will probably do is simply bring it back, right? So rather than give us a break from the inflation that we've become used to over the last few years now, we'll just keep having to deal with it. So I guess you could use the word catastrophic, but it's more like just more of the same incredibly aggravating, irritating experience. Although there will probably be a delay because people were prepared for this and we are in a cyclical downturn in pricing in some other ways.

[Ethan Kramer Flood]

Yeah, Zach, my fill in the blank here is that tariffs will be unexpected for many. While companies know what's coming down the pipeline and know how to prepare, I don't think the same can be said about consumers. I don't think that many people actually know what a tariff is. According to the Peterson Institute for International Economics, tariffs could cost American households an additional $2,600 a year. That's a lot of money. Two thirds of Americans do know that tariffs lead to higher prices, but that leads a third of Americans not knowing that their bill is going to be higher at the end of the day. There's another poll I looked at that showed that less than half of Americans actually understood that American companies are the ones that pay the tariffs. So, like Ethan said, there will be additional Inflation in the years to come. A lot of people aren't aware of that happening. I think the only or the big positive here is that back in Trump's last presidency, similar tariffs were being implemented and a lot of companies had adapted their supply chains back then. So hopefully they have offshored it from being in China to other countries or here in the US So less impacts would have occurred than they did eight years ago.

[Oscar Orozco]

Mm.

[Marcus Johnson]

Excellent arguments. Just two things for me really quickly. I went and looked, actually, I think was in the. No. Yeah. This was in the article from Ginger Lee citing the National Retail Federation. What do they expect? They were saying in a report that Mr. Trump's proposed tariffs would be too large for US retailers to absorb, with the NRF estimating that the tariffs would raise costs across six retail categories, including apparel, furniture, and household appliances, by 362 to $624 per household every year. Ms. Lee does note that one offset could be Mr. Trump's proposed corporate tax cuts, which could benefit all US companies. Bottom lines, whether they use that to balance things out and keep prices low is another story. And the second thing here is how the tariffs have changed. Advertising, messaging. You're seeing more buy now before tariffs kick in. Messaging from folks like outdoor and sports goods retailer Tarp, Tent company, home furnishings, beauty brand Jolie Skin and others. All right, gents, that's all. We've got time for the game of the week. This week's winner, Ethan, is this week's winner of the game of the week. Very, very close indeed. Going out Strat, Ethan with nine points, Oscar and Zach with eight apiece.

[Oscar Orozco]

It's easier when you take more time. What's going on here? I'm joking, Ethan.

[Marcus Johnson]

That was the main game. Well played, gents. Ethan, you get the championship belt. And the last word.

[Zach]

I had almost as good a week as Juan Soto. This is. I mean, I. You know, Yankees.

[Marcus Johnson]

We do.

[Oscar Orozco]

You brought it up.

[Zach]

It was either 800-800-million, or it was winning this. And you know, that's close.

[Oscar Orozco]

765 million.

[Marcus Johnson]

How did they let him walk?

[Zach]

We tried to get a free year, right? We tried. It was basically the same offer for 16 years or 15 years. And he was like, why would I give you a free year? And that is a reasonable question.

[Marcus Johnson]

Boston Red Sox still regretting letting go of Mookie Betts. Pay the man. That's Pay the man.

[Oscar Orozco]

Mets fans are rejoicing. We are so happy.

[Marcus Johnson]

I bet, yeah, you're happy every year. And it doesn't always.

[Ethan Kramer Flood]

That's A lot of money to pay an athlete for a sport people don't watch.

[Marcus Johnson]

Just highlights.

[Oscar Orozco]

Zach is always on his reminder. He's a Gen Z, I'm a Gen.

[Ethan Kramer Flood]

Z. I don't have the patience to watch a full baseball game.

[Marcus Johnson]

We're lucky that you stayed this long. Let's get to the end of the show before he leaves. Congratulations to Ethan. He wins the game of the week and gets the championship belt. We move now before Zach walks away from the recording to dinner party. Dayton. This is the part of the show where we tell you about the most interesting thing we've learned this week. We start with our champion of the week, it's Ethan.

[Zach]

So as I mentioned in the kickoff, the holidays are here, which means that we're all doing our gift shopping, our Chrismaca gift shopping, as we call it, in my mixed household. So I, as I was shelling out dollars upon dollars, it occurred to me, or I decided to ask ChatGPT the question of who in the world or where in the world do they spend the most on Christmas gifts? I did ask for Christmas. I didn't put in Chrismaca because I was like, I don't think ChatGPT is ready to handle my Hanukkah Christmas.

[Marcus Johnson]

They were like, that was just a your household thing. Us again.

[Zach]

So I was like, in what countries, which countries do they spend the most per capita annually on Christmas gift gifts? And it gave me an answer. And this is from ChatGPT, so who knows, right? I take no responsibility for whether or.

[Marcus Johnson]

Not the tagline ChatGPT. Who knows?

[Zach]

I did give it a bit of a difficult question, but it gave me an answer with that kind of confidence that it always does. So the top 10 countries where they spend the most on where the average person spends the most on Christmas presents per year. Unsurprisingly, this is like, you know, advanced wealthy countries are going to be at the top of this list. Although, shout out to Mexico for making the top 10 real on Christmas. So the number one country for anyone have a guess? The number one country for capital spending, USA. No.

[Marcus Johnson]

What?

[Zach]

No.

[Oscar Orozco]

Huh.

[Zach]

Our forecasting team should have some sense of where the answer might be based on what of our colleagues. What one of our colleagues just did it is Germany. The average in Germany, the average per capita spending is $1,100 per person. And our colleagues just went to Germany to go to the famous Christmas markets. They're really into it.

[Marcus Johnson]

Oh, interesting.

[Zach]

Canada next at 946 and then the US at $826 per person. Now These are all some really big numbers. It drops quickly. By the time you get to the bottom of the top 10, which is the Netherlands, it's only $327 per person. So you have some countries where we really go for what you do. I've been spending a lot. I have not spent a thousand dollars this year because of the Canada, U.S. france, UK, Mexico, Australia, Italy, Spain.

[Marcus Johnson]

Is that why you're raising them? Just so you could beat Germany? Christmas markets. That's a great reason to spend money, though. They are fantastic. All right, very good. Let's move. Let's move to Zach.

[Ethan Kramer Flood]

My Darren party data is about time spending on your TV screens. Well, the average American household subscribes to three streaming platforms, and that time that people are spending. The time that people are deciding on what to watch is greater than ever before. Users on Netflix this year are spending on average 18 minutes to choose what they want to watch, an increase of decision making of 50% versus 2019. So choose what you want to watch and just prepare that. Come to holidays, when you're sitting next to your family to watch that next holiday flick, you might be spending a good amount of time to select through Netflix's 15,000 titles and its library.

[Zach]

That is an excellent stat.

[Oscar Orozco]

That was brilliant.

[Marcus Johnson]

Low, though. That sounds low because I spent at least 45 minutes and then leave because I've run out of time to do something else with my life. Very good, though. Oscar, what you got for us?

[Oscar Orozco]

Well, with all the violence we've had recently in the world, I wanted to talk about something lovable, cuddly, and heartwarming with my dinner party day. To Marcus. So what's cuter than an elephant? Right? Do you want to hug one of those? Maybe not. I love elephants personally.

[Marcus Johnson]

Maybe I'll get an elephant.

[Oscar Orozco]

Let's talk about it. Well, it was just something really, really interesting that was published in Paper. I love elephants. I don't know. Don't you?

[Marcus Johnson]

It's fair. They're adorable. I just. I don't know if that hugging one is maybe part of one's leg.

[Oscar Orozco]

Yes. Whatever it could be. Or the ears. But anyway, yes, there was an interesting. Just, I came across this interesting paper that was published, like, at the end of the summer that found that elephants make vocalization specific to individuals in their social group. In other words, elephants appear to have names for other elephants in their herd. So they're speaking to individual elephants and reaching out to them. So just to be clear, if you're an elephant, your name is probably like a low rumbling sound Something like that. Right. So it's not something that humans would consider a name. But nonetheless, in a herd, they all have different sounds that are assigned specifically to them. So it appears to be the first non human animal to address each other in a manner that way. And you know, for example, like dolphins and parrots, they imitate receivers calls. That's like the closest we've ever seen, but feels like elephants are the only animals so far that we're aware of that actually, you know, has names for each other in a group. So. And this was found out by analyzing elephants in a national park in Kenya. So that was really cool study and what they found out there.

[Marcus Johnson]

So it was cool. It was cool. The first time we had on the podcast as well, Oscar. Unbelievable. We had this one already. I said this one, right? Victoria. What? Victoria's like, I've got no idea.

[Zach]

I will. Don't worry though, that Marcus is equally guilty of repeating stats.

[Marcus Johnson]

Whoa, whoa, whoa. Where's this come from?

[Zach]

You did like you did the tree one twice the car with us doing.

[Marcus Johnson]

This for eight years. Come here, come here. Come me some slack.

[Ethan Kramer Flood]

Look at what he brought.

[Marcus Johnson]

How dare you just know.

[Oscar Orozco]

I mean, Marcus said after. It's a great stat.

[Marcus Johnson]

I don't know if listeners are listening to every episode we put out, although they should be. So people probably haven't heard this before or if they did, they probably weren't paying attention.

[Oscar Orozco]

When happened to me before I had another one ready. I do not now, so let's just move on.

[Marcus Johnson]

Unbelievable. No, it's really good though. I think Nature, ecology and evolution. I think it was published in that paper. But fascinating. It is really, really interesting that they give each other adorable names. Yeah, yeah, it's really cool. It's still a very good one. All right, folks, I got one for you real quick. Kids sports participation. What is the most popular sport for kids to play? So these stats are ages 6 through 17 come courtesy of Project Play and the Sports and Fitness Industry Association. So we'll start with how many kids play sports in general. So in the last 10 years, the share of kids participating in organized sports so that sports teams and sports lessons grew 6% from 55 to 61%, which is brilliant. Over that same time, though, the share of kids participating just on organized sports teams fell from 43% to 40%. So that's people going to play on sports teams where you get to practice a couple times a week as opposed to lessons and just the more kind of broader catchment of sports playing. Most of that drop is amongst Boys their share falling nine points from 50 to 41% over those 10 years. Whereas girls, sports participation grew one point from 35 to 36. And also minorities, that was a big reason that the number dropped. African American kids, their share participating in sports fell 10 points from 45 to 35%. Hispanic rates fell 4 points to 37. And white kids participation from 44 to 41. Asian and Pacific Islander rates ticked up a tiny bit. That was the only group to tick up by one point. So down across the board, yeah, most of those groups, but mainly minorities and boys, the most popular sports, kids on organized sports teams, this is. So let's go 6 to 12 year olds first. Although it's. Let me see, it's this. What? Number one and number two are the same for both. So what do you think it is about 6 to 12 year olds, the most popular sport?

[Zach]

I mean, soccer is the easiest one.

[Oscar Orozco]

Yeah, right.

[Marcus Johnson]

No, basketball, 14%. Basketball, 6 to 12 year olds, basketball 14%, baseball, 12 and outdoor soccer 8. All of those rates are down from 10 years ago. 13 to 17 year olds, it was basketball again, 16%. Then a big drop off to baseball, 9%. And then golf and tennis basically tied on 8% for those older 13 to 17 year olds. And also finally, huge variations by state in sports participation, school lessons or teams. This time, 70% of kids in Vermont play sports as the highest versus 41% of kids in New Mexico, the lowest 11 states in America have participation rates below 50%. Kids playing sports.

[Zach]

Those changes that you referenced earlier, those were based on change year over year or that was from 10 years ago.

[Marcus Johnson]

10 years 2013 to 2023.

[Zach]

Yes. Must be lack of funding, huh? Something like that.

[Marcus Johnson]

Yeah. People going outside less, maybe a bit on their phones more.

[Zach]

No pandemic release, right? Pandemic decline going back become a bit expensive.

[Oscar Orozco]

Massive too, perhaps.

[Marcus Johnson]

Prices. Yeah. People need that money for groceries potentially. Yeah. Yeah. The reasons behind this. Fascinating. So it'd be worth doing, digging a little bit deeper to figure out why. But yeah, a lot of those rates overall it had gone up a bit when you look at just playing any kind of sport. So that's positive. But when you look at people playing sports teams and certain groups of people, it is down. But yeah, that's what we've got time for for today's episode. Thank you so much to my guest, as always, thank you. First to Ethan, this week's winner of the game of the week.

[Zach]

You know it. I had to go out strong. Happy holidays and happy New Year, everyone. I'm the champ.

[Marcus Johnson]

Yes. Thank you to Oscar.

[Oscar Orozco]

Congrats, Ethan. And yeah, thanks for having me, Marcus.

[Marcus Johnson]

Didn't feel genuine, but you're welcome. Congratulations to Zach.

[Ethan Kramer Flood]

Thanks, Marcus. Looks like I'm officially a loser, just like my Chicago Bears. I'll go ahead and salt this out. There it is.

[Marcus Johnson]

That's too true. Thank you so much to Victoria. She edits the show, Stuart running the team, Sophie does our social media, and Lance runs our video podcast with our video podcast back again for you guys in the new year come January. Thanks to everyone for listening in. We hope to see you on Monday, though, for the behind the Numbers Daily. That's an E Marketer podcast made possible by Liveramp. Happiest of weekends.