Moving E3 cost ESA $5 million

Industry trade group paid a pretty penny in event-cancellation fees to try out Santa Monica location for a year.

For years, the Electronic Entertainment Expo was the Entertainment Software Association's big moneymaker. The 2006 event, the last one in the Los Angeles Convention Center before the show was radically downsized (and temporarily moved to nearby Santa Monica), raked in $18.5 million, or 64 percent of the organization's annual revenue.

However, downscaling E3 cost the ESA more than just reduced exhibitor fees. As Kotaku reported this week, the trade organization's latest annual IRS filing--which has been obtained by GameSpot--lists nearly $5.4 million in event-cancellation fees for the year in which it made the change.

When the downsizing was originally announced, the ESA said that it would make up the lost income by increasing membership dues, and the group's reported membership fees reflected such a spike. For the year ended March 31, 2007, membership dues approached $4.5 million, up from just over $1 million the year before.

Income from ratings fees was also up, albeit not as drastically. The ESA-owned Entertainment Software Rating Board brought in $3.5 million for the year, up from just over $3 million the year before. None of the ESA's remaining income-producing activities produced more than $1 million in either year.

The organization's report for the year ended March 31, 2008 is not yet available.

E3 may be downscaled even further this year. Although the event is returning to the LACC, it will only take up a portion of building. Furthermore, notable mainstays such as the merging pair of Activision and Vivendi Games--as well as LucasArts have cut their ties to the ESA, with the former two companies not attending this year's show.

80 Comments

  • Yuck_Too

    Posted May 27, 2008 12:10 pm PT

    E3 was supposed to be for the little dev's out there. The fact that the big boys can take off and do their own thing is great for them, it's still about the little guys and that is what E3 should cater too.

    You all sit here saying how you hate EA or Vivendi for getting so fat and lazy and then turn right around and say the only thing you liked about E3 was the flash and glam the big boys put on.

  • cooldude03

    Posted May 24, 2008 1:50 pm PT

    with all the developers and publishers dropping ESA support it's about time ESA drops E3 to focus on gaming rights. Since nobody wants to support the important cause of gaming freedom. Everyone needs to support ESA if you want someone to fight for gaming rights they're the ones fighting anti-gaming laws. If it wasn't for them the ristriction laws would never be properly oppossed and states would be inforcing these gaming restrictions.

  • MadGamer132

    Posted May 24, 2008 5:20 am PT

    OUCH!!!

  • BigSmitts07

    Posted May 23, 2008 1:36 am PT

    itll be gone eventually...sucks because i miss the huge E3 articles in mags and wesites everywhere and how everyone used to go all out...=/

  • Disciple_Gamer

    Posted May 22, 2008 3:53 pm PT

    Its time to say a prayer. I have not heard not one good news about E3 this year.

  • Rhys555

    Posted May 22, 2008 12:19 pm PT

    I agree enoslives. Can i come?

  • enoslives7

    Posted May 22, 2008 11:38 am PT

    I think they should have E3 in my mom's basement

  • klugenbeel

    Posted May 22, 2008 11:09 am PT

    You know, E3 used to for years sound so awesome to go to...and now that it has been downsized and articles keep popping up of people dropping from the ESA, makes you think that E3 won't be as cool. There needs to be some sort of revolution in the video game industry, it seems that companies are still using the same marketing tactics that were used 10 years ago, and also seems they haven't broken all possible barriers. Sure there is some Hollywood influence and additions to games these days with a well known actor doing a voice in a game, but video games are only still scratching the service of Star power. It also seems that rather than being 1 or 2 major gaming leagues, there are way too many to main stream the pro circuit yet, which as we all have learned over the years, people love to watch competitions. In Korea they have had things like StarCraft pro leagues that would be televised and the people there would go nuts over that, so why don't we have things like Televised/Sproncered gaming leagues that aren't say exclusive to like DirecTV? The video game industry could be as huge and as profitable as MLB or the NBA.

  • xatman911

    Posted May 22, 2008 10:39 am PT

    Microscopic E3 - better start buying microscopes people. Get them while they are hot.

  • businessfox

    Posted May 22, 2008 10:25 am PT

    Oh well I bet there will be someone who's going to come up with something BETTER than E3 anyways, I just give them time because E3 was just doing non sense with themselves, They started off so well in their early times of gaming now they just gave up on us gamers around the world. But we the gamers make up the gaming industry and if we wanted we can demand for a BETTER gaming show anywhere in the world if we wanted too. All we have to do is get signatures around hundreds of gamers and funds and all this can be possible in the justice system and public media service. Yup it's as simple as that folks.

  • ChickenHounk911

    Posted May 22, 2008 10:24 am PT

    Having been to E3 in 2003, 2004 and 2005, I thought they were great shows and an excellent chance for the companies big and small to show off their stuff. It was an amazing and entertaining show, the girls, the freebies, all the booths, the 3 days, it was just a blast! I don't know who OK'd the downsizing but last I heard, video games sales have been breaking records, companies are profiting and have not been impacted by the recession. It would suck if E3 dies.

  • Kenji_Masamune

    Posted May 22, 2008 9:52 am PT

    apparently the ESA must have more money than dubai, opec, bill gates and god since they don't care about the money lost from the destruction of E3.

  • decoy1978

    Posted May 22, 2008 9:42 am PT

    Its easy to say 'Screw ESA' but if your a struggling 3rd party company trying to promote your game, you would have to spend A LOT of money just to try to get gamers attention. That would include the booth babes and freebies. Thats not cheap you know... and when your competing against the Big 3 along with other already established gaming publishers its just turns out htat E3 is NOISE vs NOISE.

    What they tried to do and failingly may I add, was bring it back to its roots before the booth babes and free stuff. Cause lets face it... any one of us whoever went to E3 in the past was not going for the games anymore it was a contest to see how much free stuff we can get. Did E3 have to change? OF COURSE it did! Who would want to spend MILLIONS on an event and have no one focus on their games but just T-Shirts?! Its rediculous as a business standpoint. The cost of funding the old E3 was sky rocketting and just because the noise and lights got brighter it still would not guarantee them the focus on their games.

    Now I agree with all previous posts that if they made E3 open to the public a few days and have a few days for industry that would really offset the rising costs. But now the current trend is Personal Venues; We have Blizzcon and others following suit. You don't need a specialized E3 event to promote your game when you can do it yourself and cut costs by 1/2. The best part.... you don't need to compete with the guy next door....

  • LancerVI

    Posted May 22, 2008 9:31 am PT

    I agree. Screw the ESA. "E3 was too big, blah, blah blah"

    I loved the extravagence of E3. They ruined it.

    Lancer VI

  • Aizou

    Posted May 22, 2008 8:44 am PT

    Meh, serves 'em right loosing money on E3 now... they never did explain what was wrong with having at least one day open to the public back when it was big >.>

  • Destroyeron13

    Posted May 22, 2008 8:01 am PT

    The ESA basically killed itself. Go Activision-Blizzard for leaving.

  • vaejas

    Posted May 22, 2008 7:57 am PT

    So E3 subsidized membership fees, obviously. Really makes publishers ask "what have you done for me lately?" Buh-bye.

  • omegabyte

    Posted May 22, 2008 7:54 am PT

    "When the downsizing was originally announced, the ESA said that it would make up the lost income by increasing membership dues, and the group's reported membership fees reflected such a spike. For the year ended March 31, 2007, membership dues approached $4.5 million, up from just over $1 million the year before."

    I love this. They reduce the amount of promotion companies get through the show, and then charge them more for membership. No wonder Activision and LucasArts are hitting the road. Frankly I'm surprised others haven't followed suit yet.

  • Lattata

    Posted May 22, 2008 7:38 am PT

    ESA is full of retards. I'm sure E3 will become eventually defunct if these idiots continue thier "professional conversion" of E3. I miss the old one.

  • ocdog45

    Posted May 22, 2008 7:32 am PT

    how is E3 a joke now. have you ever been?

  • Sins-of-Mosin

    Posted May 22, 2008 6:35 am PT

    E3 is a joke now.

  • ASnogarD

    Posted May 22, 2008 5:18 am PT

    Its a pity, I used to love hearing about the events of E3 , and it got really fun when GS had thier streaming videos of the event, I was watching them for ages .

    I wouldnt be too suprised if one of the other events took advantage and increased thier event to try be the same as the old E3. The move by ESA was in my opinions the exact same as if one of the biggest musics bands, say a popular Rap artist decided to change thier music to classic opera.... and then wondered why they werent so popular anymore.

  • steven141

    Posted May 22, 2008 5:18 am PT

    Next thing you know, its going to be held in someones house. Go back to the original plan.

  • MatthewNintendo

    Posted May 22, 2008 4:34 am PT

    Forget about E3 it's being run into the ground by ESA anyway. Tokyo game show and Leipzig are the best shows now.

  • darkfox101

    Posted May 22, 2008 4:17 am PT

    I can't wait until its held in a basement

  • hannify

    Posted May 22, 2008 3:58 am PT

    always is leipzig - come to Europe guys

  • Agent-CSim-47

    Posted May 22, 2008 3:43 am PT

    What was wrong with the original E3 in the first place. Are they just changing it for the hell of it?

  • Lauryn2000

    Posted May 22, 2008 3:20 am PT

    Pretty soon they will downsize so much,it will be held at the high school gymnasium.......

  • lamprey263

    Posted May 22, 2008 3:01 am PT

    increased membership dues, now we know why Lucas Arts dropped out of the gang, maybe they should start allowing non-industry audiences to attend at a fee to make up costs instead....and try switching up the venue for a change

  • Mutarotation

    Posted May 22, 2008 3:01 am PT

    The times have changed. There was a time when E3 was unrivalled in the gaming world, but with so many gaming shows in the world why would you put all of your eggs in one basket. It's a good thing too, this way people other than those from LA and journalists can see the new games

  • FallenOneX

    Posted May 22, 2008 2:36 am PT

    Just change it back to the way it was with enforced rules, or get rid of it. Better yet, just change the name of it.

  • Antaeus1991

    Posted May 22, 2008 2:21 am PT

    E3 is dead and should be forgotten about now. Oh well, atleast we have Leipzig and things like that...that are still fun to go to.

  • Fanible

    Posted May 22, 2008 2:18 am PT

    They have to be trying to get rid of the E3 event on purpose, by driving everyone away, so they can't say they just up and quit. For whatever reason, we don't know, but I can see no other logical explanation for them making such silly decisions, and further more, not returning to the old formula after it's so evident that it sucks now.

  • mcecny

    Posted May 22, 2008 12:54 am PT

    Getting rid of the old E3 was stupid...yes it was loud, expensive for the publishers and a bit out of control but it was something gamers looked forward to. It was the event of the year and those who were able to go became the envy of other gamers. No surpise that the new E3 isnt looking so good. Btw unless im missing something E4 doesnt make any sense. E3 stood for Electronics Entertainment Expo....so 3 E's..... E4 would be what Exciting Electronics Entertainment Expo?

  • Pyro978

    Posted May 22, 2008 12:54 am PT

    Hey guys lets downsize a very successful event that makes us a ton of cash to a tiny little business meeting and reduce the fees. Extremely business-savy decision.

  • B4mB00

    Posted May 21, 2008 11:53 pm PT

    At this rate the ESA will be holding **** bake sales to avoid financial oblivion by the end of the month.

    I personally think studios and publishers are angered at the ESA, and that's why they choose to jump off ship.

  • the_real_VIP

    Posted May 21, 2008 11:42 pm PT

    Their management is a total epic failure.

  • tyler2357

    Posted May 21, 2008 11:16 pm PT

    NOT OPEN TO THE PUBLIC = FAILURE

  • sportwarrior

    Posted May 21, 2008 11:14 pm PT

    GOD these ESA idiots are stupid. Who here didn't see that downsizing E3 would be an enormous mistake? I mean seriously? And now some of their larger members are leaving the organization entirely. It may be too late for E3 to be restored to it's original grand state... The 06 event was amazing and I wish they could bring it back, but I just don't see it happening.

  • VenomRitual

    Posted May 21, 2008 11:03 pm PT

    crunchberry gots it right. until you make it worthwhile so that more people are exposed to E3. than you're just going to destroy the event.

  • Viral-venom13

    Posted May 21, 2008 10:33 pm PT

    Even in downsizing theres still cash to pay. Either ways as long as the showcase is good overall then by all means pay up!!

  • crunchb3rry

    Posted May 21, 2008 10:33 pm PT

    They should quit kidding themselves and restore E3 back the way it was (booth babes, loud music, all of it). With an adjustment so that a couple days are strictly invite only (since the initial complaint was too many people sneak their way in that have no gaming journalism credentials) and then have your couple days of public access (paid, free, doesn't matter) so the publishers can either pack up their media-targeted stuff and leave or stay and let the public mess around with their games. The first few days can be with the decibel level restrictions, no booth babes, etc. Then bring all the circus crap out for the public.

  • Turtlefark

    Posted May 21, 2008 10:28 pm PT

    So, why exactly was it downsized in the first place? They fail.

  • StaticPlayer

    Posted May 21, 2008 10:12 pm PT

    We don't want to downsize these things. But the industry wants to because they are hemoriging money.

  • remmbermytitans

    Posted May 21, 2008 9:48 pm PT

    I really don't understand WHY, you would downscale such an epic event. All I know is, before I go off to college, I want to attend E4 (aka E for All, E4All). I went last year and while it was truly something great, they said that this year, it would become more like E3. So here's hoping

  • VMan

    Posted May 21, 2008 9:32 pm PT

    I said it before and i'll say it again, E3 can die for all I care.

  • RaiKageRyu

    Posted May 21, 2008 9:31 pm PT

    Yep, and was it all woth it?

  • Phafnir

    Posted May 21, 2008 9:10 pm PT

    Instead of downsizing the entire thing like they did they should have just split up the event - one for the West Coast and one for the East Coast - we have some pretty big cities close to the East coast as well and for large cities that are not on the East coast I'm sure that a lot of people would gladly make the trek, I know I would

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