Spot On: Industry reaction to the new E3

The Electronic Entertainment Expo is undergoing a metamorphosis, but it remains to be seen whether the event that emerges in July 2007 will be a beautiful butterfly or a Kafka-esque nightmare. To get a cross section of opinions on how the shake-up will impact the industry, GameSpot News went to a wide array of representatives from companies large and small, from developers to publishers to analysts to advocates. Here's a sampling of their reactions to the news.

Microsoft:
We are very supportive of the ESA's decision in providing a new vision for E3. Over the past 12 years, the industry has grown and matured, and it's great to see the show evolving to meet the needs of the industry. The show continues to provide enormous benefits from a key media, retailer, developer, and partner standpoint.

Nintendo:
Nintendo is forwarding all E3-related questions to the ESA.

Sony:
For the past 12 years, [SCEA] has participated in [E3] and has used it as an opportunity to communicate to the industry and consumers our vision for gaming and entertainment...As an ESA member, we support the board's decision to pursue other types of events that can better address the needs of our industry and further its growth.

Larry Probst, EA CEO and chairman: (in an investor conference call today)
We fully support the decision that was made by the ESA board. We think it makes good business sense. We see that as the appropriate evolution of the E3 event. And in terms of cost savings, it will save us multiple millions next year.

Activision:
We support the ESA's decision to evolve E3 into a more intimate event.

Capcom:
Capcom is fully supportive of the ESA and its board, which we have representation on. Currently, we are fully committed to all ESA activities, including E3.

Sega:
Sega has been, and will continue to be, a supporter of E3, and the value that it brings to the video game industry. As E3 has grown, so too has the fragmentation of the audience in recent years, making it difficult to derive the value that was originally intended. As the industry continues to mature, so, too, will our industry events in order to compensate for this growth. We are excited to be a participant in the next iteration of the show in 2007.

Ken Levine, cofounder, Irrational Games:
Like most things, it's probably good for the big boys and probably bad for the little guys. If you've got a bunch of games to show, you can host a giant event, fly in journalists, give them good food, have the Spice Girls reunite, etc., and spread all those costs across all those big games. If you're a small publisher with just a couple of titles, well, then you're kind of hosed.

I'm just surprised this didn't happen sooner. Some of the biggest games at E3 had very low-key presentations. We were fortunate enough this year to have a great response to BioShock, and we were just showing it off in a tiny little room on a medium-sized television. I'm sure that didn't make some of the big guys spending zillions of dollars on the same show floor very happy. I'm sure there are big players wondering, "Why bother? We'll just do our own thing where there's no competition."

I think the biggest loser is the "universal awareness of the games biz" in the sense that there's no longer a single event for the mainstream press to wrap their head around. It was sort of like an annual holiday where the "Live at Five" anchor-bots talked about the game industry for five minutes. I always thought that was good for a laugh.

Michael Collins, executive vice president of LA Inc, the Los Angeles Convention and Visitors Bureau:
The move-in time for these exhibitors has been extraordinarily long, so for the month of May, a very large part of that high-demand sales season has been blocked. Now we can put that high-demand season back in the marketplace. I think no question about it, it is going to be a loss, especially for '07 and maybe for '08, but I doubt much beyond that. It's not good news. It's not the kind of thing we would like to have happen. But the extent of which it is a loss is not clear.

Jamil Moledina, executive director of the Game Developers Conference:
This is definitely the smart move for E3 in delivering targeted value to publishers. Connecting with the right people in an intimate, static-free environment is a critical element of any game industry event and is, in fact, a key principle of the Game Developers Conference. The ESA will be releasing more details over the next couple of months, and my expectation is that by trimming away the more extravagant elements, you're going to see a highly distilled publisher-retailer event.

Jason Della Rocca, executive director of the International Game Developers Association:
At this stage, we can only speculate at what the restructured event will really look like. It is important to note that publishing companies constitute the membership and board of directors of the ESA. So, they are ultimately deciding for each other. Change is usually a good thing...

Michael Pachter, analyst with Wedbush Morgan Securities:
I think that the right way to look at E3 is to step back and ask yourself why we have the show in the first place. From the publishers' and the developers' and the console manufacturers' perspective, the reason they have the show is to generate positive press about their products. I'm not sure that there are 60,000 people who matter in generating positive press. I think there are 5,000 people who matter, and then 50 million who matter because they actually buy the products. I'm not sure that next incremental 55,000 who show up really influence opinion making.

I think you can downsize the event and accomplish the same goal. If the reason for the show is to promote your products to industry decision makers, whether they be retailers or the media or investors, then you should be able to do that by limiting attendance to the media and your investors and your retailers...Professionally, I get just as much out of meeting the companies individually and doing a little half-hour demo with everyone I care about.

I think that's patently obvious that we're going to lose [the spectacle of E3]. But if you watch the 11 o'clock news during E3, they don't show anything. The news is "The video game industry has its annual trade event," and they show these guys walking around dressed as Spock or whatever. I guess that makes the public is aware that there's an event, but it doesn't make anybody go buy a game. And certainly you've never, ever seen mainstream coverage on ABC News that says the game of the year was BioShock.

Evan Wilson, analyst with Pacific Crest Securities:
It's difficult to say exactly who wins and who loses, because we don't know what the final incarnation of E3 will be. However, there is a significant expense associated with the publishers' show floor presence at E3, and they likely feel that the investment was no longer paying dividends. This change was likely driven by them, and so they must be considered a winner even if the changes end up not being beneficial.

Game fans clearly lose if this results in less access for game journalists. E3 was a fantastic event for game-to-game comparisons and progress updates. It drummed up a lot of buzz at a time that usually sees a lull in the release schedule. E3 was also a marquee event for the financial community, although it is unclear if that will change.

Tom Ohle, director at Evolve PR, which represents developers including Stardock (Galactic Civilizations II: Dread Lords) and CD Projekt (The Witcher):

For the last few years, it's become increasingly difficult to get business done at the show, as the number of "exhibits only" badges have been on the rise. It's been a lot of, "Hey, do you guys have some posters?" instead of useful business.

A few industry factions will be hit relatively hard by the loss of E3, including smaller developers and publishers, as well as lower-tier media outlets. The smaller developers and publishers--including some of Evolve's clients--see E3 as the most important media event of the year; it's the only time they can show their products to a ton of editors over the course of a few days.

The lower-tier media outlets have counted on E3 as one of the only chances they have to get face time with publishers. It's unfortunate, but a lot of PR reps will simply ignore those lower-tier outlets completely without having met them face-to-face; and by doing so, they'll likely increase the dependence on top-tier media and the competition for highly visible coverage.

Overall, though, the loss of E3 shouldn't really impact major publishers too much; they have the money to schedule frequent media tours or large-scale editors' days.

I'm all for the emphasis on private meetings, but that could have been done without scaling back the show so much. I do think we need some sort of large-scale media event. E3 was a good place to network and reach a lot of media, from international television networks down to fan site operators.

John Welch, president and CEO of PlayFirst:
I hate the crowds; they get in the way of checking out the specific things we need to see in between meetings. Business always gets done behind closed doors at E3, not on the show floor. With a more intimate conference, we might be able to actually hold a conversation on the show floor.

Joseph Olin, president of the Academy of Interactive Arts & Sciences:
Nothing I have seen or heard would lead me to think that the leading ESA member companies, who are the ones who initiated this evolution, would abandon an event that will still command an incredible amount of coverage from retail partners and the media. ESA companies still want a successful E3, it's just that the benchmarks for defining success are being recalibrated to reflect how business is done today and for the next few years.

Again, thinking about "winners and losers," the smaller, specialty companies who introduce their products at E3 in Kentia Hall or surrounding properties will find it more difficult to reach "buyers" or to create buzz about their products or services. And from the opposite side, I imagine that the other trade shows--Leipzig, Tokyo, GameCity--on an international level, and certainly shows like GDC and even the Academy's D.I.C.E. Summit have the opportunity to pick up support and interest from other members of the interactive-entertainment community and media.

I guess the best thing we can all do is to continue to create forums that can showcase the incredible products and talented people who create games so that more people will consider video games and interactive entertainment as their first choice for fun.

A number of other publishers, developers, and industry figures contacted by GameSpot indicated they simply weren't going to talk about the changes.