WEBVTT - The New Social Media: Video Games 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.479 called Apple Podcast or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.640 at Bloomberg dot com Slash Podcast. Paul Matt Miller is 0:00:22.640 --> 0:00:25.480 going to be really bummed he's not here today because 0:00:25.600 --> 0:00:27.320 I know for a fact that he is a big 0:00:27.360 --> 0:00:29.720 Call of Duty Slash video game fan, and we're going 0:00:29.800 --> 0:00:32.879 to talk about video games. Now. Joining us as Adrian Montgomery. 0:00:32.920 --> 0:00:36.320 He is CEO of Enthusiast Gaming, which is a gaming 0:00:36.320 --> 0:00:39.880 company that is based in Toronto, Canada. Adrian, it's great 0:00:39.920 --> 0:00:41.400 to talk to you, and I just want to talk 0:00:41.440 --> 0:00:44.440 about the video gaming industry broadly because clearly it got 0:00:44.440 --> 0:00:47.320 a big boost during the pandemic because, let's face it, 0:00:47.360 --> 0:00:49.440 over the last year, there wasn't much else better to 0:00:49.479 --> 0:00:51.400 do than sit on your couch and play video games. 0:00:51.479 --> 0:00:54.080 Right now that the world is reopening and you can 0:00:54.120 --> 0:00:56.680 go out to bars, you can travel, are we about 0:00:56.720 --> 0:01:02.360 to see a significant pullback in demand? Uh? The short 0:01:02.360 --> 0:01:05.920 answer to that question is no. Uh. And the good 0:01:05.920 --> 0:01:09.560 news for people like me and companies like Enthusiast Gaming 0:01:09.760 --> 0:01:13.679 is you needn't um believe me. Just ask any parents. 0:01:13.800 --> 0:01:17.880 Ask any parents if their children's love of their smartphone 0:01:17.920 --> 0:01:21.240 and love of their video games has anything to do 0:01:21.319 --> 0:01:24.200 with the weather or anything to do with the pandemic, 0:01:24.280 --> 0:01:26.959 And the answer is is ten times that attend. No. 0:01:27.520 --> 0:01:30.280 This is a visceral connection that young people have with 0:01:30.400 --> 0:01:34.039 video games. Um. It is their favorite sport, it is 0:01:34.080 --> 0:01:37.240 their favorite pastime. It is how they connect with their friends, 0:01:37.720 --> 0:01:39.800 it is how they spend their money, it's how they 0:01:39.840 --> 0:01:43.080 spend their parents money. So um, yes, we saw a 0:01:43.160 --> 0:01:46.280 surge during the pandemic, but but that is not going 0:01:46.319 --> 0:01:50.720 to going to claw backwards. Adrian, give us a sense 0:01:50.760 --> 0:01:53.720 of kind of the future as you see it of 0:01:53.920 --> 0:01:57.240 video games, whether it's you know, the mobility of it, 0:01:57.320 --> 0:01:59.600 kind of the platform agnostic kind of how do you 0:01:59.600 --> 0:02:05.200 think about that? Well, first of all, the thing that 0:02:05.440 --> 0:02:09.359 needs to be understood among people who perhaps didn't grow 0:02:09.440 --> 0:02:11.840 up with video games is that video games is the 0:02:11.919 --> 0:02:16.799 new social network. Yeah, you, you and me both video 0:02:16.840 --> 0:02:20.520 games is the new social network. Young people are staying 0:02:20.520 --> 0:02:25.000 in touch, making new friends, my CFO. He had two 0:02:25.000 --> 0:02:27.760 people at his wedding last year he only ever met 0:02:28.040 --> 0:02:31.720 over the Xbox console. This is this is real, This 0:02:31.760 --> 0:02:34.600 is this is and and try telling him those relationships 0:02:34.880 --> 0:02:38.560 aren't worthy of a wedding invitation. Um, this is how 0:02:38.720 --> 0:02:43.120 people connect with each other. And so, as you know, 0:02:43.360 --> 0:02:46.079 three out of four gen zears don't watch television, they 0:02:46.200 --> 0:02:50.040 don't listen to the radio, they don't read things called newspapers. 0:02:50.040 --> 0:02:53.280 But they they watch video games and they congregate in 0:02:53.440 --> 0:02:57.040 communities to discuss them. And so as we move forward, 0:02:58.080 --> 0:03:01.320 video games will be the nexus for fashion, for music, 0:03:02.320 --> 0:03:06.880 for pop culture. Um, they're going to be pervasive for politics. 0:03:06.919 --> 0:03:14.839 Adrian certainly m our company Enthusiast Gaming played UM an 0:03:14.880 --> 0:03:17.920 interesting role with the Biden Harris campaign in the fall 0:03:17.960 --> 0:03:22.480 of two thousand and twenty. Um, they had aggressively targeted 0:03:22.480 --> 0:03:26.400 the gen Z vote. Um. Alongside them, you had you know, 0:03:26.639 --> 0:03:31.360 Congresswoman AOC gaining lots of traction and attention by playing 0:03:31.440 --> 0:03:36.120 video games with famous gamers. The Biden campaign took took 0:03:36.120 --> 0:03:40.520 ads out in Animal Crossing and yes, seventy two hours 0:03:40.640 --> 0:03:43.560 before the vote. Believe it or not, the Biden campaign 0:03:44.120 --> 0:03:47.520 did a customized map in the game of Fortnite four 0:03:47.640 --> 0:03:49.720 years ago, if you had extra money to burn for 0:03:50.280 --> 0:03:53.680 four days before a vote, you'd take out an hour 0:03:53.760 --> 0:03:57.160 of primetime on NBC. This time, they took over a 0:03:57.200 --> 0:04:00.200 map in Fortnite, and I think that just shows you, um, 0:04:00.280 --> 0:04:03.280 where this is going. So, Adrian, I'm looking at a 0:04:03.360 --> 0:04:05.920 chart of your stock and again the symbol for your 0:04:05.960 --> 0:04:08.760 company e g l X is the ticker kind of 0:04:08.800 --> 0:04:10.720 over the trillion, twelve months, not much going on until 0:04:10.760 --> 0:04:12.280 November and then it goes from you know, roughly a 0:04:12.320 --> 0:04:14.160 dollar up to eight. Did you guys get caught up 0:04:14.200 --> 0:04:21.560 in that meme trading kind of frenzy? I don't think so. Um, certainly, 0:04:22.360 --> 0:04:24.680 much to artist's appointment, we don't seem to have a 0:04:24.680 --> 0:04:28.279 whole lot of followers yet in those US based reddit forums, 0:04:28.360 --> 0:04:31.480 like like the other memes stocks do. I think people 0:04:31.640 --> 0:04:34.880 we were telling people for the longest time we have 0:04:35.040 --> 0:04:39.640 three hundred million monthly visitors to our platform, um, and 0:04:39.680 --> 0:04:42.640 I think at some point that started to register and 0:04:42.920 --> 0:04:46.560 people started to understand the power and the rarity of 0:04:46.560 --> 0:04:51.120 our platform. And then shortly thereafter, Enthusiast Gaming was added 0:04:51.120 --> 0:04:53.320 to the list of the calm score one hundred, which 0:04:53.400 --> 0:04:56.680 is the list of the hundred largest Internet properties in America. 0:04:57.279 --> 0:04:59.919 And alongside Twitch, which is owned by Amazon, as you know, 0:05:00.080 --> 0:05:04.039 it's it's the only gaming platform to be on that list. 0:05:04.080 --> 0:05:06.039 So I think people kind of woke up and said, 0:05:06.360 --> 0:05:08.760 maybe what these guys are telling us is is the 0:05:08.800 --> 0:05:11.960 real deal. And of course last week you had that 0:05:12.000 --> 0:05:15.680 share offering eight million shares price a little lower than 0:05:15.680 --> 0:05:17.599 where your stockrustrating at the time. Do you plan to 0:05:17.640 --> 0:05:20.440 continue to raise capital or issue shares in that way 0:05:20.600 --> 0:05:25.560 going forward? Yeah, we see in front of us, we 0:05:25.640 --> 0:05:30.279 see an incredible opportunity to aggregate and consolidate more and 0:05:30.320 --> 0:05:34.200 more of these fan communities, the digital fan communities um 0:05:34.360 --> 0:05:37.359 AND and fan communities in all shapes and sizes are 0:05:37.480 --> 0:05:39.280 are going to be, in our opinion, are going to 0:05:39.360 --> 0:05:43.320 be more valuable. Uh, certainly as as third party data 0:05:43.360 --> 0:05:47.160 becomes harder and harder to access and privacy revolution uh 0:05:47.240 --> 0:05:50.280 sweeps the Internet. And so we want to aggregate as 0:05:50.279 --> 0:05:53.279 many of these fan communities and in many ways were 0:05:53.279 --> 0:05:56.800 looked at because we're a gaming company as as an 0:05:56.800 --> 0:05:59.599 acquirer of choice. So we want to press that advantage 0:06:00.160 --> 0:06:03.880 um AND and continual access to capital from great shareholders. 0:06:04.040 --> 0:06:06.760 Helps us do that, Adrian, give us a sense for 0:06:06.839 --> 0:06:10.279 people don't know kind of how you guys generate revenue. 0:06:10.279 --> 0:06:12.200 Is it advertising as it events? Is I know e 0:06:12.279 --> 0:06:14.200 sports are going part of the business. Give us a 0:06:14.200 --> 0:06:19.200 sense of how you guys at your company generate revenue. Sure. Well, again, 0:06:19.920 --> 0:06:23.040 very difficult. Corporate America of the corporate world is pulling 0:06:23.040 --> 0:06:24.880 their hair out trying to figure out how to get 0:06:24.920 --> 0:06:27.160 in front of gen Z's and how to get gen 0:06:27.279 --> 0:06:29.680 zs to pay attention to them. So when you when 0:06:29.720 --> 0:06:32.359 you reach three million of them, sixty million in the 0:06:32.440 --> 0:06:36.000 US alone. UM. We we sell a lot of advertising, 0:06:36.040 --> 0:06:39.440 a lot of digital advertising UM. And we were encouraged 0:06:39.480 --> 0:06:41.760 today to read in the journal that that's expected to 0:06:41.800 --> 0:06:45.359 increase this year. So so that's a good sign. But 0:06:45.400 --> 0:06:48.440 we sell a lot of advertising UM. And the other thing, 0:06:48.880 --> 0:06:50.800 we're starting to sell more and more and more of 0:06:51.040 --> 0:06:55.480 his subscriptions and freemium content. UM. We've built a business 0:06:55.560 --> 0:06:59.880 around avid video gamers, and avid gamers will pay extra 0:07:00.720 --> 0:07:03.800 for extra content, and so these premium offerings, we've seen 0:07:03.800 --> 0:07:08.400 our subscribers double year over year UH, and we're looking 0:07:08.640 --> 0:07:13.640 at more and more subscription packages to offer UH content 0:07:13.800 --> 0:07:18.320 licensing is starting to become a significant growth area for us. 0:07:18.720 --> 0:07:21.520 It seems every O T T platform in the world 0:07:21.560 --> 0:07:24.320 wants more and more gaming content. So we're putting our 0:07:24.400 --> 0:07:28.600 channel channels on SAM some of the smart TVs UM 0:07:28.680 --> 0:07:31.040 and then we're going to migrate to e commerce and 0:07:31.080 --> 0:07:33.680 social networking and all those sorts of things. Lots of 0:07:33.720 --> 0:07:37.280 areas to grow. It's a fast growing segment of consumer 0:07:37.320 --> 0:07:41.680 spending for Shore. Adrian Montgomery, CEO of Enthusiast Gaming, they 0:07:41.680 --> 0:07:45.920 have the largest gaming media platform in North America. This 0:07:46.160 --> 0:07:53.320 is Bloomberg. Let's dive into the high yield market. Ken Monahan, 0:07:53.400 --> 0:07:55.520 He's co had a global high yield for a MUNDI 0:07:56.000 --> 0:08:00.120 about two trillion dollars in assets under management. So they 0:08:00.120 --> 0:08:02.680 do a treat or too, I think every day. Ken, 0:08:02.720 --> 0:08:04.320 Thanks so much for joining us here. Looking at the 0:08:04.400 --> 0:08:07.080 high old market, it's been a risk on market for 0:08:07.120 --> 0:08:10.640 a long time. Is there any juice left there? Or 0:08:10.920 --> 0:08:12.960 am I just clipping coupons on my high yield piece 0:08:12.960 --> 0:08:15.400 of paper? You know, Paul, it's a good question. I 0:08:15.400 --> 0:08:17.880 think the answer is you're right. Is it has been 0:08:17.920 --> 0:08:21.119 a risk on market for a year plus now, after 0:08:21.280 --> 0:08:24.880 obviously a big fade in uh In in March of 0:08:25.000 --> 0:08:28.720 last year. UM, so we're up quite substantially and spreads 0:08:28.720 --> 0:08:32.040 her back to pretty close to tight levels. UM. You know, 0:08:32.080 --> 0:08:33.680 I think we think they can get a little tighter 0:08:33.720 --> 0:08:36.440 from here, not dramatically, um, but they can still get 0:08:36.480 --> 0:08:38.840 a little tighter from where they are UM. And I 0:08:38.880 --> 0:08:41.360 think that there's a couple of reasons for that. In particular, 0:08:41.440 --> 0:08:44.600 if you have to recognize that the marketplaces, even over 0:08:44.640 --> 0:08:47.920 the last eighteen months, has become increasingly double B centric. 0:08:49.080 --> 0:08:51.360 A lot of that came from downgrades, but the quality 0:08:51.360 --> 0:08:53.640 of the markets improved, and that would argue that spreads 0:08:53.920 --> 0:08:57.600 a little tighter, tighter than two basis points for high yield, 0:08:57.679 --> 0:09:00.360 that that is something right there. But of worse, what 0:09:00.559 --> 0:09:03.520 has driven spreads in part to be this tight from 0:09:04.000 --> 0:09:06.800 where they blew out last March was the FED and 0:09:06.920 --> 0:09:08.800 the fact that the FED said, hey, I got your back. 0:09:08.800 --> 0:09:12.600 We're going to have this corporate credit facility that's unwinding. Now, 0:09:12.640 --> 0:09:16.040 what's the impact of that. You know, I think that 0:09:16.200 --> 0:09:19.160 the Fed's decision just stepped into the high yield market 0:09:19.559 --> 0:09:22.080 was important at that point in time and obviously provided 0:09:22.080 --> 0:09:24.320 a flora not only for high yield but for other 0:09:24.360 --> 0:09:27.320 asset classes at the same time. Um, So that was 0:09:27.320 --> 0:09:29.600 critical at that juncture, but I don't think it's been 0:09:29.600 --> 0:09:32.600 critical for the last hand, for the months or even quarters. 0:09:32.640 --> 0:09:34.960 I think that the economy is momentum on its own, 0:09:35.440 --> 0:09:39.839 is supporting in the direction of spreads. So can again, 0:09:39.880 --> 0:09:43.400 the FED has been supporting, you know, providing liquidity for 0:09:43.440 --> 0:09:47.560 this marketplace, and I guess that's resulted in credit quality. 0:09:47.760 --> 0:09:50.840 You know, it's been much better than I would have expected. Certainly, 0:09:51.000 --> 0:09:54.760 you know, fifteen months into this pandemic, is it potentially 0:09:54.800 --> 0:09:58.920 masking Is the FED support potentially masking credit quality issues 0:09:58.960 --> 0:10:01.080 that the high market's going to have to deal with 0:10:01.120 --> 0:10:04.640 at some point? You know, there's there's a there's an 0:10:04.679 --> 0:10:07.640 ideal here there that's coming to marketplace that you kind 0:10:07.640 --> 0:10:10.120 of raise your eyebrows at. Um. You can see that 0:10:10.240 --> 0:10:12.360 there's maybe a little bit more coming to market and 0:10:12.400 --> 0:10:15.440 triple cs, but it's on the margin. It's I would 0:10:15.480 --> 0:10:17.560 tell you, by and large, most of the credit quality 0:10:17.600 --> 0:10:19.439 of the things that have been coming to market are 0:10:19.440 --> 0:10:22.000 pretty reasonable. Now, we could argue about pricing whether you're 0:10:22.040 --> 0:10:24.080 getting paid for the risk, but in terms of the 0:10:24.080 --> 0:10:26.920 credit risk itself, it's not all that it's not it's 0:10:26.960 --> 0:10:29.319 not all that sour UM And the other thing I 0:10:29.360 --> 0:10:31.920 think you need to look at is um and we've 0:10:31.920 --> 0:10:34.199 had an explosion of issuance this year. We're running in 0:10:34.200 --> 0:10:37.520 a record pace and a lot of that relates to refinancing. 0:10:37.600 --> 0:10:40.400 So companies are making use of the low rates for 0:10:40.440 --> 0:10:43.560 treasuries and then the low spreads for credit to to 0:10:43.640 --> 0:10:47.200 refinance their debt, even refinancing their term loans. Yeah, and 0:10:47.240 --> 0:10:49.800 just borrow because it's cheap to do so. So why not, 0:10:49.920 --> 0:10:54.079 right exactly, you were talking about triple cs there in 0:10:54.080 --> 0:10:56.600 the issue as we've seen, but we've also seen outperformance 0:10:56.679 --> 0:10:58.600 in that risky is debt. What do you chalk that 0:10:58.679 --> 0:11:01.000 up to? Way, I like to think if you look 0:11:01.040 --> 0:11:03.360 at it was obviously on its on its rear end 0:11:03.480 --> 0:11:06.480 last year and particular in the first quarter and to 0:11:06.520 --> 0:11:08.480 a certain extent in the second quarter as well, so 0:11:08.520 --> 0:11:11.280 I think it's a recovery from that. In addition, I 0:11:11.320 --> 0:11:15.360 think that there's been a level of of cleansing that's 0:11:15.400 --> 0:11:18.080 taken place in the triple V space, particularly if you 0:11:18.120 --> 0:11:20.520 look at energy um SO, a lot of the more 0:11:20.600 --> 0:11:24.559 problematic companies in the energy sector UM filed last year 0:11:24.600 --> 0:11:27.440 and I think so that cleansing process really allowed spreads 0:11:27.480 --> 0:11:32.160 to tighten and gave the triple sea markets winded. It's 0:11:32.200 --> 0:11:35.480 back can talk to us about the funds flows into 0:11:35.520 --> 0:11:38.640 the high yield space. Our investors still keen that they 0:11:38.760 --> 0:11:41.080 can get some return in hiotas or is money going 0:11:41.280 --> 0:11:45.000 perhaps even farther out on the re spectrum. Well, you know, 0:11:45.040 --> 0:11:47.040 that's interesting to look at because if you look at 0:11:47.080 --> 0:11:49.560 the high yield marketplace, you would see then as it 0:11:49.559 --> 0:11:51.800 relates to mutual funds, which is let's say about a 0:11:51.880 --> 0:11:54.439 quarter of the market high yield funds, whether you're looking 0:11:54.480 --> 0:11:57.679 at actively managed ones which we're focused on, or ets, 0:11:57.760 --> 0:12:00.880 there's been outflows, um, not in warm as outflows, but 0:12:00.920 --> 0:12:03.640 there's been outlaws pretty much eaching every week this year. 0:12:04.200 --> 0:12:08.440 Um and uh it amounts to not insignificant amount. But 0:12:09.000 --> 0:12:11.240 I would argue if you look what's happening on the 0:12:11.240 --> 0:12:14.120 other side, is it's clear that there are other buyers 0:12:14.160 --> 0:12:16.600 in the market. So who's buying I think that their 0:12:16.640 --> 0:12:19.839 crossover investors in particular that are coming in and that's 0:12:19.880 --> 0:12:22.240 really been the big support of the market. And I 0:12:22.280 --> 0:12:24.120 think the reason for that is if you look at 0:12:24.120 --> 0:12:27.120 where triple bees are. They're trading at very tight levels. 0:12:27.280 --> 0:12:30.199 And if you look at the spread relationship between triple 0:12:30.240 --> 0:12:33.280 bes and double bes in particular, those are much closer 0:12:33.320 --> 0:12:36.360 to historic averages than they are historic tights, and I 0:12:36.360 --> 0:12:38.840 think that that's been very supportive of flows. Can we 0:12:38.880 --> 0:12:41.160 only have about thirty seconds left, but if we get 0:12:41.200 --> 0:12:43.200 a hawkish surprise from the Fed on Wednesday, what's the 0:12:43.200 --> 0:12:48.320 read through to credit? Well, let's let's recognize that, you know, 0:12:48.400 --> 0:12:51.160 the the on the high yill side, we're talking about 0:12:51.280 --> 0:12:53.240 bonds with a duration that's half of that of an 0:12:53.240 --> 0:12:57.440 investment grade, So does it not um the investment grade 0:12:57.440 --> 0:13:00.160 market on its rear end? Potentially it has much more 0:13:00.200 --> 0:13:02.880 negative impact though on i G. Than it does on 0:13:03.000 --> 0:13:05.080 high yields. So that I think that that's our viue 0:13:05.120 --> 0:13:07.520 as to what moment if that in fact happens. That's 0:13:07.640 --> 0:13:11.560 very ratrically all right, Ken, Thanks, We appreciate you coming 0:13:11.600 --> 0:13:13.719 on as always giving us the latest on the high 0:13:13.760 --> 0:13:16.480 yield market. Ken Monahan, co head of Global high Yield 0:13:16.520 --> 0:13:19.800 at a mundy U s Uh, that's interesting question because 0:13:19.800 --> 0:13:22.000 we're gonna have you know, is a market you think 0:13:22.000 --> 0:13:24.800 expecting anything like that? It's not priced for it right now, 0:13:25.080 --> 0:13:26.880 I'm looking at a ten year yield at one point 0:13:26.920 --> 0:13:29.640 for eight percent. That to me looks like it's expecting 0:13:29.640 --> 0:13:32.600 a devish. That's right, right, that would be consistent what 0:13:32.679 --> 0:13:38.520 I guess the rhetoric we're certainly getting from the FED historically. Well, 0:13:38.600 --> 0:13:42.400 during the pandemic, it just seems like we're all buying 0:13:42.600 --> 0:13:46.120 more online Amazon boxes. As far as the hi can see. 0:13:46.480 --> 0:13:50.120 You see the Amazon Prime trucks all over the place. Um, 0:13:50.160 --> 0:13:52.240 but that raises the issue not just for Amazon, but 0:13:52.320 --> 0:13:55.800 for all e tailing, and that's counterfeit. It's been big 0:13:55.800 --> 0:13:58.800 in the luxury market. What's happened here during the pandemic? 0:13:59.200 --> 0:14:02.240 Ronya set Home, she's managing partner I've set Home Law Group. 0:14:02.480 --> 0:14:06.040 She joins us here. Ronnie, thanks so much for joining us, UM, 0:14:06.320 --> 0:14:10.320 talk to us about counterfeit luxury goods. I know it's 0:14:10.360 --> 0:14:13.959 always been an issue for e commerce. Kind of where 0:14:13.960 --> 0:14:17.360 are we today? First? Thank you so much for having 0:14:17.360 --> 0:14:21.280 me on the show today. Well, the luxury space is 0:14:21.520 --> 0:14:26.239 quite fascinating when it comes to counterfeiting, particularly on Amazon. 0:14:26.640 --> 0:14:31.360 And what I find of particular interest is that the 0:14:31.480 --> 0:14:35.920 counterfeit items on Amazon are sometimes double the M S 0:14:36.040 --> 0:14:38.840 R P. In the store. So I just think that 0:14:39.480 --> 0:14:44.720 UH is very fascinating and someone should study why individuals 0:14:44.800 --> 0:14:50.720 are purchasing items for more money on Amazon. Is it 0:14:50.880 --> 0:14:55.080 just convenience or is it something else? I have no idea. Well, 0:14:55.120 --> 0:14:57.920 I Ranya must summit. I am a convenience shopper and 0:14:57.960 --> 0:15:01.200 I probably get six Amazon packages a week. How would 0:15:01.240 --> 0:15:05.120 I know if I'm buying something counterfeit? That is a 0:15:05.200 --> 0:15:08.240 great question. So there are two things that consumers can do. 0:15:08.520 --> 0:15:12.520 And I do purchase some items on Amazon, but not 0:15:12.640 --> 0:15:15.240 all items on Amazon. And this is what I do. 0:15:15.640 --> 0:15:18.040 Whether I want to buy a luxury good or I 0:15:18.080 --> 0:15:20.800 want to buy a consumer good like christ tooth taste 0:15:20.880 --> 0:15:23.320 or whichever tooth taste you like. The first thing I 0:15:23.360 --> 0:15:27.920 do is determine whether or not those items are actually 0:15:28.000 --> 0:15:32.840 for sale on the Amazon site. UM with the permission 0:15:32.880 --> 0:15:37.400 of the brand. At the bottom of several UM brand 0:15:37.440 --> 0:15:42.040 name websites, there's something called stockists or find us, and 0:15:42.120 --> 0:15:45.400 it'll lift it out for you. So, for example, HP, 0:15:46.080 --> 0:15:49.480 very well known brand, if you go to the HV website, 0:15:49.480 --> 0:15:52.600 it does tell you that there are real Amazon products, 0:15:52.920 --> 0:15:56.320 real products of Amazon Amazon, and that might give you 0:15:56.760 --> 0:16:00.240 some comfort, and it should but the biggest problem them 0:16:00.280 --> 0:16:03.520 with buying anything on Amazon is that if it is 0:16:03.560 --> 0:16:07.640 fulfilled by Amazon, it means that the legitimate product is 0:16:07.640 --> 0:16:12.280 sitting in a warehouse with fake products, and you don't 0:16:12.280 --> 0:16:15.960 know which product you're going to get. Even worse, when 0:16:16.000 --> 0:16:19.640 you see, uh the reviews for the product, it's for 0:16:19.720 --> 0:16:22.440 the product, not for the product from this particular seller. 0:16:22.600 --> 0:16:27.000 So consumers are at a disadvantage. What I customarily tell 0:16:27.080 --> 0:16:30.480 people is, first check the price doesn't make sense in 0:16:30.560 --> 0:16:35.280 comparison to the brand name that you know. Secondarily, you know, 0:16:35.400 --> 0:16:38.680 check the reviews. If everyone loves the review and it's 0:16:38.720 --> 0:16:42.760 thousands of people, you're probably buying an authentic product. And 0:16:42.800 --> 0:16:46.880 then third you know, ask yourself, does it make sense 0:16:46.920 --> 0:16:52.600 that this product would be on Amazon? So run you. 0:16:52.680 --> 0:16:57.440 When someone finds themselves the victim of counterfeit, what recourse 0:16:57.440 --> 0:17:02.800 do they have to say Amazon? Well, Amazon does have 0:17:03.040 --> 0:17:07.639 a very generous refund policy, and I think that's what 0:17:07.720 --> 0:17:10.800 they've been hanging their hat on as that term is 0:17:10.920 --> 0:17:14.600 used to them. I think, again, this is just an 0:17:14.680 --> 0:17:16.880 educated guess. If you can get a refund, the really 0:17:17.040 --> 0:17:19.720 really isn't that much of an issue. But the problem 0:17:19.840 --> 0:17:22.320 is that some of the items that you're purchasing, not 0:17:22.440 --> 0:17:26.480 the luxury ones, but the consumer good products. Some of 0:17:26.520 --> 0:17:29.840 them can harm you, and the refund may not be enough, 0:17:30.560 --> 0:17:33.080 you know, depending on what it is you're suffering from 0:17:33.080 --> 0:17:36.480 the purchase of the counterfeit good So it's just refunding 0:17:36.560 --> 0:17:39.119 isn't enough. How can Amazon get a better handle on this? 0:17:39.200 --> 0:17:42.720 What do they need to do? I think it would 0:17:42.760 --> 0:17:45.639 be a very helpful if there was an easy way 0:17:45.680 --> 0:17:50.280 for consumers to report UH fake goods or counterfeit goods 0:17:50.320 --> 0:17:53.720 to Amazon. Right now, they are listening to the brands, 0:17:53.760 --> 0:17:55.760 which means you would have to call the brand and 0:17:55.800 --> 0:17:58.040 you'd have to tell the brand as a consumer, oh, 0:17:58.119 --> 0:18:01.200 I purchased a fraudulent item from Ammazon, and then they 0:18:01.240 --> 0:18:03.360 need to investigate, and then the brand needs to work 0:18:03.359 --> 0:18:07.080 with Amazon. That UH takes a lot of effort. It 0:18:07.080 --> 0:18:09.720 would be great if there was a mechanism for consumers 0:18:09.760 --> 0:18:13.000 to go directly to Amazon and have their voice heard. That's, 0:18:13.080 --> 0:18:15.520 you know, the first thing. The second thing would be 0:18:15.880 --> 0:18:18.600 UH allow us to purchase items that are not just 0:18:18.680 --> 0:18:23.480 fulfilled by Amazon. So we know if ABC seller is 0:18:23.480 --> 0:18:26.040 selling this, and we've had you know, good experience with 0:18:26.080 --> 0:18:30.199 ABC seller, we know, we're getting ABC sellers product as 0:18:30.200 --> 0:18:34.000 opposed to a random product in the warehouse. So ron 0:18:34.000 --> 0:18:35.320 you just give us a sense of Like on the 0:18:35.440 --> 0:18:37.960 luxury side, I'm always shocked at people would buy a 0:18:38.040 --> 0:18:40.720 luxury item, you know, worth thousands or tens of thousands 0:18:40.720 --> 0:18:43.399 of dollars without actually seeing it. But is this a 0:18:43.440 --> 0:18:46.800 growing part of e commerce? I think that it is, 0:18:47.160 --> 0:18:49.800 And I think what's happening is that some of the 0:18:49.920 --> 0:18:53.680 luxury brands are so well known that the consumer likely 0:18:53.800 --> 0:18:57.359 already saw the product at some point in time, and 0:18:57.560 --> 0:19:00.320 they remember it and they're still pining for it, and 0:19:00.359 --> 0:19:03.480 then there it is on Amazon and they purchase it. 0:19:03.520 --> 0:19:08.960 There's no need to to look any further. Fascinating story, Ronna, 0:19:09.000 --> 0:19:11.439 thanks so much for joining us. Really appreciate that this 0:19:11.520 --> 0:19:14.800 is a I guess a big issue, Kaylene. People spend 0:19:14.800 --> 0:19:17.879 more and more time online shopping online, and you know 0:19:18.080 --> 0:19:20.720 online has just grown dramatically over the past fifteen months, 0:19:20.760 --> 0:19:23.840 kind of pool maybe three years of growth forward that 0:19:23.920 --> 0:19:25.760 this can be a bigger issue. Yeah. Now I'm going 0:19:25.800 --> 0:19:28.000 to go home and check all the products on Amazon 0:19:28.119 --> 0:19:31.200 over the last six months or so exactly, Ronne said, 0:19:31.200 --> 0:19:33.719 Home managing partner for said, Home Wall Group joining us there, 0:19:33.720 --> 0:19:36.919 and we appreciate that. Again, Uh, we've seen this at 0:19:37.000 --> 0:19:40.000 you know, the e commerce traffic just skyrocket and as 0:19:40.040 --> 0:19:42.840 everybody when they were forced to stay at home, buying 0:19:42.920 --> 0:19:46.320 more and more uh products, different types of products than 0:19:46.520 --> 0:19:49.359 perhaps they were comfortable buying in the past, all because 0:19:49.480 --> 0:19:52.840 of the pandemic, but a big change to retail. We'll 0:19:52.880 --> 0:19:59.880 have more coming up. This is Bloomberg when the pandemic hit. 0:20:00.040 --> 0:20:01.960 One of the areas of the economy that was hit, 0:20:02.600 --> 0:20:06.719 you know, probably just so hard and so brutally was 0:20:06.880 --> 0:20:09.040 the real estate market what we had. Obviously, if we 0:20:09.080 --> 0:20:13.159 can all remember back, people leaving cities looking for the burbs, 0:20:13.200 --> 0:20:16.320 looking for more room, uh, looking just to get away 0:20:16.320 --> 0:20:19.600 from the congestion and the uh, you know, the density 0:20:19.680 --> 0:20:22.480 of the cities. The question is how long term uh 0:20:22.600 --> 0:20:24.679 is that. Let's check in with Brad Dillman. He's a 0:20:24.720 --> 0:20:28.080 chief economist for the real estate firm Courtland. Brad, thanks 0:20:28.080 --> 0:20:30.200 so much for joining us here. Again here in New 0:20:30.280 --> 0:20:33.520 York City, we saw it firsthand, people leaving uh the 0:20:33.640 --> 0:20:38.320 city for the suburbs. Rents plunged. If you want to 0:20:38.320 --> 0:20:41.680 get an apartment in the city, it was a good time, uh, 0:20:41.720 --> 0:20:43.639 to be a renter. Give us a sense of how 0:20:43.720 --> 0:20:46.560 you think this market is going to play out as 0:20:46.560 --> 0:20:50.800 we come out to the other side of this pandemic. Yeah, definitely, 0:20:50.840 --> 0:20:52.480 and I'm glad to be here. You know. I think 0:20:52.520 --> 0:20:54.320 we need to first recognize that this is a trend 0:20:54.320 --> 0:20:57.399 that was occurring prior to the pandemic. The pandemic, of course, 0:20:57.440 --> 0:21:00.520 accentuated it. It is something that we see across markets. 0:21:00.560 --> 0:21:03.960 We see a migration from more expensive markets too cheaper 0:21:04.000 --> 0:21:06.480 metropolitan areas, and then also within these markets from the 0:21:06.520 --> 0:21:09.560 core out to the geographic periphery. So in many ways, 0:21:09.600 --> 0:21:12.359 it's trends been underway since two thousand twelve. If you 0:21:12.440 --> 0:21:15.000 look at pricing, it really is kind of compressing across 0:21:15.000 --> 0:21:16.879 the spectrum in some ways. And I mean that between 0:21:16.920 --> 0:21:20.040 markets and also within markets. So when we look ahead, 0:21:20.080 --> 0:21:21.440 some people would say, hey, you know, maybe this is 0:21:21.480 --> 0:21:23.680 gonna reverse. People are going to come back into the city. 0:21:24.280 --> 0:21:27.040 The reality is there doesn't seem to be that much supply. 0:21:27.520 --> 0:21:29.919 The bulk of multifamily supply, as an example, is in 0:21:29.960 --> 0:21:31.359 the urban core. But if you look at it in 0:21:31.480 --> 0:21:34.080 terms of units, it's really not enough to really move 0:21:34.119 --> 0:21:36.720 the needle in an under house market. Again, You've got 0:21:36.800 --> 0:21:38.760 estimates that the US is under built to the tune 0:21:38.800 --> 0:21:41.320 of about a million housing units are more? Are we 0:21:41.359 --> 0:21:43.919 going to see that supply and demand gap narrow at 0:21:43.960 --> 0:21:47.159 any point? I think we will if we were to. 0:21:47.240 --> 0:21:49.640 If we look at our gauges of of cumulative under 0:21:49.680 --> 0:21:51.560 supply right now, it does look like we hit peak 0:21:51.640 --> 0:21:53.679 under supply a few years ago. And then as we 0:21:53.720 --> 0:21:56.760