Q&A: ESA president Doug Lowenstein

In the opening remarks made by Entertainment Software Association (ESA) president Doug Lowenstein to the media at this year's E3, he reflected on the nervousness he felt before the first E3 opened its door in 1995. Back then, he wasn't sure the industry would get behind a game-industry-only trade show. Obviously, that first year laid the groundwork for the annual show-and-tell extravaganza E3 has become, and there is little doubt Lowenstein's creation has legs enough to go another 10 years at least.

This year's event set numerous records: most attendees, most square footage booked, a new consumer-oriented Web site that delivered impressive traffic, and a conference program that showed signs of gaining a real foothold among industry players and attendees.

GameSpot spoke with Lowenstein this week to see how the annual E3 trade show dovetails with the broader agenda of the ESA. Lowenstein surprised us by putting E3 in perspective, saying, "To be honest with you, E3 operates in its own, other world."

The truth is, Lowenstein's world is profoundly larger than being the E3 figurehead and top-ranking exec of the organization that owns and produces the three-day trade show. For the other 49 weeks a year--when E3's doors are closed--he has his hands full defending the rights of the game industry to self-regulate in the area of ratings, policing piracy and hacking in this market and abroad, and monitoring and lobbying against undue and overzealous government regulation of content or sales.

Less than two weeks before this year's E3, in fact, Lowenstein was doing what he often does: testifying in subcommittee hearings on Capitol Hill. On that day in April, he was advocating that the US government continue to devote itself to prosecuting and eradicating software piracy. In testimony to the Senate Appropriations Committee investigating abuses in the area of intellectual property rights, he said, "If we don't nail these criminal organizations [devoted to piracy], we'll be here year after year after year after year. That's the root of the problem, and it's going to take a very focused effort not only in this government but in cooperation with foreign governments to solve the problem." Neither a David nor a Goliath, Lowenstein slogs through federal and state bureaucracies like a gamer grinding through levels in EverQuest.

Such is the role of Lowenstein as chief advocate for the game industry inside the beltway.

But back to E3. We asked the ESA president to explain further how E3 affects the ESA agenda on both its home turf of DC and beyond.

DL: E3 is about creating attention and interest in the industry; it's about companies accomplishing specific agendas around their business strategies. That business side of E3 doesn’t really directly impact the public policy orientation of the ESA on issues [such as] legislative regulations, copyright, or policy enforcement.

GS: But the event certainly is significant, yes?

DL: For us, E3 is such an incredibly intense week. It seems that the whole world revolves around it. But then you come back home and you realize, well, Congress hasn’t stopped doing its thing, and the states haven’t stopped doing their thing. While we thought the world had come to a stop for a week while we were celebrating our industry, in fact, the world had moved on.

So the work [of the ESA] continues irrespective of what I learned at E3--and is usually pretty unaffected by it.

GS: Do legislators keep an eye on events at E3? Do they not glean something from the event?

DL: I can’t speak for legislators, but I’ve never heard of any sort of political reaction to E3, coverage of E3, or what’s been written about E3 ever being played back into the public policy debates.

GS: You spoke of growth that the industry has experienced. Do you think that the industry is likely to maintain that level of growth into the next decade? To double in size?

DL: I think doubling in size is possible, but it's ambitious given the fact that we’ll go through some transitional years.

GS: And most hardware companies now openly broadcast that a console's life cycle should be measured in decades rather than in years.

DL: We’re certainly going into new territory in terms of how the hardware companies are extending the life cycles of their platforms. The launching of new platforms is obviously going to have an impact on growth rates.

GS: So is a doubling of revenues possible?

DL: My conservative side says, yes, I see continued growth year on year for the industry over the next 10 years. Overall, I think the industry will have grown 50 percent from where it is today. I think doubling is obtainable, but a lot of things will have to go right.

GS: As the industry matures does it accumulate additional responsibilities along the way? Do the standards that it holds itself to change?

DL: I think they changed in the first 10 years. I think they had to change from 1994 to 2004, [but] I think they will probably change less from 2004 to 2014.

GS: Why?

DL: Because in that first decade, we went from being an industry largely focused on adolescents to a more broad-based industry. I don’t see the same dramatic shift occurring in the next decade that would require the same kind of evolution of responsibilities. I think we’ve already established a pretty sound self-regulatory framework for ourselves. We certainly will be subject to further tweaking over the years, but I think the basic framework is sound. I don’t see some kind of revolutionary change in industry self-regulation in the next decade.

GS: As games become more realistic, does the ESA advise the publishing community on the portrayal of violence and mature themes any differently?

DL: It's a question I’ve thought a lot about, but there’s a very clear line for this particular trade association--and I think it’s no different from other entertainment trade associations. We represent our members when it comes to public policy and related issues that bind them together. We do not advise our members or seek to influence our members’ creative decisions. Whatever I may personally think about games today or what games might be tomorrow, in my opinion, there is no role for the president of this association to be the conscience of the industry.

Each company is accountable and responsible for its own creative decisions, and I suppose if at any point in time those decisions made me personally uncomfortable about who I was representing, that’s my problem to deal with.

GS: Today, what are the most prominent challenges the ESA addresses?

DL: The most prominent issues we address, from a public policy standpoint, are [inaudible] and the broad attacks on the industry manifested by efforts to regulate games with particular content.

But those aren’t new challenges. If you asked me the question a year ago, or three years ago, or four, I would have answered the same. And frankly, I think if you ask me the question three years from now, I’ll probably have the same answer.

GS: That means your job is secure, Doug.

DL: I think that there’s going to be a continuing need for the industry to be proactively confronting, on the one side, efforts to erode our business through illegal copying and distribution, as well as efforts to erode our business through unconstitutional regulation. I don’t think those issues are going away.

GS: Is the threat that piracy poses any greater today than it has been in the past?

DL: [The threat] may ebb and flow, which isn’t to say we make zero progress year to year, but with respect to antipiracy, I think we do make progress, and I do not think the situation is hopeless.

I think we may be better off in some parts of the world three years from now than we are today. I just don’t think the issue of piracy will disappear from the face of the earth. I think in some places it’s still going to be a very fundamental bar to industry growth.

With respect to content regulation, I’d probably be a little less pessimistic. I’ve always believed that these kinds of attacks ebb and flow [as well] and that as we continue, I hope to win at the [inaudible] level, [and] that over time, cooler heads will prevail and efforts to regulate the industry will refocus on more responsible ways to educate parents and consumers rather than regulate the industry.

We’re already seeing that in the California State Assembly. The bill over there now has been revised to simply require retailers to have information about rating systems at the point of sale. It still hasn’t been brought up for a vote, but it’s been revised considerably from the original form--which would have prohibited the sale of mature games. I’m hopeful that those kinds of more-measured approaches will become the norm rather than unconstitutional efforts to regulate.

GS: You’ve been at the helm of this battle for 10 years, defending the constitutional rights of publishers to sell their product. If you were to assess the immediate tenor in terms of the threats to the industry, how would you? Is this a particularly challenging time?

DL: I think if you look at mass media coverage of the industry in the last couple of years compared to the previous five years, you see a lot more attention and focus on the industry beyond the easy hit on violence. In that sense, I think there’s a much broader understanding of the growing role of games in our culture, not just as a form of entertainment, but as an art form--and as a way to influence aspects of our culture, our society, and our health in many positive ways.

I think in certain political quarters there is growing awareness and respect for the gaming industry, and that reflects the fact that you’re seeing more and more people in pubic life who have come out of an environment where they are comfortable with games and have integrated games into their lives in ways that they understand. They have a clear sense of balance and an understanding of games and their appropriate role in a child’s life.

It’s a little difficult to [respond with] broad strokes here. There are pockets of the world where games are seen in a far better, more positive light than they were before.

GS: At the media breakfast at E3, you mentioned online games, saying that online games are set to explode. I wonder what you see the impact of that explosion being on the industry and on the ESA members. Do you think it’s going to radically change the business model for your members?

DL: Part of my thesis is that the evolution of online games, almost by definition, involves creation of games that are more broadly appealing for a larger audience. If I’m right about that, I see the demographics of the gaming market and certainly the online gaming market broadening to cover a wider swath of people not typically associated with online games today. I do see a change, [a] gradual migration to online gaming environments as a more common way for people to access interactive entertainment.

GS: Were there any unique aspects of this year’s show that you think marked the show as particularly important? One could say the introduction of the PSP or DS was a high-water mark.

DL: I don’t think the show was defined by the introduction of PSP, or the information about the DS, or a particular announcement about a feature or software. To me this show was a signpost in the journey of this industry to dominant status in the world of entertainment in the 21st century. It’s not so much that there was one announcement or one trend that stands out above all others and makes me say five years from now we’ll look back at the 2004 show and say, “Boy, what a watershed that was.” I think it’s all part of a continuum.

There was some tremendous content shown; there were some really exciting announcements regarding hardware; there was marked increase of attention on mobile games--all of which are part of a way to measure how the industry is continuing to grow, evolve, and mature. To me, that’s what the show was about. More than anything else, it was about what defines the industry, and that’s great games.

GS: What about the "wow" factor in the area of software? Did news of any "must-see" products percolate to your office during the event?

DL: People can quibble and say, “I didn’t see anything really unbelievably new and different,” or so forth. I think we’re becoming almost too self-critical now. I don’t know how many hundreds of films are released every year...and how many times have we said, “My god, I’ve never seen anything like that in my life; it’s the most unique, innovative film of the year.” Well, you know, we don’t. But we do say, “There were some great movies last year.”

We’re the same. Just because there aren't some incredible breakthroughs that makes you forget about every other game you ever played doesn’t mean there aren’t tons of great, fun, interesting games out there. I think we need to refocus ourselves on the fact that our industry is still producing some damn compelling entertainment, and that’s what this is all about.