Elan Lee wants you to convert part of your life into the storytelling experience

Thanks to a fortuitous mix of chance and invention, Elan Lee has found himself to be one of the few recognizable names in the transmedia business. With four separate companies (Fourth Wall Studios, edoc laundry, 42 Entertainment, and the “not worth mentioning” collaboration with Jordan Weisman called Myriad Mobile), a handful of patents, and a certain amount of reckless (or naive) experimentation, his projects have helped to define – or redefine – cross platform storytelling in the 21st century.

Last time we talked philosophy. This time we’re down to brass tacks: what works, what doesn’t, and what you do when you’re in the right place at the right time.

[This dude is dropping some serious insights - read closely, and between the lines - and you, Dear Reader, are better off hearing it straight from him. And he's a talker.]

Holy crap! Steven Spielberg walked into my office!

Phoebe: As a maker of ARGs, what are you selling?

Elan Lee: At first, when I personally started this whole crazy thing, it was not even a marketing effort. I can talk about where the first one came from, if that helps?

So, I was doing game design at Microsoft, and one day Steven Spielberg walked into my office…cause… Holy crap! Steven Spielberg walked into my office! And he basically said, ‘So, hey, your boss just bought the rights to my movie A.I. (A.I. Artificial Intelligence).’ And, the sort of fill-in-the-blank part there was that my boss really wants to get into Hollywood, and he bought anything with Steven Spielberg’s name on it. And he had signed us up to do a fighting game, and a racing game, and a gladiatorial combat game, and all of that sort of fell in my lap. And it was like, you get to build all these great games!

I went and watched the movie… Actually, even before watching the movie, we built those games. We actually built an A.I. fighting game for the Xbox, a racing game for the Xbox, and a gladiatorial combat game for the Xbox. And the problem with all those games was that an audience isn’t going to know how those fit together. They’re not gonna understand how the characters kind of move from one game, to the next game, to the next, especially with a franchise where some of them may not have even seen the movie.

So we thought, what we really need is just kind of like, the glue between those properties. So we thought, what if we built a game that didn’t actually live on any platform, it just sorta lived everywhere. And characters could call you, and characters could send you email, and the characters that you saw in one game could hop out of that game into the real world for a while, and you’d play along with them. And then they’d hop into the next game, and that’s episode two. Episode three they’re gonna hop back out into the real world, play with you, and then episode four they jump into the next Xbox game. So we built that, and we called it The Beast, because we didn’t know what else to call it and we thought it would be cool.

No one’s gonna buy these things

Then we saw the movie A.I., and… I don’t know if you’ve seen the movie A.I., but umm, you don’t exactly… It’s a movie about a fake boy who really wants the love of his mom and would do anything to be real, but at the end we realize he can’t actually be real and his heart is broken and he’s buried at the bottom of the sea forever… No one walks out of that movie thinking, ‘Oh, I can’t wait to play the Xbox game!’ right? You’re screwed. So me and my team walked out of the movie and just thought, ‘Oh, we’re so f**ked!’ We have nothing.

So we went back to Redmond and we canceled all the games. We just killed them that day cause we thought, ‘We have no chance, no one’s gonna buy these things.’ But as we’re slashing these games, we kinda realize ‘But that other thing, the glue, that’s still kinda cool. That actually has emotional resonance, and actually fits in really well with the movie, because it’s all about people’s real lives. And their passions and their hatreds and their conflict, and, it’s just gritty and real and awesome.’ And so we thought, ‘Well, we own the rights anyway, so let’s just release that, even though it’s not promoting any of our games.’ Even though it’s not carrying characters from one piece to the next. We built it anyway, so we might as well just launch it. And so we did. And it wasn’t meant to be promotion for the movie… it was meant as a clue for these other Xbox games, which no longer existed. So we had no agenda. I mean, absolutely no agenda.

And after about a month of running it, we kinda realized – this is really powerful. We’re onto something here. And so I went to my boss and said, ‘I wanna build more of these. This is cool, we’ve just entertained millions of people in a way that no one has ever entertained them before.’ And he said, “How much money did it make?” And we said, “Well, it didn’t make any money. It wasn’t supposed to.” And he said, “Well, go build an Xbox game, then.” And I thought…this job kinda blows. So I resigned from Microsoft, and started a company to build more of these things. And that’s even worse, cause now I wanna build these things that make no money…

Twelve hours later, Microsoft called…

Phoebe: What made you think you could form a company on the basis of this model when you knew…?

Elan Lee: Absolute naivete. I was so dumb. I just thought, this is really cool. This feels like more compelling storytelling than anything I’ve ever done. And I wanna just build them. And I can worry about the realities of… probably that I’m going to starve to death doing so. So, me and some friends literally started a company – we each put in a little bit of cash, and spent about twelve hours freaking out because now none of us have any income and we have no clients, and… Holy crap! What do we do now? And twelve hours later, Microsoft called and they said, ‘So, we’ve got Halo 2 coming out, and you guys are the only ones who know anything about the game (cause we were some of the original designers of Halo 1), and how do you feel about marketing it using that crazy A.I. thing you did?’ And we thought, ‘Uhh…Awesome! Okay!’

Phoebe: When you say twelve hours, do you mean literally twelve hours?

Elan Lee: Yes. It was a very tense twelve hours. … It was the silver platter. It was like, ‘Hey, how would you like to do exactly what you set out to do, and make money doing it?’

It was total wild west

Once we realized that there was money in marketing, and that in fact it was the only revenue we could come up with, then we just went full steam ahead with that. And we said, ‘Alright, let’s become a marketing company. And that will let us fund a lot of this research on someone else’s dime. Cause it really was research at that point. I mean, there were no rules. It was total wild west. Who knows what the hell is gonna work? …

So, 42 Entertainment was built as a marketing company. And to answer your question, ‘What were we selling?’ We were absolutely selling promotional materials. We could walk into most marketing firms, most giant studios, and say, ‘Your revenue model is dying. People are learning how to skip commercials, they pay no attention to billboards anymore, they have absolutely no tolerance for banner ads and every day that gets worse. But we just finished two projects in a row that had unprecedented numbers…’ It was a really easy business. I mean, it was such a compelling case that we could make to say, ‘We have a mechanism by which you can entertain someone in a new way.’

If you fast-forward that about seven years, now it’s impossible to launch a movie, or a TV show, or a rock album, or a videogame without an ARG. Everyone’s doing it. Or, at least, what they call ARGs. Because the traditional stuff doesn’t work, and it’s only the tent-pole projects that a company is willing to put so much marketing money into. Those things work, but everything else needs some edge, it needs some hook. And the irony of the whole situation is that ARGs are no longer an edge or a hook. They’re just commonplace now.

“ARGs” is such a stupid term that no one knows what it means

Phoebe: Well, commonplace, I think, to a certain subculture. A certain niche of people that are technologically proficient… I mean, even though I have a media-engaged background, I have never accidentally come across the rabbit hole for an ARG.

Elan Lee: Fair enough. Nor have I. In fact, I’ve never actually played one. So… (He laughs.)

Most marketing companies, at this point, will call whatever it is they’re doing an ARG. Because what they’re doing is basically saying ‘Let’s do traditional marketing, plus a Twitter account. Let’s do traditional marketing, plus a weird interactive website with a flash game on it.’ And they’re calling that stuff ARGs because “ARGs” is such a stupid term that no one knows what it means. So that stuff I think is actually commonplace – the things that they’re calling ARGs I think are commonplace, and most people at least know they exist. Every movie that comes out, you at least know how to find the website, if you wanted to. And if you were to go there, there would be some embedded flash experience, or there would be a link to a Twitter account, or a link to some other weird thing if they’re more elaborate.

An actual ARG, in the sense of what I Love Bees was, or in the sense of what A.I. was, and the few that we did after that…those are not nearly as commonplace. And those are – very much to your point – entertaining the hell out of that same group of hardcore geeks over and over again…

There is no upside to trading time for money

Which is exactly why I resigned from the company. I woke up one morning and realized two very important things: one is that I’m really good at entertaining the hell out of that small group of people, and two is that there is no upside to trading time for money. In other words, I only make money if I put time into this. And the moment I stop putting time into this, I stop making money. And that’s a service industry. That’s not a happy moment for me. I’m very uncomfortable with that.

And so I started–with some friends–Fourth Wall Studios because I wanted to change that. I wanted to not only entertain the same million people over and over again, but I also wanted to build things with permanence to them, so that even once I stopped pouring time into them, they would continue to generate revenue.

And so now what I’m selling – this is the longest answer to your question ever – so now what I’m selling is a true media experience with built in revenue models, established revenue models. We’ve got some that have microtransactions, we’ve got some that we’re building actual TV shows so those have ad sponsored revenue models built in. People already know these. We’ve got some with text messaging revenue models. We’ve got a book coming out that’s got a built in revenue model. All of those things, what we’re essentially selling to the user is…it’s everything you know, but the coolest version of it you’ve ever seen. Here’s a book! You know how to buy a book…here’s the coolest book you’ve ever seen. Here’s a TV show. You know how to watch commercials in a TV show, but it’s the coolest TV show you’ve ever seen. That’s the new proposition: it’s what you’re used to, plus.

It’s just a psychological manipulation

Phoebe: Now I guess what you’re doing with Fourth Wall is a slightly different take on embedding a business model into the delivery of your story, which is clearly a huge evolution from what you were doing with 42. Most of us, when we think about funding an “interactive experience” (for lack of a better term), the introduction of a new business model is often a hard sell. Especially because people in the media industry are trying so many different things and so many of those things are failing miserably.

Elan Lee: Yeah.

Phoebe: And so you go back and look at the marketing model that 42 was using, and you go, ‘OK, but still every marketing person is asking me about ROI and “Engagement”.’ And if I’m only selling the same story, or a different story to the same market, even if those people are fully engaged – which they may be – it doesn’t necessarily translate to selling products.

Elan Lee: There’s a few answers to that. First, let me put my 42 hat on for a second and answer that specific one. Whenever we took on a new client at 42, we would ask one very important question, which is: ‘What are you guys gonna use to judge the success of this project?’ Not, ‘What does success mean?’ but, ‘What do you think?’ And oftentimes, they would answer, ‘Oh, we just want column inches. We just want reporters all over this.’ And so we would tailor things to accomplish that very specific goal. Or they would say, ‘We want to sell movie tickets.’ OK, so we’re gonna tailor that. So, there’s tricks you can use to do exactly that, even if  you don’t have a lot of players, you can tailor it to get a sh*t-load of press, or you can tailor it to get massive traffic to a website, even if it’s the same people over and over again, right? You can encourage repeat behavior… So that was one thing that we’d be really clear on: ‘What do you want to get out of this?’ And we’re gonna give you that. And we were very successful at that because it’s just a psychological manipulation…(He laughs.)

It’s not the game that has to be entertaining, it’s the players

The second thing is… Have you ever seen that inverse pyramid of the players?

So, the goal there, what we were always able to say which I think was actually really true, is: If you can build the game that has three core functions – one super hardcore thing that’s gonna keep the players engaged…and it’s gonna be hard and complicated and geeky, and all that’s actually good, cause those are the guys that are going to keep coming back. If you can build one medium engagement thing, so that you can play ten minutes a day–a flash game is a great example of that–then you’re gonna keep that middle group occupied. And, if you can build something that only takes ten seconds, like a really awesome website, something super spooky happens when you’re visiting, or you call a phone number. Then you’re going to get that upper crowd.

When it works right. When all those things are powering each other, what happens is, you get the bottom group entertaining the top. So, the core players are entertaining the medium players, the medium players are entertaining the really casual people. Cause they’re watching, like ‘Oh my god, these guys are going out in hurricanes and answering payphones!’ And you have all that insanity. And what happens is that triangle grows, because people from the top, every once in a while they trickle down to the middle. And people at the middle level start to trickle down to the bottom level. And that bottom level grows when there’s more core players doing more and more and more, the whole triangle grows because now there’s more to be entertained by. And although it looks like a triangle, it’s actually a circle. And if you build it the right way, you can get the player–nothing attracts a crowd like a crowd–you can get these guys to generate the viral spread for you. Because it’s not the game that has to be entertaining, it’s the players that have to be entertaining.

You don’t have to teach your customers how to spend money

Phoebe: So, back to Fourth Wall…and rather than selling somebody else’s product, selling your own original IP [Intellectual Property] in new forms… It sounds like you’ve already experimented with a number of different models, so what have been the most successful? Where do you wanna go?

Elan Lee: The two that have been the most successful so far is actually edoc [that's edoc laundry] clothing company – selling shirts, or clothes, makes a lot of money – and Cathy’s Book makes a lot of money. And I think the reason those two make a lot of money is because they’re established revenue models. If you have to teach someone how to spend money, that’s a loooooong road. So, using those established mechanisms is really good.

We have a lot of other mechanisms. One of the projects that we’re starting to develop right now – actually, the one I’m most excited about – which I can’t say too much about… is… how do I phrase this without totally screwing myself over? OK. (He pauses.) There’s a way that we all behave online. Nope, that’s a bad way to say it… OK. (Another pause.)

Here’s a statement: Marketers spend billions of dollars every year to make television commercials to get you to look at a product. Another statement is: Marketers spend a nearly equal amount to build banner ads to get people to redirect their behavior to a certain URL. To move their eyeballs to a certain URL. I think those are both true statements. OK. We have an experimental revenue model that I’m very excited about, because what it does is it makes part of gameplay moving your eyeballs to very specific websites, over and over and over again. And because that has such tremendous value, I think it’s a revenue model that you don’t have to teach. That you don’t have to teach your customers how to spend money. They just do it. And that has incredible value to marketers.

Let’s call that chocolate and peanut butter

I realize how nebulous I’m being about that, but if you look at it in that very abstract way, there’s something kinda beautiful about that, right? There’s value in people looking at your thing online, and the game is built out of things online, so let’s call that chocolate and peanut butter and put those things together, and build something where everyone wins.

Phoebe: So, if I can summarize: You’re talking about building a revenue model that is based on existing behaviors?

Elan Lee: Correct.

Phoebe: You’ve also had an opportunity with Fourth Wall to explore your own IP, instead of leveraging existing IP. And it seems like you’ve had a lot of opportunity to experiment with different media. Can you talk a bit about that?

Elan Lee: None of those have launched yet. However, we have started the process of writing and selling scripts in Hollywood. Some are television shows, some are webisodes, and some are feature length films. They’re all properties that we wrote in-house. And they’re all properties that have the interactive components baked into the DNA of the property. So, while it is possible to just sit back and watch a TV show…cause that’s not massively broken, and enough people know how to do it.

Lean forward and live in that world

All of the interactive components are an extension of that same experience across your cell phone, across your email address, across your facebook page. And rather than the interactive elements feeling like a marketing thing that was slapped on afterwards, what we’re trying to build – and what’s so exciting – is… When you participate in passive media, when you watch a TV show and watch a movie, you are sitting back. It’s a lean-back experience. And our claim is, in addition to that, the opportunity to then lean forward and live in that world – so that, when you decide to lean back again and watch the characters, they’re just continuing where you left off. My assertion is that that is the future of entertainment.

And getting to work with media where they let us play with that, and fund massive projects geared to not entertain that same million people who look for those marketing projects, but instead geared towards the 30 million people that are going to watch a TV show and then hopefully say, ‘Oh, there’s more? I wanna see what the more is, I wanna see what else there is.’ That’s a much more fun sandbox to get to play in. So, that’s what I’m excited about right now.

I’m sooo happy American Idol exists

Phoebe: Do you think that shows like American Idol, which are scratching surface of some type of audience interactivity – do you think that’s going to help with educating an audience so that they can deal with a cross-device experience?

Elan Lee: Yeah. For sure. I’m sooo happy American Idol exists. And I’m soo happy it’s doing as well as it is. Well, I guess it’s sort of declining a little but…what a run, right? I think that they showed…they took the first and hardest step in this process. They said, ‘For a massive audience, they are not gonna be scared to interact. And we’re gonna teach them over the course of many years how to do it. And we’re gonna reward them along the way, and we’re gonna introduce conflict along the way, and we’re gonna make it part of the experience. Part of the experience of American Idol is picking up another device – a computer or a phone and doing something. And we’re not gonna punish you for that, we’re not gonna make it complicated. We’re gonna make it fun and easy. And that’s the hardest damn step. And they did such a phenomenal job at it! Now, what’s even more exciting is what comes next.

You can just do it. Just do it today, this afternoon.

Phoebe: If I want to grow up and become a “transmedia designer”, what do I do? What’s the path for that?

Elan Lee: Right. Well, the shortest path is build one. What’s really cool about all this stuff is, you can just build one. If you’ve got a microphone and basic HTML skills, or a friend who has basic HTML skills, you can build one.

I think we’re in this phase that I call ‘wild experimentation,’ and no one has any idea what’s gonna work. There are certain lessons out there, but there are no rules. Everything is worth trying. And it’s rapid prototyping, and it’s rapid failure, and it’s wild experimentation. And for anyone who wants to grow up and be a ‘transmedia designer’…there’s no growing up involved. You can just do it. Just do it today, this afternoon. And those lessons that you learn there are what transmedia houses are looking for. Anyone who’s got any experience in this at all is what they’re looking for. But in success, and even in moderate success, people come to you and say, ‘That was awesome! What’s next? What are you going to build next? And can you slap this onto my product? And here’s some development money, and can you build it bigger and better and involve this thing instead?’ There’s quite a boom in this industry right now, because no one’s good at it. And there’s huge potential.

You get to convert part of your life into the storytelling experience

Phoebe: What’s been interesting for me in watching the development of this whole, quote-unquote transmedia environment, has been the role of academia and the media itself shaping the way people understand what it is. I mean even the term “transmedia” is not… I mean, did you coin that term?

Elan Lee: (Shakes his head.)

Phoebe: Right. So, the definitions have influenced what people expect. For example, there seems to be a set of conventions that go along with an Alternate Reality Game. And even within this frame of wild experimentation, it appears that what people are looking for is something formulaic… What do you think of when you think of an Alternate Reality Game? What does “transmedia” mean to you? Or does it have any meaning?

Elan Lee: I think that all it really means is that you get to convert part of your life into the storytelling experience. And the best ones are the ones where you get to define what part of your life that is. I don’t think there’s any formula about what it has to include or what it shouldn’t include. I’m such a huge fan of making people feel like superheroes. I just think that’s the key to everything. And so, if you can get someone to invite your story into their life, and what they’re gonna get in return is to feel like a superhero for doing so…that’s the ultimate transmedia experience. And I hate to define it more than that. I really think that’s the core of it.

Phoebe: More like transcendental media?

Elan Lee: Yeah! That’s a great way to look at it. (He laughs.) Yeah. I mean…I’ve had small experiences watching TV or movies, where I felt like a superhero just voyeuristically, but it wears off immediately. You know where the border of that TV is, and I know if I look to the left it’s not the TV anymore. That’s the wall of my apartment, and that’s the not having that experience anymore. And so transmedia is one where we say, well, the border doesn’t have to be there, the border is wherever I want it to be. And I really believe that’s the future of entertainment.

[But wait! There's more. Next time we'll cover Elan's take on creativity, and what makes him more successful at this than you.]