Mike Gallagher won’t be able to watch the Electronic Entertainment Expo (E3) from the comfort of a movie theater. As the chief executive of the Entertainment Software Association, the trade group of game publishers that put on E3, he gets a ringside seat at the game industry’s crazy circus.
Like yours truly, Gallagher will brave the crowds of 45,000 at the Los Angeles Convention Center in downtown Los Angeles next week. Millions more will watch online.
He will wait in line (the shorter VIP line, of course) to see the games that will keep the industry humming along as a multibillion-dollar business. In our annual ritual, I interviewed Gallagher this week about the trade show and the issues facing the game industry. Try as I might to get him to moan about something negative, Gallagher was happy as can be.
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While the core console video game business is static, the overall game industry is blossoming thanks to mobile, social, and online games. The industry could become a $100 billion business by 2017, according to market researcher Newzoo. Here’s an edited transcript of our conversation.
GamesBeat: Tell us about E3 this year.
Mike Gallagher: For us here at the ESA, this is like the Super Bowl. This is a fantastic time in the industry. E3 is such a powerful contributor to laying the foundation for the success of the next 12 months. It’s a great time to be in the business and great time to be holding E3. We’re excited about next week.
GamesBeat: Is it 40,000 or 50,000 attendees? What’s the estimate?
Gallagher: I do know, it’s the Goldilocks standard for E3. It can’t be too small, it can’t be too big. It has to be just right. For the L.A. Convention Center, that sweet spot is right around 45,000. That’s the number we drive toward. We actually suppress attendance to keep it under 50,000, because we believe that you can get in a too-hot range once you hit that. If it gets to be over that number, it’s problematic as far as the quality of the experience for everyone. Media, analysts, exhibitors, everyone starts having a rough show if we overcook it. So our number that we strive to hit is 45. That gives us room either way.
Last year we had 48,200. That’s a good number. Somewhere between 45 and 50 is the target.
GamesBeat: Is 2014’s show as big as last year’s?
Gallagher: Right now, we’re looking at about the same number of exhibitors. Last year’s was a sellout show. This is a sellout show. We fit like a hand in a glove at that number, just over 200 exhibitors. What’s unique each year is who those exhibitors are. One of the things we’re most intrigued by and excited to see is that we have new companies like Facebook and Google and Kabam that will be at the show for the first time, or at least having floor space for the first time.
That’s indicative of the growth and the value of E3, but it also shows that there’s a lot of innovation that’s coming in from outside players, from players new to the show. That keeps the energy level sky-high.
GamesBeat: What are some of the trends that you’re looking forward to, some of the big ideas you see coming up?
Gallagher: Last year was definitely a hardware year. You had PlayStation 4 and Xbox One both launching first-time playables at E3. They both launched to record-setting commercial success. Both of them outsold their predecessors by a significant margin. That’s a good sign. It shows the value of the show for kicking off a major investment like that.
This year we’ll see a few things on the hardware side. Everyone’s fascinated to see Oculus and Morpheus and virtual reality on display. But you’re going to see more focus shift to the games themselves. Now that the developers have had a year with those consoles — or in many cases more than a year, because they had them before launch – we’ll see some pretty remarkable game experiences at the press briefings and on the floor.
GamesBeat: What are some of the issues on your agenda this year?
Gallagher: We have a great conference that we put on around education. We’re now in year four of hosting that. We’ll have some very serious discussions with the education community about the progress we’re making using video games as a catalyst for improving STEM education, among other things. This year we’re privileged to have the CEO of the Boys & Girls Clubs of America. He’ll be speaking to that group, Jim Clark. Obviously the school day doesn’t have to end at 2:00. We’re pleased to extend the success we’ve had into those after-school hours.
The positive agenda is what you see on display at E3 – all the potential from the games. The ESA manages and leads on a portfolio of issues with our eyes to the future, making sure that the runway is extended for the industry. Those issues, some of them are very familiar. Others are new.
You look at the nature of the industry, it’s become more of an online presence. It’s really important that the industry continue to have very high standards around privacy and data security. When we look at how we treat customers, it’s very important that when we acquire and terminate a customer, we’re fair in how we go about doing that. A lot of state governments and the federal government have an eye on making sure that customer protection policies are sound.
As we move more and more into the mobile space, all the issues in mobile e-commerce become more of our issues. You have issues around currency and Bitcoin. How does our industry continue to thrive when the government takes certain actions to protect itself, but that also have a potential negative impact on us? The state and federal agendas are full, but the opportunity for the industry is even bigger.
GamesBeat: Do you still consider First Amendment issues to be a big part of your job?
Gallagher: First amendment issues are resolved and clear. Making sure that everyone necessary around the country understands that is certainly a part of what ESA does. But the Supreme Court case we won in 2011 has been a substantial catalyst for that understanding around the country.
Also, it’s a great shield for the industry and its creative energy. The developers and storytellers and magicians making video game experiences can labor in a sense of security, knowing that their works are entitled to the same protections as books and music and movies. That’s a very profound, important thing. It’s known more broadly. We’re in better shape, probably the best shape we’ve ever been in, when it comes to first amendment issues as an industry.
The industry has shown a great responsibility and responsiveness to that freedom. You see it on display at E3. You see entertainment experiences that are every bit as compelling, if not more so, than what you see in cable TV, broadcast TV, music, literature. The First Amendment is a wonderful thing.