"No one rings a bell saying the world has changed."

Though we can never look back on history and decide at what point, or even in what year, the television, for example, became an accepted part of our culture, Gallagher feels that history will show that the present era is the one in which video games became a recognized and accepted part of our cultural and economic landscape.

"With this new level of acceptance comes respect... and that's a loaded word," Gallagher said.

One such application of respect, Gallagher said, is the fact that an elected official from a powerful state addressed the game industry audience at E3 earlier today with Texas Governor Rick Perry's keynote encouraging more game developers to put down roots in his state.

Another is the fact that former Supreme Court Justice Sandra Day O'Connor has expressed her support for video games to teach civics lessons, with her announcement of the Our Courts game and learning tool announced earlier this year at Games For Change.

"The ESA was fighting state officials two years ago, rather than welcoming them," Gallagher said.

"Our industry has continued to grow and attract millions of new customers of all ages and from all backgrounds. Those who write and talk about our industry in narrow demographic terms are living in a different time."

He likened today's video game industry to a movie multiplex, featuring a broad range of entertainment choices that appeal to a diverse customer base. 94% of today's games, he said, are rated appropriate for gamers 13 and under.

"The... options available are endless," he said. "Who would have imagined nursing home residents would be more excited about video games than bingo or bridge? ...I believe we are entering the golden age of gaming, but we need to work together to make that entry a good one, and further weave entertainment software into the economic and social fabric of America."

"All of us lucky and privileged enough to work in this new entertainment medium should feel exceptionally proud of what has been accomplished," he said. "Name another industry that has a more passionate consumer base than ours, and a workforce as talented and energetic as ours."

Gallagher looked back on the ways that the video game industry has grown and expanded in recent years, with games reaching a broad range of new audiences and finding uses in healthcare, education, and all-ages entertainment. At the same time, he laid out five key tenets essential to the industry's continued growth, and the core gamer was at the top of this list.

"First and foremost, we must remember our base," Gallagher said. "We must never forget our core customers. Avid gamers have been with us from the start, and we must remember that as we expand our offerings."

Second, Gallagher said, the industry must welcome in the gaming converts who recently joined the industry by expanding content offerings and providing new game choices. Thirdly, he urged broadening the use of games. "The operative word is 'play,' but video games are increasingly not just recreational, but are also involved in more serious pursuits. The generation that grew up with games naturally... incorporates that educational aspect into their lives."

Fourth, Gallagher said, the industry must continue to seek innovative ways to help caregivers ensure that the games their children play are parent-approved. Today, according to Gallagher, 80 percent of children cannot purchase mature-rated games, say FTC statistics. "That's a 433 percent jump since the FTC began reviewing this subject in 2000... it places us above movies, places us above music when it comes to partnering with parents."

The fifth requirement for the industry, said Gallagher, is that it unites to continue to support policy and usage through initiatives with states that encourage the health of the games industry. Texas, Georgia and Wisconsin already provide economic incentives to the industry, and Gallagher said the ESA will continue to work with elected officials both on the state and federal level to expand support for the industry and to promote awareness of ESRB ratings.

Gallagher called on members of the industry and consumers alike to support the ESA's fight against unconstitutional anti-game legislation by joining the Video Game Voters Network - his goal is to gain 200,000 supporters by next year's E3. "If you haven't done so already, I encourage you to join the VGVN ... and make your voice heard."

"The industry has come a very long way in a very short time, and we're finally gaining the respect we deserve... now is the time that we need to keep working and doing what we do better than any other industry or community so that today's level of recognition and accomplishment will pale in comparison to what we are about to achieve."

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.

Gallagher confirmed during a conference call earlier today that he had no plans to reinstate the old E3 format and that his first duties as president of the ESA would be to "listen" and learn more about the videogame industry's ecosystem. He praised the work of the ESA and the ESRB, pointing to successful efforts by both organizations to protect videogames as speech protected by the First Amendment and educating parents on videogame content ratings.

The new ESA president also revealed that while he has much to learn about the entertainment software industry, he personally has gaming experience, having played titles like Halo and Mario Kart with his family.

Full press release from the ESA is after the jump. Michael McWhertor

Mike Gallagher Selected as New Entertainment Software Association President

Former Assistant Secretary of Commerce to Lead Video Game Association

May 17, 2007 - Washington, DC - Michael D. Gallagher will serve as the next president of the Entertainment Software Association (ESA), the trade group representing U.S. computer and video game publishers, the ESA announced today. Mr. Gallagher was a former Assistant Secretary of Commerce for Communications & Information, serving as the chief telecommunications and policy advisor to the Bush Administration. Gallagher will start the ESA position later this month.

"Mike's outstanding technology, policy, and government relations experience makes him a strong fit for the ESA, where issues like intellectual property, self-regulation, and industry social and economic contributions are at the forefront of the agenda," said Robbie Bach, chair of the ESA Board of Directors and president of Microsoft's Entertainment and Devices Division.

Mr. Gallagher is currently the Communications Practice chair at Perkins Coie, a leading international law firm offering a broad spectrum of legal services. Previously, he was Deputy Chief of Staff for Policy & Counselor to Secretary Donald L. Evans, secretary of Commerce. Mr. Gallagher is a member of both the Advisory Committee to the Secretary General of the United Nations for the Internet Governance Forum and the U.S. State Department Advisory Committee on Information and Communication Policy. Mr. Gallagher holds degrees in Economics and Political Science from the University of California, Berkeley and a Juris Doctor from the University of California, Los Angeles.

"Mike Gallagher is an experienced Washington hand - he understands the intersection of technology and policy and we look forward to working with him and the ESA to pursue our shared goals of keeping kids safe, empowering and educating parents, and protecting the First Amendment," said Jerry Berman, president of the Center for Democracy and Technology.

During Gallagher's four-year tenure at the Department of Commerce, he led successful efforts to pave the way for a number of new technologies and services, such as ultrawideband, broadband over powerlines, advanced wireless services, and millimeter wavelength networks. In addition, Mr. Gallagher developed and successfully advocated the US Government's policies on international Internet governance.

"It is a privilege to represent the dynamic entertainment software industry," said Mike Gallagher, newly-named president of the ESA. "With over two-thirds of American heads of households playing video games, and the tremendous opportunities available to the industry on every device — from consoles and PCs to handhelds and broadband enabled cell phones — the business is poised for tremendous growth. I look forward to working with federal and state leaders to foster an environment where the industry and its consumers can thrive."

The ESA is the U.S. association dedicated to serving the business and public affairs needs of the companies publishing interactive games for video game consoles, handheld devices, personal computers, and the Internet. ESA members collectively account for more than 90 percent of the $7.4 billion in entertainment software sales in the U.S. in 2006, and billions more in export sales of entertainment software. For more information about the ESA, please visit www.theESA.com.

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