This week: we discuss the economics and business behind the New York Times’ decision to buy popular internet game Wordle.
Sandra Peter (Sydney Business Insights) and Kai Riemer (Digital Futures Research Group) meet once a week to put their own spin on news that is impacting the future of business in The Future, This Week.
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Kai So Sandra, what are we talking about?
Sandra Oh, there's lots of really difficult things continuing to happen, and we've been talking about this on the podcast for the last couple of weeks, really. The continued conflict in Ukraine is difficult not only in the way it unfolds, and the severe consequences for the people involved in the conflict and the millions of now refugees, but also in terms of its long-term consequences. We're already seeing the prices of things like petrol and wheat going up, really threatening global food supplies for the foreseeable future, but also, fuel prices and supply chains of many, many products and services are being affected. So an ongoing tragedy, also affecting lots of organisations not directly involved in the conflict that have been pulling out of places like Russia and Belarus for the last couple of weeks.
Kai This comes on top of an already disrupted supply chain situation through COVID. Around the world, increasingly also in China and Southeast Asia, have already disrupted global logistics chains that were just about starting to recover are now hit by increased fuel prices, disruptions around air traffic and air freight in the Ukraine/Russia region. And also Ukraine, which is a large food supplier adding to problems in food supply chain, so a lot of problems unfolding, the effects of which will only become clearer in the coming weeks and months.
Sandra I'm sure we will continue to come back to these topics week in and week out on The Future, This Week. But maybe for a brief reprieve let's have a quick look at some good news, because there has been a couple of good news in the sea of uncertainty.
Kai And since you mentioned the sea, one of the long-lost ships has finally been found in the Antarctic.
Sandra Yes, Shackleton's ship that went down more than 100 years ago.
Kai The Endurance has endured basically.
Sandra Has basically endured almost untouched under 3000 meters below the ocean's surface in the Antarctic waters and has been found just last week, interestingly, using an autonomous underwater vehicle. And it looks exactly the same as the day it sank in 1915.
Kai Which is due to cold waters, I presume.
Sandra And the lack of things wanting to eat the ship because the water is so cold that they don't live there. The Endurance has this mythical place in kind of Antarctic history because it did sink, and the crew led by Shackleton...
Sandra Sir Ernest Shackleton, yeah.
Sandra Made this daring escape in little lifeboats. And they crossed the sea. They made it to South Georgia before raising the alarm and being rescued like almost a year later. So this daring adventure, but he also managed to take these pictures as the ship was going down. And 100 years later, it looks pretty much the same as the day it went down. So an amazing discovery, and also a different lens on Antarctica, we often discuss Antarctica these days in terms of the effects of climate change on the ice shelf there and on the water and on the wildlife there. But Antarctic also has this rich human history that this is an important part of, so a good news story.
Kai And so what happens now, is there any way to retrieve the shipwreck or will it just stay there, and we'll have autonomous vehicles surrounding it and sending us pictures? Is there any plans to do anything with it?
Sandra My understanding is that it will stay there with everything on it just as the way it went down. And researchers will use autonomous vehicles and other ways to survey it and to understand a bit more about its condition.
Kai So from the high seas to the skies, I found an interesting good-news story which concerns Swiss airline SWISS, which is owned by German Lufthansa, I want to mention. It's the first airline to sign up to fly with renewable energy. And they're using an innovation called syngas, which is a synthetically produced fuel that is identical to fossil fuel but is carbon neutral. And it's also described as 'liquid sunlight'. It's done by a company called Synhelion. And they invented this quite amazing process by which they capture sunlight with gigantic mirrors, bundle it, create 1500 Celsius heat, and then liquefy gas and carbon dioxide into syngas, basically.
Sandra And then they use this to power commercial flights?
Kai The idea is to do this fairly soon, it will be ready by 2023. And it is carbon neutral, because you are basically taking carbon to produce the fuel, which is then burned up and released back into the air. So you do not dig up fossil fuel to add it to the atmosphere, you take carbon out of the atmosphere to produce the fuel, which is then being released. So it's quite a genius invention. The question is, how much can this scale, how many airlines can use this, but I think it's an interesting step forward to long-term sustainability of air travel.
Sandra Sounds like a really interesting story we should keep an eye on. But speaking of scalability, there is another good news story that, if they do pull it off, would make a really big difference to the environment as well. The Wall Street Journal reported that Starbucks wants to ditch disposable cups, like, for good. So the idea here is that Starbucks, the American coffee chain, is trying to rethink its disposable cups and is experimenting with reusable cups with the idea of getting rid of all of their single use and plastic cups by 2025, which is not that far into the future.
Kai And it's not insignificant because of the sheer size of Starbucks is one of the largest fast food or coffee chains in the world.
Sandra Their waste and their footprint is actually quite significant. And obviously, so are the sustainability concerns that our customers have. So this would be a really interesting movie, if they managed to move towards only having reusable cups within three years.
Kai So this sounds like a good start to make coffee more sustainable. Starbucks, who want to ditch disposable cups. And speaking of start and ditch, ditch would be an excellent starting word for Wordle.
Sandra Yeah, that's actually one story that both of us, and a few other people on our team, came across as well. It's not been a while since the New York Times bought Wordle, and it's still on everybody's mind. And now that the novelty of the move has worn off, a number of outlets have started looking into the economics and the strategy that was behind the New York Times acquisition of the game Wordle.
Kai So we're going to discuss Wordle, the business behind it, why the New York Times might have done it. Let's do this.
Sandra Let's do this.
Intro From The University of Sydney Business School, this is Sydney Business Insights, an initiative that explores the future of business. And you're listening to The Future, This Week, where Sandra Peter and Kai Riemer sit down every week to rethink trends in technology and business.
We are finally going to talk about Wordle on the podcast.
Kai It had to happen.
Sandra And there was a story in the AFR this week on, "Why on earth did The New York Times buy free puzzle game Wordle?"
Kai So about two months ago, The New York Times bought Wordle, which had become an internet sensation, a social media sensation.
Sandra And the article tries to unpack whether this was, you know, a stroke of genius in terms of strategy from the New York Times, or just the New York Times getting on top of a trend of a very hyped-up app. So we thought we'd try to unpack the business decision that the New York Times made. And think a bit about what it tells us about only the future of newspapers, but the future of marketing and indeed, of short or long-term lived trends.
Kai So what is Wordle? I mean, both you and I have played it before, but we're not regular players. We're not experts, but we know someone who is.
Sandra And we've just heard his voice a couple of minutes ago because he does the intros and the outros to our podcast.
Kai So do not be confused when you hear His voice. This is not the end of the podcast. He is a guest this time.
Sandra So welcome, Pat.
Pat Hi, Sandra. Hi, Kai. Thank you very much for having me.
Sandra Pat Norman, who's on our team and is a regular Wordle expert player is going to tell us a bit about what the game is and how he plays it.
Pat Yeah, and excitingly, I have a huge collection of people who are super-engaged with Wordle. And that's, I think, part of the excitement of this particular tool. So basically, Wordle is a game where you start with a panel of black boxes, and you've got to guess a word,
Sandra And this is the five-letter word, right?
Pat It's a five-letter word. So you get your first guess. And if you've got the right letter in the right place, it'll have a green box. And if you've got the right letter in the wrong place, you'll have a yellow box. And if the letter doesn't appear in the word, it'll have a black box. And so each time you take another guess, hopefully build your way up to achieving that word, and you get six guesses. If you don't achieve it, it says, 'Oh, I'm sorry you failed', and tells you what the word is for the day.
Sandra And then you can try again tomorrow with a different word.
Pat A completely new word. The exciting thing about Wordle, I think, is that everyone in the world within a particular time zone, this is very important if you have friends in Germany as I do, everyone in a particular time zone will be looking at the same word each day. And so while Wordle has got that private function of like, wake up in the morning, challenge yourself, can I achieve the word how quickly can I achieve it? There's also this social function where you can share your result online. And that's probably what you saw a lot of happening on Twitter and on social media, people would be sharing these grids of boxes, and it just says Wordle, and a number next to it, which is the sequence number of Wordle and their score for the day. And so it was getting all this sharing on Twitter, and that's what made it this huge viral phenomenon.
Sandra So this is like, did I get the word in two tries, or in five tries?
Pat 100%. If you've got two rows, you've achieved it into tries, you're amazing. What a hero. If you've got one row, it's a fluke. But people still brag about it, even though you've won Powerball, you know, you happened to pick up the word in one go, good on you.
Kai It's completely because you put in a starting guess, which is just your word. And you know if that's the word on the day, you got lucky, right, but you didn't actually put any brainpower into that.
Pat Interestingly, though, people have different approaches to their starting word. So for the longest time, I would use the same starting word, my starting word is teach. Because it's got, you know, a couple of very common vowels a and a, it's got some quite common consonants T, C, H. But it's also got that CH combination, and an EA combination. So I thought to myself, this is a great starting word, and it's going to really help me. Some friends of mine take the chaos approach. So they'll just pick a random word every morning. And I actually switched to the chaos approach by the end of our sort of massive competition that was happening with our group of friends, because we had our own sort of system of scoring within our group that required me to basically try and nail it in one guess, which is really difficult to do. And the strategy is really important here, because after you've done your first word, how do you tackle the second or third words? I would always say, right, these are the letters that I've got, what sound combinations can I make with those letters and try and work through this word really, really strategically. And sometimes that would have me sitting there thinking for a very long time. Then I've got other friends who'd want to eliminate as many letters as possible. So their second guess, would have none of the letters that they used in their first guess, which I was horrified by, seething with rage every day when I saw this thing, how can you do that? You're throwing away guesses, but it would prevent them forming what we called canyons, which is if you get green letters for, say, the second and third letter of the word and a green letter for the fifth letter, but you can never pick that fourth letter, you end up with a canyon.
Kai Oh, we did todays, earlier. And basically, I had the word, but I didn't have the starting letter. But there was like, a handful of letters that would work.
Pat Yep, canyons.
Kai I got it in five tries. In the end, the word which isn't great. Didn't quite fail. But then you get stuck.
Pat Canyons are an absolute trap.
Sandra And part of the appeal of this is exactly what's going on here. And what you're describing Pat, is that there is some sort of kind of limited range, that there's one word every day. But then there's this whole community of everyone guessing the same word, at the same time, and people talk about it, there's a huge community on Twitter. And then people have this private communities in which they discuss, so it's got great appeal. And it is free, right, even before the New York Times bought it, and for now, the game is completely free.
Pat So it satisfies this private urge for a sense of mastery over something because you achieve it. And it's the same as playing any kind of single player game, you feel like you've mastered something. And then it adds this social overlay where you're talking to your friends, hopefully about strategy, what did you think of the word, wasn't it horrifying? One day, this word came up, it was an American spelling. And nobody was getting it, it was taking five or six guesses for everybody to get it. And just the fury that bubbled up. And we could share that fury with each other every day because we're having the same
Kai What was the word?
Pat I can't remember the word.
Kai Was it labor or something?
Pat Something along the lines of labor, but labor would have been too obvious. But oh, I’d have to go back through. But all the articles that you read online talk about that particular day.
Kai Yeah, because labour in the civilized part of the world is a six-letter word, right?
Pat One of the interesting things that people kept saying about Wordle though, before it was acquired by the New York Times, is how 'pure' it felt. And that's probably what was socially a jarring thing about NYT acquiring it, was that something that was created by a guy to play a game with his partner, or so the story goes, so they could just have this fun game together. And then it just caught on, virally online, felt so pure. There was nothing complicated about it. And then in becomes the New York Times and acquires it. And a lot of people said, 'Oh, it's just not the same anymore'. And there was this flurry of people saying was really difficult. By chance, the first four or five words after the times acquired it were really hard words.
Kai Oh, there was this whole narrative that they ruined it. That's actually when I first heard about Wordle, interestingly. I wasn't aware of it because it didn't hit my social media feed, and I'm not that active on social media these days. And then that's the first time I actually played Wordle, but I never got into the social aspect of it. So, you know, I don't play it for days, and then I go on it, and I do one. But I can see the appeal, when you're sharing it, and you're all on the same day, everyone does the same thing, right? It satisfies something that goes beyond just the individual challenge.
Sandra And two things to kind of highlight there, one is that it really did grow that fast. Like in November of last year, there were like, less than 100 people playing it. And by January, like a couple of months later, there were 300,000 people playing it. And now there's millions and millions of people playing it, hundreds of 1000s in Australia alone. Without any, you know, ad or other revenue, like this company wasn't doing anything other than being a great little game that people would share on social media. And the second is, well, it kind of worked. You heard about it when the New York Times brought it on. So it did work.
Kai Yeah. And I think it satisfies something in us because we live in a world of hyper-personalisation, right? You go to streaming platforms, everyone gets their own TV program. So you don't go back to the office, everyone have watched the same TV show. That happens very rarely, with some TV shows that, you know, reach that level of awareness that everyone watches it.
Sandra And we did Squid Game on The Future, This Week.
Kai Yes, Squid Game, exactly. That was one, Game of Thrones was one. But it doesn't happen very often. And so Wordle satisfies that void, where we don't have that thing that we share, and you have something that is very simple that everyone can relate to, that can be a topic to banter, to talk, to compare.
Pat I think there was also another function that Wordle had. And it's really interesting that you raise the idea of streaming and television. You only got one word a day, and that was it, it was absolute restraint, you couldn't do more words, you couldn't keep playing the game, you couldn't binge Wordle, we were all on the same page playing the same game, and then talk about that same game. And it's in the same way that I mean, I'm, I'm a big fan of streaming shows that drop weekly, because it gives us a chance to talk about it for a week, so it reinvests that social aspect. So it shows like Squid Game, or you know, Netflix series, which are often dropped in one bingeable set, you consume it, and then it's done. And there's none of that joy that comes with sharing with other people, at least over a longer term. And I think Wordle sort of preserved that in a way by limiting our ability to play more.
Kai So you get that, you know, thing that you can talk about at the coffee machine or the water cooler, you get both reminiscing about, you know, yesterday's, talking about today's and then the anticipation of, you know, 'what am I going to do tomorrow, you know, am I going to change my strategy? How am I going to approach my next Wordle?’
Sandra So, Wordle kind of becomes this thing, right. And it's not just for individual people. Domino's Pizza was using it in ads, like these little squares from Wordle. And there were like a couple of rock bands mentioned in one of the articles that were using it to like create advertising campaigns because it became such a recognisable social meme.
Kai Yeah, the graphics started to be everywhere, and would be adapted. It became like an iconic visual.
Sandra So then the New York Times goes and buys it fairly early on in the process. So people began asking whether this is like a really strategic move on behalf of the New York Times or is it really just a getting on top of a fad or a trend that will die off fairly quickly. And the word on the street is that they paid somewhere in the low seven figures. The Fin Review article says it's 3 million US dollars, but I'm not quite sure the actual price was ever disclosed.
Kai Probably not. But in that vicinity. So a low seven figure US dollar number. And the question then was, did they overpay for something that is just a free game?
Sandra Well, one argument would be they didn't, right? Reaching millions of people who play this every day for a couple of million dollars is not a huge price to pay. Like if you think about what it would take in terms of like traditional advertising or daily advertising on Facebook or on other platforms, that would cost the New York Times tons more money than they paid for Wordle. So in that respect, it's probably a really, really good investment.
Kai Yeah, there's all these articles online that sprung up immediately, like, 'Oh, this will move behind a paywall'. Because of course, the New York Times has lots of content behind a paywall. It also has some free games, but there was immediate calls, which said, 'this will definitely move behind a paywall, and it will ruin the game'. Which it would because it would take away this free social aspect. But so far, it hasn’t, and I think there's good reasons to believe that it will neither move behind a paywall, nor will they pollute it with advertising. And then the other argument was that they will use this to convert people into subscriptions. But they don't seem to do that actively either. It's not even very evident that it is a New York Times game when you go to Wordle. If you go to Wordle straight from Google, it looks very clean. And you have to actually go to the navigation button in the corner to get any New York Times content. So so far they have preserved what the game looked like.
Sandra I'd argue that there probably is a reason to buy to convert, because if you think about what the New York Times has managed to achieve over the last 10-15 years, was this incredible growth in subscriptions, right. That's how the New York Times makes its money currently. And I think the numbers for the last three years were subscriptions going from 4 million to 10 million users, and they're looking at getting another 5 million people over the next five years. And people do subscribe, remember, not just to the New York Times, but they could have a subscription just to New York Time recipes, or just to New York Times games, right? So there's a number of things that they could be incentivizing people to take a closer look at.
Kai And the New York Times has a very good reputation when it comes to games. The New York Times crossword puzzle is an institution. It's a long standing and well-known game that has a large followership and the maker of the Wordle game actually was inspired, apparently, by the New York Times approach to games. And so was very happy, and he said it was very fitting that the New York Times would now look after Wordle, that it would become part of their portfolio. So brand-wise, from a New York Times point of view, it actually fits quite well to have, you know, what you could argue is like an emerging classic game as part of their portfolio. And even if the hype subsides, Wordle will likely always be a fairly recognisable game, because that history is already there, even if it's a very short one.
Sandra It's interesting to consider, though, whether Wordle is kind of a long trend or a short trend in internet times. Because in, you know, this era of TikTok challenges and things just come and go, and even kind of longer things like Squid Game, Wordle is something that's been around for quite a few months now, so it's kind of a longer internet trend. But is it going to be a classic? Or is it a classic already? Pat, you've been playing this for a while. Do you reckon this is just going to become part of your daily routine?
Pat I feel like you only have to look at some games that come and go and some that stick around. So Candy Crush is still enormous, absolutely enormous.
Kai What about FarmVille?
Pat Well, FarmVille, interestingly, makes about $200 million a year worth of cash, still.
Pat So it's still around, but you don't talk about it anymore. So I imagine that what will happen with Wordle is that it will become you know, an ongoing game and will become a classic. But it's not going to be part of the zeitgeist in the way that other fads are.
Kai So it might still reach a lot of people for the New York Times, even though the craze on social media, the visibility, and the traditional media picking up on what is happening on social media, might no longer be there, you know, if we look forward. Is that what we're saying?
Pat I think so. And I think one of the really interesting things has been the way, even amongst my group of friends, the conversation happens less and less every day, there's less and less squares traded with each other. That may also be because we banned it from the main conversation and said, ‘everybody have the separate Wordle or conversation, please’.
Kai Because it dominated everything.
Pat My life.
Kai I think that's where the question of why did they buy it is interesting, because for the New York Times, it's probably already paid off, because they got all this free publicity out of it. And they still own the game, with that daily engagement that might still happen, even though the conversation moves on. Which raises the question more broadly, how do you engage with these phenomena as a company, you know, when you want to buy into or get a slice of this internet hype, these trends that happen?
Sandra Probably on the one hand, just accepting that many of the trends these days are really short-lived trends, right? The sea shanties are pretty much done and gone, people might still be buying tracksuits because you know, they've just come to watch Squid Game, but that fad has kind of passed, so people producing lots and lots of tracksuits or chess sets might want to stop doing that. But there are other trends, as you've mentioned, some games, some things that have lived on, and for Wordle that might just come from the association from being bought by an institution that kind of sits outside of these trends. So most of these trends do come up on TikTok or on social media, where they often get crowded out by other similar trends. But putting this in an institution like the New York Times sets it apart from the daily social media hype and gives it the chance to become something else.
Kai And to survive and to you know, remain. So what I hear you say is that, actually, rather than being suspicious, and assuming that they will use this to drive people behind their paywall, it might actually be a good thing for both parties. The New York Times getting access to large groups of people, but also for the game to become part of a collection of classic games that will persist long beyond the fad and the trend, which might otherwise not be the case. Because if you don't have that institution behind, it, maybe wouldn't exist in a few years’ time. We need to wait and see what will happen. But it is interesting to see how you engage with this. And in this instance, we're talking digital, right? Sometimes it's very hard to engage with these large-scale phenomena that can be very short-lived, you mentioned tracksuits. When you go to the physical world and you go to the world of producing physical goods, you can be caught out by a short-lived trend. If you buy into it, you'll produce a lot of stock, and then you know, attention moves on, the Eye of Sauron shines on something else. And you're left with, you know, warehouses full of Squid Game tracksuits that no one wants to buy anymore, because the latest craze has moved on to something on TikTok or something else.
Sandra But in a way, that's where the genius of the New York Times movie is. In that they didn't actually buy the hype, they bought the audience that the hype had at that moment, and the audience is likely to stay on their website, accessing other products and services. So it's not so much about the hype, but it's about buying the access to the audience. So even if the craze does move on, they've still managed to get a lot of the people who are part of this and bring them into the fold. And again, we've spoke about this before, but the move that The New York Times has managed to make away from ad revenue and to subscription and to people coming back to their website and paying for access to information has been tremendous. And it's one of the few success stories from the traditional media that have survived the continuing decline in ad revenue that all the newspapers have experienced.
Pat So for players like me, and for somebody who actually cares about that social interaction, I think the other reason The New York Times move is smart, is because the New York Times has a particular set of values that attaches to its brands. And the idea of preserving something like Wordle as a social good, as a way for people to connect with each other, as a way to have fun, aligns really closely to what I expect from the New York Times. And I'm a subscriber to the New York Times, so it doesn't faze me that Wordle has been acquired by them. But I do like the idea that when the creator Josh Wardle of Wordle said that he can't sustain this tool for the levels of popularity that it's reached. This is a way for a company to come along and take something that is a social good and preserve it for a much longer time for more people. So I think that's a wonderful thing.
Kai So what we can conclude is that it is a great fit for New York Times as a brand. It fits with, you know, people like yourself, already a New York Times subscriber, and maybe like-minded people who wanted to become one. So it was so great to have you on the podcast, not just reading our intros but actually coming onto the podcast to help us out and talk to us. Thanks Pat.
Pat Thanks, Kai. Thanks, Sandra. It's been a wild ride.
Sandra It's been great to have you but that's all we have time for today.
Kai Thanks for listening, everyone.
Sandra Thanks for listening.
Outro You've been listening to The Future, This Week from The University of Sydney Business School. Sandra Peter is the Director of Sydney Business Insights and Kai Riemer is Professor of Information Technology and Organisation. Connect with us on LinkedIn, Twitter, and WeChat. And follow, like, or leave us a rating wherever you get your podcasts. If you have any weird or wonderful topics for us to discuss, send them to email@example.com.
Kai I have birds in the background here. Can you hear those?
Sandra Kai's getting attacked.
Kai I took it to the physical world.