Rogers plays peek-a-boo with a towel, because it's one of the first games babies learn to play. He also plays hide-and-seek. He remembers the time he couldn't find people in a hide-and-seek game. Rogers then goes to Picture-Picture to show a film (video, really) of how people make towels. In the kitchen, Rogers shows a dishtowel and demonstrates through a peek-a-boo that he is still Mister Rogers.
In the NOM, Prince Tuesday and Lady Aberlin return to the Castle after a fun swim. King Friday XIII is more interested in swimming miles than games. Mr. Strothers of Strothers Racing Towel Company arrives to demonstrate his wares. He tells King Friday XIII of an upcoming letter, stating the Make-Believe Olympic Games will be held in the NOM. King Friday asks for, and receives, the role of official timekeeper. Still, Strothers has to get permission from everyone to hold the Games. Everyone agrees except for Lady Elaine Fairchilde, who holds out unless she wins. Mr. McFeely delivers the letter from the Make-Believe Olympic Games Committee.
Back at the television house, Rogers says sometimes people like losers.
Songs: Won't You Be My Neighbor?, Please Don't Think It's Funny (first verse), It's You I Like ("towels" substituted for "toys"), Good Feeling.