Q&A: ESA president in the E3 hot seat

Summer is usually a relatively quiet time for the game industry. The din from the annual Electronic Entertainment Expo (E3 or "E3Expo") has died down, the Tokyo Game Show has yet to begin, and the fourth-quarter release avalanche is months away.

But that traditional tranquility was shattered over the weekend, with numerous reports that the pivotal event in the game industry was undergoing a radical makeover. Today, the Entertainment Software Association (ESA) confirmed that next year's E3 will be a far cry from the massive spectacle the world's media focused in on when it overran the Los Angeles Convention Center in May.

In the official press release, ESA president Doug Lowenstein would only say that "The new E3Expo will take shape over the next several months." He was more forthcoming to the Wall Street Journal, saying E3 2007 will attract around 5,000 industry insiders to at least one downtown Los Angeles hotel--essentially turning it into a large-scale D.I.C.E. summit. The event will also carry a new title--the "E3 Media Festival"--a possible indicator that it may involve entertainment other than games.

Given that E3 has been the center of the annual game-industry news cycle for the past 12 years, its radical restructuring has left many in shock. To get some answers, GameSpot caught up with Lowenstein, who took time off his hectic schedule to give a glimpse of what the future of E3 will be.

GameSpot: Can you confirm the July 2007 date that I've been hearing?

Doug Lowenstein: I confirm that we're going to do this event in July, we don't have any dates in yet. I would guess it would be the early part of July, but that's not firm.

GS: We've heard exhibitors complain about costs in the past. Was there a straw that broke the camel's back this year?

DL: No. Exhibitors have talked about costs for years, and that's nothing new. I think there are a lot of things that are coming together. We began a strategic planning process within the ESA looking at how to best fund the organization on a long-term basis, how do make sure that we're putting in place the kinds of programs with the kinds of resources required for the industry to accomplish its objectives. Part of that was also looking at events like E3 and how they fit in.

So, I don't think there's any one thing that drove this. I think it's just we reached a point where this was going to happen sooner or later. It could have happened two or three years ago. There's nothing magic about this year, I think. It really is a question of looking at where it was 12 years ago when we launched it, when you had an industry that didn't have a lot of visibility. Sites like yours didn't even exist at the time. The major mainstream media didn't even cover it. So the industry was looking for something that really galvanized attention around the industry. It was also a retail-oriented event where retailers would come and they would write orders and companies would be able to say, "I invested a lot of money and I sold a million units, and it was a great show."

Obviously the industry gets a huge amount of visibility from a cultural and entertainment standpoint now that it didn't 12 years ago. Retail has consolidated, and the whole process of interacting with retail has changed. Companies are seeing retail 12 months a year. This is not an order-writing show anymore. So I think it's gradually become clear that the primary thing that's driving the event is the media.

So, If you were starting an industry right now, and one of the things you needed to do was to find a way that you can get your stuff in front of the press in a way that's really effective, you wouldn't create E3. So we said, "Well, if that's true, then what would we create? What would we do that allows people to have the kinds of businesslike meetings that they need, that would also allow the personalized interaction of the highest quality?" It became clear to us that evolving into this kind of event was clearly the right thing to do and it was the right time to do it. We've just come through these hardware launches, which is obviously always a kind of a big part of E3, and I think it really just became almost a natural time to kind of make this decision.

GS: OK. And we've heard that some ESA members were willing to pay up to $5 million apiece in order to allow the ESA to recoup money lost from exhibitor fees...

DL: I don't know where you guys hear stuff like this. What is clear is that by moving from a trade show which funds the ESA to an event that doesn't, we're going to have to have an alternative source of funding for the ESA. That will be [membership] dues. Since nobody's actually decided what the dues are--because we haven't made any number of critical strategic decisions about how much money we actually need over the long run--for people to be talking about how much money they were or were not willing to spend is really kind of stupid.

GS: So they haven't been charged dues in the past?

DL: No, there are dues, but they're pretty nominal right now. They'll be considerably higher going forward. But there are plenty of companies who said that they are more than willing to step up to pay significantly greater dues revenue to fund the critical work that ESA is doing in piracy and government relations at levels far beyond what they're paying right now.

GS: Have the costs and legal battles like your recent victory in Minnesota played any part in the decision to get rid of E3?

DL: No, no, no. Don't confuse the two. I think that the board is committed to a vibrant, strong, well-funded ESA. And that certainly means having the resources to continue to fight these legal battles, if that continues to be necessary. But the decision on E3 is really a business decision and it's looking at something that we've done for a long time and saying, "What makes sense for this event as we look at the industry as it is structured and we look at the landscape in 2006 and 2007?" The answer is we need to evolve it into something that's more strategic and more focused. It just makes good business sense. And this decision would have been made if we weren't chasing court fights. It would have been made, regardless of what was happening in the external government relations and in the political world.

GS: It might be a little early for you to have these details yet, but do you have an estimate of how many exhibitors to expect?

DL: No, I don't think we've really faced that yet. Without a show floor per se as of now, I'm not quite sure exactly whether there will be an exhibitor base, if you will. Going to a suite-type setting obviously means there are sort of a finite number of participants. Exactly what that means in real numbers I couldn't tell you yet. I don't know whether we're going to create space for companies in a ballroom or something where we have 10-by-10 booths or things that are obviously much more manageable and simple than anything you'd see at E3 today. I think those are all questions we'll be taking a look at and we'll have a lot more information out over the next several months.

GS: Do you know what will happen with the conference program and the retailer VIP program?

DL: No, I don't. I certainly think we're going to look at whether having a conference program fits into this new event and if so, how. It's certainly on the table. As for the retailer VIP program, I doubt if it'll survive in its current form, because we're moving to an invitation-only kind of event. But that's speculation on my part.

GS: And we heard there would be maybe an anchor hotel for the event?

DL: Yeah, well it is all subject to working with the people here in LA and with our members in further designing and structuring the event. The hope is to have at least one, maybe more than one headquarter hotel where we can basically take over the properties and set up the companies in suites that make sense for the kinds of meetings they want to occur. Those will be the focal points and we'll probably have a big room that will be a state-of-the-art AV room for press conferences. That'll be sort of our central operating point. Then there'll be offsite press events like the console companies do now. There may be other offsites, as some companies may decide that they're going to take advantage of the new format to do media events in other parts of town in other ways that we can't quite yet envision.

GS: There are two concerns I've heard from people that I've talked to so far. One is that smaller publishers and developers might have a harder time getting noticed as a result of the redesigned E3. The other is that the industry benefited from the spectacle that would attract mainstream media and attention from the outside world.

DL: Well, on the first one, without knowing exactly how the event's going to be structured, I think it's premature to sort of say that smaller developers are going to be adversely affected. Secondly, most of those developers are hooked up in some way, shape, or form, to a publisher, so if they're working on products that the publishers want to showcase then they'll be there. Third, there are a lot of other events around the world and around the US that offer opportunities for companies to be seen. So I think that in the end, if a developer is working on something that eventually requires investment and partnership with a larger publisher, then they're going to be part of this event no matter how it's structured. Companies are still looking for innovative and creative products and if you've got something out there that is really hot, then I think you'll find a place to show it.

As for the second part of that question, I think that 12 years ago we needed that spectacle. But I look around today and I look at the dozens of newspapers that have people who regularly cover this industry, I look at the amount of coverage this industry gets throughout the year, and I think that the kind of event we're talking about will have no trouble drawing the media attention that it needs--unless the companies choose not to use it to make major announcements. If Sony, Nintendo, and Microsoft aren't using the event to make the kinds of high-profile, global announcements that that they've made at E3, then I think people will find it less compelling to attend. To me attendance is a function of what's coming out of the event, what's the value of it, what's the news being generated. That's going to get people there, not whether there's 500,000 square feet of exhibit space there.

Our goal is to create something that people still have fun at. I expect there to be parties around this event still and other kinds of activities that add some social and networking elements to it. I want people to have fun. I want people to be impressed with what the industry has to offer, and at the end I want them to say, "I had fun, that was some damn impressive stuff I saw, and I sure as hell got a lot of work done." If that's what we do, then we will have succeeded. That's what this is all about.