IndustryGamers: So this will be your first "big E3" since you took over as head of the ESA. Considering the last two were downscaled and somewhat experimental, how important is this E3 to you personally?
Mike Gallagher: I came aboard one month before the first of the small shows. The Santa Monica event was really my first exposure to the industry in a broader way – I had never been to any of the prior E3s. Last year we made some improvements based upon the input we received, but this show is not a return to the old E3. It is definitely much more reflective of the energy, excitement and creativity of our industry, but I wouldn't say it's our first "big E3" or a return to the old one. It's a show based upon what the industry needs to project as an image of the excitement we have in the pipeline for the rest of the year. It's the right show; it's not a particular reference to any prior year.
IG: Right, but the attendance will obviously be much higher than it was the last two years, which is why people are calling it the big E3 again.
MG: We're quite pleased to have the numbers reflective of the energy and excitement of the industry; over 200 companies are coming and we're expecting a ballpark 40,000 attendees. It's going to be a lot more high energy and that's precisely what the industry needs right now.
IG: Has there been any effect on the show from the economic downturn?
MG: Yeah, we're up 800%. [laughs] We had less than 5,000 the last two years and we're going to have around 40,000. The show itself has been on target for a long time. There's been a lot of enthusiasm for the show. As I said, we have over 200 companies, and we have 3,500 members of the media and analysts that are coming – again, these are qualified and credentialed mainstream, print, online and broadcast media that are coming, so the excitement level is very high despite the economic headwinds.
IG: Let me rephrase that question, because I know in some of the past E3s some of the major publishers spent a boatload of money to set up huge, extravagant booths. Have you seen a cutback of that big booth experience?
MG: Well, my frame of reference is from the prior two shows, and we dramatically increased the size of the booths that are available for the publishers and the first parties to show what they've got coming next. They've got 15,000 square feet and that's up dramatically over what we had the prior two years. It gives them a bigger footprint. That said, it's nowhere near the size of the footprint – at least for first parties – that they had in 2006 and prior shows. So it's going to look different to folks who have been to E3 prior to 2006, but it's going to look a whole lot different than the last two years in a much more positive way.
IG: This year's E3 was built based upon a lot of feedback you got from exhibitors and member companies. What were some of the primary requests you received?
MG: One was that they wanted to have a bigger canvas to paint on. They wanted to have the opportunity to be more creative and more high energy in putting their products out there for the media and retail community and international press to see. We can send those signals far and wide in a much brighter and energetic way; that's probably the primary thing they wanted to see. And that's what you'll see reflected at the show... That said, they also like the private meeting spaces and we're going to have those too, so folks like yourself will be able to sit down and engage with industry leadership and get direct interviews and a sense of what's coming next in that private way. So both will be available under one roof. In addition to the press briefings, we are the only show in the world where everybody comes for video games. It's all under one roof and only happens at E3.
IG: With that in mind, regarding past E3s, some have said that it's necessary for the industry to grab the spotlight , occupy Los Angeles and to show how important video games are to the mainstream media and the world in general, especially compared to other entertainment. Do you feel that that's a primary function of E3 and what makes the show necessary?
MG: I think the purpose of E3 is to make sure that everyone knows in every corner of the market what's coming next in video games – and that includes a lot of mainstream media, not just traditional gamer press, getting the word out in all those channels so that the buying public and all the gamers out there share the same excitement we do for the industry and that that carries through the rest of the year. It all starts at E3 and obviously culminates with the holiday shopping season. That's the real purpose of the show. There are other business purposes for people to come to the show, and that's why you're going to see it be a manageable experience for those that are there to conduct business... It's not going to be clogged and choked and overcome by folks who are not credentialed and don't really belong at a business trade show.
IG: Have you thought about adding a day or two or splitting it up so you can have a sort of consumer component to E3, sort of combine E for All with E3 and have it be more like Tokyo Game Show where the public can see the games?
MG: As you know, E3 has never been a consumer show. Having said that, we look at all the different ideas so that the show remains dynamic and relevant and achieves its purposes for the companies that come. I'd say those types of things will be considered and certainly discussed after the show as part of the process for improvement. But right now we're very focused on delivering this show at this size with a credentialed audience, and we'll take those other ideas into submission after we execute this year.
IG: With the swine flu outbreak still ongoing and Los Angeles of course not being far from Mexico, what precautions will the show take to mitigate the risk at E3 for attendees?
MG: Keep in mind that when you have a pandemic, we're all just as close. If you look at the reports of instances of where they've had swine flu, it's not just concentrated in any one particular place. It's not just an event that's about places near Mexico – it's a worldwide issue of concern. LA is being very proactive and responsible in how they're working with us.
Dan Hewitt, sr. director communications: We're in close communication with public health authorities as well as folks in the city to make sure all appropriate measures are taking place. They're not concerned. If folks take common sense precautions, it's not going to be an issue. We're just taking the lead from public health authorities and right now they're just saying it's not an issue.
MG: I'm not a doctor and I don't work at CDC, but I think we're seeing that this is not that strong a strain of the flu and it's manageable.
IG: Regarding membership in ESA, last year we saw the big news about Activision and LucasArts dropping out. With Activision exhibiting at E3, is that a sign that things are being patched up? Are you talking to them to get them back into the ESA?
MG: Well, let me say that we're delighted to have Activision at the show. We really are. I look forward to seeing what they put on display, and we welcome their energy and their titles – they make great games, no question about that. On the membership issue more broadly, as you've probably seen over the last couple months we've added eight new members, and from our perspective that's a sign that we're on the right track and that we're a very vital and important association for the industry. That vitality and importance comes from doing things that are of value to the industry. In particular, we have a much better format for E3 – this is an E3 that the industry is excited about and they want to be a part of. The other things we do relative to public affairs and government affairs... if you look at the work we did with Governor Huntsman in Utah to get that misguided legislation that passed overwhelmingly vetoed, that's the type of work that's high impact and leads to companies saying we want to be a part of that. So we're on the right track, we're adding members, we welcome all publishers to the ESA and there's certainly a place here for any that want to come back.
IG: So do you think we'll see Activision come back? Do you have any expectation with that?
MG: The door is always open; we're in great communication with them on a number of levels because they're a very, very important industry player...
IG: Right, largest publisher out there now...
MG: That goes back and forth, I don't track that, but Activision Blizzard combined is just incredibly successful and makes great games. They have terrific folks there, we're in good communication with them and we'll see where that leads.
IG: More generally, do you proactively reach out to the companies that aren't in the ESA to ask them to join or do you sort of wait for them to approach you?
MG: There are two parts to that. One is after the challenges we faced last summer, we did a top to bottom review of ESA and said, "How do we make sure this is a compelling place to be?" so that companies want to be a member and see the value in ESA membership. We focused on that first, got that right, and then we have been reaching out to and approaching companies to make sure they understand the value that we would bring their business and the importance of their being part of the voice of the industry. We've been successful in doing that over the last several months...
IG: I think one really interesting potential member would be Apple, since they've obviously become an important player in gaming with the iPhone and App store. Have you approached them?
MG: I'll share a couple thoughts on that. One is when you have great opportunities like E3 and you have impactful work like what we do in the state and federal area, anti-piracy, and the good work we do at the [ESA] Foundation, we believe we have an equation that's very, very attractive to people who are committed to the video game industry. Now that could very well include Apple, but as you know, their emergence in the games space is a very recent phenomenon, and historically they've gone their own way. That's just part of the character of their company – they don't even belong to CEA (Consumer Electronics Association) and they're in the consumer electronics business. So it's a conversation that I think may happen over time. They're new to the space but enjoying a lot of great success, and there certainly is a lot of enthusiasm amongst the video game publishers for the platform. There's potential there, but it's a conversation that will unfold at the right time.
IG: Regarding the current administration, President Obama has been quoted a few times with what seems like a slightly negative vibe towards video games. How has it been for the ESA in talking to the new Obama administration when trying to advance the interests of the video game industry?
MG: Well, first of all, let me say that President Obama's message is not one that's hostile to this industry. It's very much focused on parental responsibility, and he groups video games with things like ESPN, the remote control, etc. He says, as a parent you should be engaged and tell your kids to turn off the media and get their homework done. "The media" means television, video games, cable... all of those things. But that message is one that we support and we have for some time. When you think about it, that's one of the primary features that's built into the parental controls of the Xbox 360 – you can control time limits for your kids.
As for the administration itself, we've been very pleased with the discussions we have had thus far. If you look at it, this is the first time there's been a video game console in the White House. We understand the President has a Wii and his family enjoys that very much, so we're pleased to have that level of familiarity with our industry in the White House – that's a great thing. The other piece is, if you look at the meetings we've had, I was invited early on to transition team discussions on issues of importance to us. They have been very open and accommodating and very much in a listening mode to our position on key issues. U.S. Trade Representative Ron Kirk has also been very supportive on intellectual property [issues]. Commerce Secretary Gary Locke, the governor of my former state Washington, has come out very strongly in favor of the entertainment industries at large and the protection of intellectual property. So there are a number of trend lines that are very positive with this administration, and we're pleased to be working with them.
IG: Obviously piracy issues on a national and international basis are a priority for the ESA, but what other challenges does the ESA have to deal with right now on behalf of the games industry?
MG: You have to look at it by functional area. If you look at state level public policy, we are very pleased by the dynamic we're seeing around incentives to attract our industry. Texas Governor Rick Perry came to E3 a year ago and welcomed the industry, and he just recently signed legislation that tripled the benefits for the total size of committed resources from the state of Texas to attracting interactive media, including video games. And we have instances like that around the country that we work very hard on. We also have to fight back against those who have a flawed stereotype in mind about our industry and beat back legislation that's content based, similar to what happened in Utah.
In the federal arena, we're very focused on working with the administration on piracy, which we've talked about, but also intellectual property policy in general, making sure we have a culture in this country (and laws that support it) that values the artistry and genius and investment that's made in our industry. They've been very open to those discussions and those have gone well. We also work with them on trade policy, and I have to say that that's a place where I have some concern. The political climate nationally, across the country, is very difficult on trade when the economy is in the state that it's in. There's a tendency for the American people and also policy makers to blame our circumstances on trade, when in fact the path out of our challenges is through greater fair and balanced trade. Right now that's a difficult one for the industry and one that we're working on very hard.
IG: Because people love to talk about these kinds of things, I will end with this question: In your unbiased opinion who will win E3 this year? Nintendo, Microsoft or Sony?
MG: The winner at E3 is going to be the American game playing consumer. Period. You'regoing to see great games and they're coming from all corners. Brace yourself – it's going to be a very exciting show.
IG: That's the safe answer! [laughs]
MG: Of course! But I mean it. Isn't this exciting? The choices are unbelievable and the gameplay is so good, and my biggest challenge is I don't have enough time to play them all. It's phenomenal and we'll see it all on display at E3.
IG: Thanks for your time, and we'll see you at the show.
