THE WALL STREET JOURNAL. ** Monday, December 7, 2020 |B5
City, Calif., entertainment
company that does business as
Pocket.watch and manages the
“Ryan’s World” business off of
YouTube, has been thinking
about virtual worlds as a way
to create new versions of fran-
chise theme parks, said Chris
Williams, its founder and chief
executive.
“We don’t need to go buy
real estate but focus on where
kids actually are today, which
is platforms like Roblox,” Mr.
Williams said.The “Ryan’s World” fran-
chise is on track to surpass
$500 million in retail sales
from the launch of its con-
sumer-products business in
2018 through the end of 2020,
including around $250 million
this year, Mr. Williams said.
With Roblox, “Ryan’s
World” will produce revenue
when players purchase “gems”
that they can exchange for vir-
tual gadgets and other in-
game items. Players can also
earn gems during gameplay,The Red Titan balloon at this year’s Macy’s Thanksgiving Parade,
top. Characters from ‘Ryan’s World’ on Roblox platform.POCKET.WATCHextensions violate Google poli-
cies. “Google has taken hun-
dreds of millions of dollars
from us to advertise and dis-
tribute these products in the
Chrome Store,” said Ms.
Combs. “There’s nothing new
here—Google has used their
position to reduce our browser
business to the last small cor-
ner of the internet, which
they’re now seeking to quash.”
Publicly traded IAC owns An-
gie’s List, Investopedia and more
than 100 other online products.
The company offers a search en-
gine called MyWay that main-
tains a tiny fraction of the
search business, using results
and ads provided by Google.
Google is by far the world’s
largest online advertising bro-
kerage. Researchers estimate
about one of every three dol-
lars in online ads are sold
through the company.
Mr. Diller’s company was
once Google’s biggest adver-
tiser, according to Kantar Me-
dia, and current and former
Google employees said IAC re-
mains one of Google’s larger
advertising clients.
IAC spends hundreds of mil-
lions of dollars a year on
Google ads, according to people
familiar with the matter, and
its financial statements show
Mr. Diller’s company received
27% of its total revenue last
year from Google.
IAC’s dozens of browser ex-
tensions, which Google docu-
ments show have been installed
by Chrome users more than 150
million times, accounted for
$291 million in IAC revenue last
year. The extensions change us-
ers’ Chrome home pages to ver-
sions of MyWay, the IAC-owned
search engine.
IAC earns money from the
Google-furnished ads served in
MyWay’s search results. Google
both takes a share of that reve-
nue and earns money on the
ads that IAC buys on Google
platforms to promote its
browser extensions. IAC’s profit
Continued from page B1
Spars With
Diller’s IAC
from the browser-extension
business has fallen 87% over
the past three years, according
to the company.
The concerns raised by
Google’s enforcement staff cen-
ter on whether IAC’s browser
extensions and their marketing
are misleading Chrome users.
The search giant this year
performed a broad audit of
IAC’s business practices on
Google platforms.
Many users of IAC exten-
sions expressed agitation, the
audit found. “Tricked into in-
stalling it and can’t delete it,”
said one user in a review on the
Google Chrome store.
“IAC’s business model ap-
pears to rely almost exclusively
on unintentional installs,”
members of the Chrome safety
team wrote in the audit.
Of special concern in the au-
dit were ads that IAC ran
against search terms such as
“how to vote” and “voter fraud.”
Users who clicked on the ads
didn’t get voting-related infor-
mation, the audit found. In-
stead, their browser home pages
were reset to MyWay, and the
separate, IAC-owned Ask.com
toolbar was installed on their
browsers, the audit found. Theaudit found IAC continued to
run such ads even after Google
told the company to stop.
The practice of changing a
user’s browser settings without
his or her full understanding
and consent is known as
“browser hijacking.”
Ms. Combs, IAC’s spokes-
woman, acknowledged that
some of the ads cited by
Google’s investigators were in-
appropriate and misleading.
She blamed affiliate marketers
that the company said it has
since fired.
But IAC bristled at the find-
ing that its browser extensions
were generally duplicitous, add-
ing that Google approved those
extensions in its Chrome store
for years as part of the compa-
nies’ partnership agreement.The company
allegedly tricked
users into installing
browser extensions.$
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Mr. Williams said.
Roblox takes a 30% cut of
sales on its platform, which
hosts millions of games. It av-
erages 36.2 million daily users,
according to a filing last
month to go public. Its nearly
seven million developers are
on track to make $250 million
this year, up from $110 million
in 2019. Its top earners net
more than $1 million a year,
the company said.
“Ryan’s World” in Roblox
world will also promote other
parts of the Ryan empire: A
racecarinthegameisatoy
for sale in real life from FAO
Schwarz, for example, and new
characters are likely to arrive
as they are introduced in pro-
gramming elsewhere.
One challenge for “Ryan’s
World” will be staying rele-
vant as its young star grows
older, said Mr. Gahan, the Me-
kanism executive.
Ryan’s parents have tried to
account for that by creating
animated characters that can
serve as the basis of new
shows, games and products
while allowing Ryan to pursue
his new interests in science,
gaming and design as he
grows older, said Shion Guan,
his father.
“I think we can expand the
range of the content—similar
to how Disney has Disney and
Disney Jr.,” Mr. Guan said.
Mr. Williams, a former Dis-
ney executive, said
Pocket.watch aims to replicate
the success of “Ryan’s World”
with its other YouTube cre-
ators. Toys and costumes for a
creator-franchise called “Love,
Diana,” for example, are now
available at Walmart in the
U.S.
Consumer products account
for 54% of the revenue gener-
ated by Pocket.watch across
its roster of 12 creators, with
content sales and licensing at
23% and advertising—exclud-
ing ads sold by platforms such
as YouTube—at 22%. “Ryan’s
World” has the largest busi-
ness of the group, Mr. Wil-
liams said.
“It’s helped set the blue-
print for us,” Mr. Williams
said.Nine-year-old Ryan Kaji
shot to fame opening toys in
YouTube videos on his popular
channel “Ryan’s World,”
spawning a global kids-enter-
tainment franchise across TV
shows, streaming channels
and console videogames, de-
buting a balloon at Macy’s
Thanksgiving Day Parade, and
selling toys, clothes and tooth-
brushes inWalmartInc.,Tar-
get Corp. and other retail
stores.
On Saturday, “Ryan’s
World” took its latest form, as
a virtual world on the fast-
growing videogame platform
fromRobloxCorp.
“Ryan’s World” in Roblox
offers interactive areas and
activities for players, including
a racetrack, school, city center
and a “fun zone,” where play-
ers can challenge each other in
obstacle courses.
The world will also feature
characters from Ryan’s TV
shows and videos such as Red
Titan, a superhero version of
Ryan, and Combo Panda, a
headphone-wearing cartoon
animal that plays and reviews
games.
Ryan, whose real name is
Ryan Guan, will occasionally
participate, giving fans a
chance to meet him virtually.
YouTube stars with big au-
diences, especially among
younger viewers, are receiving
more attention from entertain-
ment companies, toy manufac-
turers and other businesses
seeking to leverage their fame
into new content and prod-
ucts.
Retail chains now carry an
array of toys from major kids-
focused YouTube channels,
said Brendan Gahan, chief so-
cial officer of ad agency Meka-
nism Inc. “I firmly believe that
in a few years these brands
will rival that of ‘Sesame
Street’—they’ve got the mass
appeal, which is likely bigger
than ‘Sesame Street’ in most
cases now—they just haven’t
monetized it through as many
avenues. I think you’ll see that
change quickly.”
PocketwatchInc., a CulverBYSAHILPATEL‘Ryan’s World’ Joins Roblox
JASON SZENES/EPA/SHUTTERSTOCKNY