Mike Gallagher is the cheerleader of gaming, and it’s time for him to cheer again. On Sunday, the Electronic Entertainment Expo (E3), the big game industry extravaganza, gets started. E3 should draw around 50,000 people from the game industry again to the cavernous Los Angeles Convention Center (where the show floor opens Tuesday). This year, all indications are the show will be stronger than ever, even though a few high-profile companies have pulled their booths off the show floor (Electronic Arts, Activision Blizzard, and Wargaming).
In spite of those departures, Gallagher, the chief executive officer of the Entertainment Software Association, expects about 94 percent of the available space to be occupied (compared to 95 percent last year). The show will draw more than 3,500 press, up 10 percent from a year ago. And the new E3 Live event in the nearby L.A. Live entertainment complex will draw another 20,000 fans for the first time this year. All told, Gallagher expects about 2,000 game announcements this year, including 130 that will be made for the first time. A year ago, the number was 1,600, with 110 brand new announcements. The 500,000-square-feet of show space will include 53 virtual reality companies, compared to just 27 the year before and 6 the year before that. About 90 mobile game companies will be there, compared to just 70 last year.
Gallagher also said that creativity will be on display like never before, and the industry will take on issues such as diversity and censorship in certain countries such as China. Above all, E3 is going to be about making a lot of noise.
“For this show we have 75 percent of the world’s leading social media personalities in the game space at E3,” Gallagher said.
GamesBeat talked with Gallagher for our annual preshow interview, and he said the convention center is Here’s an edited transcript of our conversation.
GamesBeat: How is E3 turning out?
Mike Gallagher: Every year is so different. It’s like Christmas in June. You don’t know what’s under the tree. We’ve talked about this before. I marvel at the fact that when we get to Los Angeles next week, we’ll see more than half a million square feet of innovations, engagements, and games, and they’ll all be different from the year before and the year before that. The industry reinvents itself in such a remarkable way and displays that to the world for a week. It’s going to be a $100 billion industry next year.
Some numbers underneath that might be interesting. Last year, we had 1,600 announcements, products, releases, and experiences at the show. Of those, 110 were brand-new reveals, things that were only revealed for the first time at the show. Essentially surprises. This year the numbers are 2,000 and 130. When you measure the volume of announcements and experiences, we’re up over a very big high last year. Another thing to look at is the number of journalists. That’s up 10 percent over last year to 3,500 journalists. Obviously a lot of interest from media about what’s happening.
On VR, MR, AR, two years ago we had six exhibitors in those categories. Last year it jumped up to 27. This year we’re going to be at 53, in a very dynamic segment of the industry. Obviously not huge penetration yet, but if you want to be part of defining what’s next you have to be at E3. With mobile, last year we had a high-water mark of 70 mobile companies. This year we have 90 at E3 with a significant play in the mobile space.
We have 66 brand new exhibitors at the show. Those are illustrative of how healthy the ecosystem is. We also have the addition of E3 Live, adding a consumer experience we’ve never had before. It’s outside of E3 itself, but in a way that’s conducive to consumer engagement. Those 20,000 tickets were gone in 10 hours. Now we’re in a position to deliver a great experience, learn from it, and see where we go in the years ahead.
GamesBeat: I guess you’ve answered the question about whether E3 is dying or irrelevant because EA and Activision have left the show floor.
Gallagher: It’s been a very poorly framed question from those who frame it that way. Both EA and Activision are very much at E3. EA’s having their press briefing on Sunday. One of the biggest changes we’ve evolved into is that E3 has become more of a marathon with the addition of Sunday on the agenda, with the addition of briefings from EA and Bethesda. Then EA Play is a consumer experience we’re complementing with our own creation of E3 Live. We’re both going to learn from this consumer engagement in concert.
Activision will be all around the show. You’ll see their titles, play them, and write about them. They’re at the show and they’ll tell you that. They just don’t have a booth on the floor. The important thing about that is to think about it as a menu when you come to E3. You can have a booth. You can have a suite. You can do a press briefing. You can do wraps on elevator doors. You can have digital events that exclusively exist online. All of those are part of the ecosystem of E3 and the larger industry. They’re just different selections made by different companies at different times.
In the past we’ve had Activision on and off the floor. We’ve had Take-Two on and off the floor. The show rolls on because of the size and strength of the ecosystem it represents.
GamesBeat: In square footage or in numbers of exhibitors, how do you compare to last year?
Gallagher: On utilization of the space, we’re at 94 percent of the LACC space available to us filled with exhibitors and experiences. That’s fantastic. Last year, which a lot of people said was the best show in recent memory, we were at 95 percent.
We’d love to have the benefit of those huge brands from EA and Activision on the floor, of course. They know how to project and they have a track record of exciting lots of fans. But meanwhile we’re finding this is a rich ecosystem. It’s a deep industry. The space still went pretty quickly to others who wanted it.
GamesBeat: As far as the highlights of the show, what are you expecting?
Gallagher: There are all these rumors. We’ve had some confirmations. I love how the companies individually manage building buzz into the show. We have some great announcements from Ubisoft and Microsoft and PlayStation and others, teasing what they have in the pipeline for E3.
When you have a game like Uncharted that came out this month and you look at the artwork that goes into that, or the success Bethesda had in the mobile space by announcing Fallout Shelter on the stage at E3, that gets you excited for the things this week that we don’t know about. All sorts of rumors swirling. That’s part of the fun. For you I’m sure it’s a huge tapestry to paint on.
GamesBeat: For 2017 I think you mentioned before that you’ll make more changes still. Is that direction becoming more clear to you?
Gallagher: We have a number of options for continuing to evolve the show. This is a big event. The planning for 2017 started six or eight months ago. We start that planning process with our board and our largest exhibitors and our vendors well ahead of time. I think less about options on the table, but we’re going to learn from what we see this year to figure out which of those we’ll choose for 2017, 2018, and 2019, the three years we have in front of us in Los Angeles.
I’m going to EA Play on Tuesday. I’m going to their press briefing. I’ll go through our E3 Live exhibit. We’ll see how that plays out. Then we’ll make some of those selections. We’ll be on the phone a year from now saying, “Can you believe it?” We must innovate alongside a very dynamic industry. We’re excited about that.
GamesBeat: There isn’t a keynote speaker for E3, but if there was, what do you think they would be talking to the whole industry about?
Gallagher: You have two or three people that would be laying out the future. If you had a panel, you’d have a successful publisher CEO – I’ll let you fill in the blank, choose who that might be. You’d have someone who’s a fantastic game developer. We have some legendary successes, like Todd Howard or Cliff Bleszinski. You’d have one of them. And you’d have one of the social media leaders.
For this show we have 75 percent of the world’s leading social media personalities in the game space at E3. We’re giving them a broadcast facility on the show floor. They can reach over 300 million people worth of total reach from the floor. They’ve become instrumental as a catalyst of success for the industry.
That conversation would be about what this all means. I don’t think there’s any one person that can summarize and project the magic that is at E3. It’d be a unique person who could pull that off.
GamesBeat: What about the kinds of issues that the industry still faces?
Gallagher: You’ve been alongside us and you’ve seen the evolution of those issues. When I arrived, we had two basic issues – “We didn’t do it” and “Don’t take my stuff.” The evolution to the array of issues we manage now—it’s so different and so much more reflective of a successful and mature industry.
The bigger thinking process in this is, we’re a digital platform e-commerce industry. We acquire customers by the millions. We entertain and engage them by the tens of millions. We’re seeking to grow around the world into billions. We’re nearly a $100 billion industry worldwide. Next year we will be. With that comes things like privacy, data security, alternative currencies and how those are treated by governments, the cultural challenges in other countries that limit market growth. Those are the types of things that we spend much of our time on. The trajectory, the future, the frontiers of this industry are expanding in front of us.
Intellectual property concerns are an issue that’s largely been handled through technology. We have a different approach where we treat the consumer as part of the creative experience. Once we reach that point, our policy positions become more natural. They’re more aligned with the reality of today’s environment and legal structures. Where there are violations we step in and help and knock down things that harm the future of the industry. But we’re at a point know where we’re an industry that makes money releasing things for free. That model is seen by consumers as a partnership.
On the content side, we used to have antagonists in Congress. Today, the video game caucus in the House of Representatives has more than 108 members. One quarter of the House is aligned with this industry and part of a caucus focused on our growth. We’ve had video game czars in the White House. We’ve won a Supreme Court case. Governors around the country are clamoring to attract our industry’s jobs. We have 21 states where that’s happening.
The environment has shifted. Like I remarked at DICE in February, with that comes a change in focus for the ESA. How do we expand those frontiers instead of playing defense against old ghosts?
GamesBeat: I saw this week that China announced a government agency to approve all mobile game submissions. Before any game gets published in China, it has to be submitted 20 days in advance to the board of censors.
Gallagher: Those in the console industry understand how deeply limiting that can be to the market. China has illustrated a disregard for those concerns for a very long time. The motion picture industry is nearly throttled in China because of those restriction. A very small number of films are allowed to release in China.
For the mobile space, obviously, that’s an area of big concern. We’ll be looking at it from the ESA perspective. How do we help remove the friction from that type of review process? We have a solution in the form of IARC, the digital ratings platform that Patricia Vance leads for the ESRB. That’s been adopted in Europe, Australia, Japan, and Korea, as well as the United States. We have a few South American countries engaged. That’s a solution that we may be able to work with them to deploy, but it’s early days.
GamesBeat: Do you have a sense of a shift in who is at E3, as far as exhibitors across PC, consoles, mobile, and VR? The bulk of the people there, are they still mostly triple-A console people?
Gallagher: No, I’d say there’s a much more balanced attendance at E3 now than 10 years ago, when it was brought back. It’s an incredible diversity of platforms and different entertainment experiences. With the new consoles, for example, the ability to have whole game downloads and more robust digital distribution fuels a democratization of game development that’s evident on the floor of E3. EPK this year will be a much bigger footprint at the show.
You also see it in the press briefings from PlayStation and Xbox. They’re openly courting and featuring the independent creative energy in the industry, because that drives the success and reach of a platform. No one company can do that themselves. Look at what Apple’s done with the App Store and Google with Google Play. They make few, if any, games themselves. They thrive on being a gathering point for others to come and find the games of their choice. You see that in how other companies approach the industry. You see it on the show floor and see it in the attendees.
GamesBeat: Do you know how many people you’re expecting in total?
Gallagher: You remember that it’s the Goldilocks standard – not too hot and not too cold. What we’ve concluded after years of experience at the LA Convention Center in its current configuration—now, this could change pretty significantly in 2020. But up through 2019 we know how to create the optimal level of energy and excitement that comes from large numbers of people, and also maintain the ability of companies, exhibitors, and attendees to get their business done. That sweet spot is between 48,000 and 54,000.
Last year we hit 52,000 because we allowed more pro-sumers in. We had 5,000 of them. We’ll probably increase that number slightly this year. But somewhere in there is the sweet spot. We don’t want to overcook the building. We saw the consequences of that in 2006.
GamesBeat: With the 20,000 additional fans and EA Play people coming in, I bet it’ll be hard to find parking.
Gallagher: Yeah, it will be a little harder to park. But there are consequences to increased engagement. We have to balance those carefully when you’re creating an asset as valuable and with the reach of E3. We’ll be keeping a close eye on those types of infrastructure issues.
GamesBeat: What was the number of impressions last year again?
Gallagher: Last year we were just shy of 60 billion media impressions. We were at 54 the year before and 50 the year before that. There are only 7 billion people in the world and only 1.7 billion gamers, according to Newzoo. It’s pretty remarkable that they keep coming back over and over all week long.