Kotaku
By: Brian Crecente and Leigh Alexander
Rumored developer displeasure with Entertainment Software Association president Mike Gallagher may be partially to blame for nearly half a dozen member publishers dropping out of this year's E3 conference, Kotaku has learned.
This morning we broke the news that not only are Vivendi and Activision not attending this year's E3 they've both decided to drop out of the association all together. We've since learned that NCSoft, Her Interactive and id Software have all decided not to attend this year's show, though they are all remaining members of the association.
Only NCSoft had returned calls about the decision as of press time, saying that their decision to not attend E3 this year, the first time they won't in the company's history, was due to the development cycle of their games and in no way reflects on the ESA or it's leadership.
But several industry sources who wish to remain anonymous say Gallagher is in part to blame for issues surrounding this year's E3.
Wedbush Morgan analyst Michael Pachter also believes that the drop-outs are spurred by decisions made by Gallagher, who he says is less knowledgeable and sophisticated than his predecessor, Doug Lowenstein.
"Lowenstein was a very savvy industry veteran who paid attention to the goings-on in the industry and cared what the community had to say," Pachter said. "The new person.. whose name completely escapes me because I've never met him or heard from him, is far less knowledgeable and sophisticated about this industry than Doug was and is going to make some rookie mistakes."
"Doug used to be a very visible spokesperson in congress... when you'd get these [things like] Barack Obama saying videogames are corrupting our youth or MADD saying that Take-Two should pull GTA off t he shelves, you would hear Lowenstein immediately shoot back. I would guess that Activision doesn't perceive the same value from the ESA as they did under Doug's leadership. I criticize [Gallagher's] lack of drive to learn about the industry."
While the ESA and Gallagher declined to comment for this story, several sources tell us that Gallagher has come under fire for what is perceived as his poor handling of the association.
In March, GamePolitics reported that the ESA shuttered its New York office, and in so doing fired that office's head, senior VP and general counsel Gail Markels. Markels, who reportedly earned $317,000 in 2005, successfully led all the ESA's litigation efforts against unconstitutional video game laws.
The ESA apparently trimmed its lobbying initiatives throughout 2007 while budgets rose, according to a report made by GameSpot on public filings. Last year, the Association spent a record $2.86 million on lobbying — even though it chose to confront fewer issues, removing lobbying on online gambling, taxation of virtual property, and Internet privacy in favor of focusing solely on constitutional, copyright and relevant trade issues.
Pachter points to the timing of this year's E3 as another mistep. He believes that the new July date just doesn't work out for Activision and Vivendi for financial reasons. Most game companies have a financial quarter that ends in June. Those companies usually have to observe a two-week "quiet period" following the end of the quarter, during which they may not speak to investors — and Pachter says that Activision is especially strict about observing theirs to the minute.
With that in mind, the July E3 is just financially inopportune for both Activision and Vivendi based on the schedules of their fiscal quarters.
"And a Vivendi that feels snubbed could be a big detriment to the ESA, Pachter said. "Vivendi's revenues are so heavily from online subscriptions, which technically don't fall under the ESA... but if ESA ever cares to represent the MMO companies, they really have to have Blizzard as part of their consortium. And there's no question that the market in 20 years is going to shift to a more heavily-utilized download model."
Activision and Vivendi, for their part, say the decision to not renew their membership in the ESA this year was purely a business one.
"After careful consideration, Activision has decided not to renew its ESA membership for business reasons and will not be participating in any official E3 activities. We appreciate the work that the ESA has done over the years in promoting the interactive entertainment industry with state and federal governments and wish the ESA best of luck with the show."
Vivendi sent a similar statement to us today. Both declined to comment about Gallagher's leadership of the ESA.
Activision did confirm with us that while they will not be attending the show, they will be holding an event on the first day of E3, though not at the convention center. Vivendi has not yet commented on whether they will be showing outside of the convention center during the show's week.
The ESA contacted us after the story went live to clarify that Codemasters will be attending E3 afterall.
Comments
PAX is the new E3, everybody come to Seattle at the end of August, you won't regret it.
how wierd
@thejakeman: probably disagrees with you: weird
WTF no guild wars 2 at E3 Damn you arenanet/ncsoft
So what does this mean for the ESA and ultimately E3?!?
Now THIS has some meat on it, lets hope the story breaking brings out some more official responses.
I'm gonna wait til the rats start jumping ship (AKA EA) before I call a sinking ship
But it does not look good for the trade show. It's been going down hill since they closed it to the public.
Increasing the budget,but reducing your lobbying on behalf of games.Yeah,that's a bad idea when you have people trying to attack games at every corner. Gallagher is just filling a desk apparently, and not sticking up for the community like Lowenstein.Still sad to see E3 in such shape.
This guy needs to drop his barber!
If the ESA actually helped the developers by promoting things through things like the old E3 and running ads like many other trade groups do, instead of sitting on their asses when Jack Thompsons of the world bash video games and have shitty E3s, people might not drop out
This is probably the most pointless thing to notice, but what's up with his hair? It's so flat, like you can balance a bowling ball on there.
@DigiMish:
I'm a fan Leipzig myself..
Hm. Very curious. I don't know that I even am familiar with what the ESA does. I... COULD check wikipedia or something, but... I'd rather a 1 word summary from someone here.
that jerk better not screw up E3 this year...if he does...well...I am going to send a STERN email...and go back to playing games because I am lazy...like all Americans, and apparently we take everyone's shit now.
I mean we don't enforce our own laws and we elect people based on "well the other guy/gal sucked worse"
BAH *flips off picture of Mike Gallagher*
I wonder if it really is the fault of the current head. The firing of one of their best lobbyists is concerning though, and seems to be a major worry to developers to feel about leaving.
The ESA is largely about protecting IPs right now, which means raiding mod chip users and trying to gain back theoretical revenue from mod chippers.
Since they got this new guy, who was a person who did instigate such methods, it seems most developers feel they'll be paying for nothing that'll benefit them in the long run.
This is like the party that happens anyway even though the DJ and half the guest list didn't show. Just a bunch of people nervously shuffling around in an extremely awkward situation.
E3 is pretty much through as a public venue, let some other show fill the void now.
@DigiMish: Already got my plane tickets. See you duders at PAX!
"Barack Obama saying videogames are corrupting our youth"
He never said that, he said that the parents should start teaching their children instead of video games teaching them.
and this Gallagher seems like a pawn. Seriously, if you're going to represent the ESA, at least have a voice and an opinion on video game related things such as the GTAIV political/MADD fiasco.
Don't sit there and cower in your corner without any comments.
People like this make me so angry, they're partially responsible for all the flac the gaming industry has been getting.
"Business reasons"? That's pretty much saying "We're not telling you why." "Business reasons" could very well be that they don't see the business value of an organization that doesn't have a good leader anymore...
Also I kept thinking about sledgehammering watermelons for some reason.
I wonder what happens when his expanding baldspot and receding hairline meet? Is pure energy created? Only time will tell...
@DigiMish: I'm tempted to go
Ouch. They must miss the half-naked women in the booths.
@Phenom88:
I was thinking the exact same thing. Unless that is a weird Photoshop crop, it is the most awful haircut I have ever seen. It's like one strip of his hair decided to rebel and not be like the rest of his head.
@Pezdispenser:
He's like me...Folically challenged.I'd just shave it,if it was me. lol
@DigiMish:
Yes, If E3 doesn't work, dont go, because something else will step up to take its place. Don't hold you're breath on E3 waiting to return. E3 is DEAD.
Well this sucks.
@2NinjasTapedTogether:
www.theesa.com is a quick way.
Helps the gaming community,pr,etc
I'm getting a domino-effect vibe from this. E3 has been a shadow of its former self since the shakeup, anyway. If people keep backing out, E3 could be done by next year, and the ESA might not have anybody but small publishing houses on board.
A lame duck, leading
a group that has lost focus.
Bad sign of the times.
Wow. If a single guy causes this much trouble, as an investor, I'd be hard-pressed not to sack him.
See what happens when you get rid of the booth babes?
Don't care much E3 any more anyway.
@Pezdispenser: I like to imagine that it's dented.
thanks for the informative article!
This worries me... mostly because gaming is so much stronger when its a community function, and that's true for the developers just as its true for the consumers.
This cannot be good for the ESA. It pisses me off that they have a rising budget but they are cutting back on lobbying. I know there is a huge negative connotation to lobbying, but it is something the game industry needs in order to properly educate Congress about what the gaming industry is all about. Every time I see some clip of a debate about video games, a majority of the time it's some misinformed Congressman trying to stir a shit storm that really doesn't exist because some constituent or Jack Thompson tries to get this to be the rallying cry for family values. Shape up or ship out Gallagher now is the time to fix this before you make things harder for gamers everywhere and allow there to be a greater assault on our 1st ammendment rights.
Only two of those are really a big loss. E3 is still where it at most other events like PAX etc as good as they are don't get a lot of new stuff announced.
The big three press conferences have always been the high points anyway.
What in the seven Hells happened to that man's head?!
@Does Not Equal: I have the same feeling. It's looking like this year may be the last E3 ever. Hopefully, those who aren't satisfied with the ESA will come together to set up a new lobbying committee.
Now, I'm off to watch Iron Man.
@enewtabie: That's executive hair. Few well-off execs have anything close to a normal haircut. I worked for one that had the david lynch thing going on. I read a study once that said waaay more men than women feel like their day is shot if they have hair or appearance trouble (like torn trousers or whatever).
In other news, I don't see how the E3 is that big of a deal. None of us go anyway, so presumably the companies that withdraw from the show will have more time to work on their games or will just release comparable amounts of press after the event (don't want your game/company to get lost amid E3 buzz). That said, the progressive weakening of the ESA is a huge loss for the industry. The shift in focus from issues that are important to game consumers to issuers that are imporatant to the business side of the industry may prove to be short-sighted. More disturbing is how this evident short-sightedness effects the policies they mean to affect now - are copyright laws being lobbied for now anticipating the increase in digital distribution? Also disheartening is that ESA management hasn't seemed to develop much of a raport with developers - while most other industries have a pretty standard method of delivery (books are still, by and large, printed and sold in book stores), video games have a growing number of methods of delivery and these means are often first implemented or at least concieved of at the developer level of things and not necessarily at the publisher level. Also of note is that there is a lot of interprnetration between various parts of the video game industry (like how an Actor may write, produce, direct, etc a movie) and it just seems that ESA's more conservative approach to the industry doesn't address alot of the nuances.
@Spoony Bard:It means that they are "F-ed in the A". More devs will follow suit.
@Raynre: you know those orbs in Portal?...yeah...he forgot his helmet
It's a conspiracy I tell you......
What about Bethesda?
"...even though it chose to confront fewer issues, removing lobbying on online gambling, taxation of virtual property, and Internet privacy in favor of focusing solely on constitutional, copyright and relevant trade issues."
I actually think they made a good move here. ESA shouldn't be wasting money on those issues... best to focus on the important stuff.
I do miss the spectacle and wall-to-wall coverage of the old vintage E3. That was just about my favorite week of the year. I prefer my gaming news in big spurts of gooey goodness all at once versus these drips and drabs here and there.
Ahh...the good ol days.
@huginn:
e3 has never been open to the public.
but since they made it less of a spectacle its been kinda less attractive.plus there are other shows popping up
wow the E in E3 must stand for
Everyone
Except
Everyone
since there will be no booth babes, i hope at least they bring the tumbleweed.
@lifeinthefridge: well they better not fuck it up like they did with GW. nerfbat for all, yay!
@Fulgurator: +1. bring back the booth babes and access to the public. its what got the public crazed about their favorite titles!
Meh...E3 is dead anyways.
Oof. Rough first year, huh? I guess that's what happens when you don't properly interview your candidates. I mean, the guy had a year to make plans, probably more than that to prepare for the new position/direction. Instead, it sounds like the guy was trying to ride the wave that Lowenstein started.
I could totally be wrong, and his speech at this year's E3 (if he makes one) would be the inspirational and progressive piece that everyone in the industry is waiting for. I hope it's not just, "Come baaaaack!"
@Pezdispenser:
I thought the same thing, Pez. It's like his hair line is beating a hasty retreat to the back of his head, yet he still blow-drys what's left to give it to that poofy look.
Even so, one part looks like its been totally ironed flat. I don't know where you go to get that look, but that's where the real meat of this story is, no doubt.
The E3 thing is only a small part of what the possibly massive overall outcome this could have.
I'm more concerned about the the ESA closing the NY office and firing the person who won every case against unconstitutional video game laws. I sincerely hope they rehired that person somewhere else in the ESA, or I'm really afraid of what may happen with future game bills.
TGS is the next E3!
@kw4k: "ring back the booth babes and access to the public." +2
since the E3 downsizing decision, this was bound to happen
@Sloopydrew:
You were right, it is a photoshop crop. Mr. Gallagher insists on wearing a tiny hat in all of his formal photos, which his staff has to 'shop out when they release the photo to the press. In this case, he was wearing a tiny cowboy hat that he called a 10 ounce hat. And this is who we left in charge...