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E3 Trade Show Rescheduled, Gets Facelift

31 Jul, 2006 By: John Gaudiosi

The 2007 Electronic Entertainment Expo, which was scheduled to be held at the Los Angeles Convention Center May 16-18, 2007, has been pushed back until July 2007 and drastically trimmed down.

The annual trade event will no longer be held within the huge hallways of the convention center, as the Entertainment Software Association (ESA) refocuses the event from a large-scale spectacle to a more intimate gathering of game companies, media, analysts and retailers.

The July show will remain in Los Angeles, although the exact location has not yet been chosen. Rather than the 60,000-plus attendees that make the annual pilgrimage to see the latest video games, consoles and peripherals each May, the new show will be attended by fewer than 10,000 people.

“We looked at what do we have the event for?” said Douglas Lowenstein, president of the ESA. “The event is primarily for the media … to reach out and expose the world press to some of the products that are going to be making news the coming holiday season.”

The new E3 Expo will encompass a location with suites where game companies can meet with press and show them new games that are further along in development than previous May shows could provide.

“The problem with May is that you're saying that games need to be ready in April, which is very early for games that might not be coming out for another seven or eight months,” Lowenstein said. “It was increasingly difficult to get playable demos. The extra couple of months mean that when this event does occur, the games that companies show will be a much better representation of what the real products will look like and play like when it comes out.”

While the actual venue is still being worked out, Michael Pachter, video game analyst for Wedbush Morgan Securities, suggested that a location like Grumman's Chinese Theater, which was used by Nintendo at the past E3 and has access to a large hotel with suites, is the type of location that the new show would move to.

In addition to cutting down attendance and square footage, the new E3 will also take place over three days only. Lowenstein said that part of the problem with E3 was that, while the show itself was three days long, the event seemed to go on for a week or 10 days because of other press conferences and activities.

“The intent here is to create an event that occurs over the three days of the event and not to extend out for days before and after,” Lowenstein said. “The focus is not on downsizing. The focus is on creating an event that best serves the needs of the industry and the participants.”

When E3 launched in 1995 in Los Angeles, the industry was dramatically different. Video games were not a recognized form of entertainment, so the large show with big booths, loud music and wall-to-wall plasma screens attracted attention.

“We also looked to trade shows in those times as a way to sell product to retailers,” Lowenstein said. “Today we have a retail channel that's dramatically different. E3 is not a show where orders occur or sales are written. Companies are meeting throughout the year with a handful of retailers who drive 90 percent of the business.”

Today, the video game industry has large international events, including the August Games Convention in Leipzig, Germany, and the September Tokyo Game Show in Japan.

“Do we still need this one humongous global event in the United States?” Lowenstein asked. “Part of the answer is you clearly don't. I think E3 will still occupy a hugely important position in the global gaming calendar. It depends on how the companies use it. It's a symbiotic relationship. If you know you can expect a bunch of big announcements from companies at the event, you're going to be there. If they are using it for that purpose they'll be there. By definition it becomes important and a must-attend event.”

The decision to scale back the annual event came from the game publishers that make up the ESA. Many of the larger game companies were spending an exorbitant amount of money to maintain enormous booths, fly in personnel from around the globe and host parties and events during the show.

“I see this as much price-driven as just out of control,” Pachter said. “THQ two years ago spent $2 million at E3. EA [Electronic Arts] maybe spends $5 million. That's a penny in the scheme of things. What they care about is the waste of resources. To man the massive booth and conduct all of these meetings, there are at least 200 or 300 people there. With the new venue, it might take 60 employees there for PR and finance and a handful of developers that matter. Publishers can focus on the games.”

“It took the publishers to get together and go to Doug and say we're sick of this,” said Keith Boesky, principal for game consulting company Boesky and Co, and former president of Eidos. “Let's figure something else out. No one I know can figure out what happens at E3. I don't know any business deal that has ever happened at E3. The only thing we've ever heard is incremental sales for games. Every publisher and retailer has their own show. All the buying is done before E3. The value was not quite equal to what the publishers were spending.”

“As the head of ESA, which is owned by our members, we're designing an event that our members said they want,” Lowenstein said. “My interest is not really if this important in the global calendar, but in serving the interest of our members. Since they're directly involved in shaping it, I think it will serve that purpose. And that's my goal.”

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