We had an opportunity to chat today with Joseph Olin, president of the Academy of Interactive Arts and Sciences (AIAS). The AIAS is a trade organization charged with promoting awareness of the art and science of interactive games and entertainment; it hosts the annual DICE Summit, and is the game industry’s counterpart to the Academy of Motion Picture Arts & Sciences (of Oscars fame) in the same way that the ESA is our counterpart to the MPAA.

Joseph, thanks for taking the time to chat with us today on what’s happening with E3 2007. Some are calling it cancelled, others downsized or restructured, the more positive are calling it focused or re-targeted. What’s going on?

Well, first you have to understand that the ESA (Entertainment Software Assocation) is a not-for-profit trade organization created to represent the industry. And the E3 Expo Group was set up to execute a tradeshow on behalf of the ESA. They aren’t running E3 to make a profit, per se, but to serve the dual purpose of promoting video games and interactive entertainment to the retail market place and generate funds for the ESA to use in pursue initiatives on behalf of the industry. The ESA is governed by its board companies, and its board said “Guys, we need to make changes, because E3 is not working for us to the level that it needs to.”

When you think about the industry’s charter and why these companies belong to it – to have a professional organization that speaks about the industry as a whole – you can see the importance of having the industry speak with one voice. The ESA was created to do just that. The E3 Expo has evolved into a significant way for the ESA to get the income it takes to give the industry professional representation. The member companies all know where the dollars go, because they establish what the fees are and ultimately write the checks accordingly.

My metaphor would be to think of baseball, and the baseball commissioner’s office. Bud Selig is hired and retained by the thirty team owners in the same way that Doug Lowenstein is hired and retained by the ESA board. His job is to reflect and represent the industry in terms of three or four specific aspects of business. The ESA doesn’t talk about creativity. Its job is to promote the business of interactive entertainment. And one way to do that is a tradeshow.

It was the baseball owners who initiated changes to baseball’s playoff structure through the creation of the Wild Card and lowering the pitchers mound (for example) and directed the Commissioner to create and implement their decisions. And when Bud Selig’s constituents think that the requires examination, the owners will come to him and say let’s change the rules. To a certain extent, that’s what happened with E3 and the ESA.

So what will E3 2007 look like? Is this going to be a better show for the changes?

Everyone is in the situation of having to wait and see. I don’t think anyone, even the board members of ESA can say for a fact what E3 2007 is going to look like.

So it’s going to take a couple of months until the world knows what the scope of E3 2007 will be, and how it will be structured. The opportunity to make material changes to improve it shouldn’t be snap judgments. The rhetorical question I might pose is: “You know you have a problem. You know you need to make changes. How do you make changes and convey it and announce it, and to whom, and when?” There’s never a good time. Whenever you make significant change, there’s no way to introduce that change without detractors. The challenge is that without being able to announce the exact implementation of change it leaves that gray area for ignorance to fill the void.

And that’s what’s happening now.

Exactly. But with a board driven enterprise, like the ESA, you are dealing with a number of different constituents, and it takes time to gather consensus and to make sure that when you make a change, you have the majority of your constituents on board. For ESA to be successful, for E3 to be successful, requires the support of the industry players. It just takes time.

What do you think drove the decision to change E3?

Costs are one element of the challenges at E3, but there’s a lot more to it than just the hard dollar. There’s the hard cost of space and just being at a tradeshow. The booths have gotten more luxurious. Over the course of the next twelve years, the dynamic of how the industry has done business has changed. The return and the cost to participate are no longer in equilibrium.

The other side of the cost, based on the costs of game development, to put on your best face at E3, has also changed. Instead of getting ahead of a milestone, all of a sudden you’re falling behind a milestone just to impress somebody when they hit your booth. That’s as much of a driving factor in changing how things are presented. That’s what publishers need to change in terms of selling and presenting their entertainment products to the widest group possible.

What about attendance? Was it just too much mass?

There’s no doubt that the scope of the show in terms of its attendance over the last three years was becoming a problem for the exhibitors. But it’s hard to say who should be there and who shouldn’t, whether it’s the onslaught of credentialed bloggers or the local employees of retailers, publishers, developers, agencies, etc in Southern California. It had become so important and it had so much impact on the marketplace…it was like a trip to Mecca. A trip to Nashville, if you’re into country music. I think that it’s important to note that E3 was an incredibly successful event for our industry, even when one acknowledges some of the problems and issues that are endemic in creating such a significant undertaking.

How do you create an incredible amount of excitement and yet still effectively conduct business? That’s the challenge. And what business do you need to conduct, in terms of the buying community as well as media coverage?

Last year, the Roosevelt Hotel Lobby was as crowded as the Microsoft booth, and equally as loud. The exhibitors have some culpability in how the shows have evolved, and I daresay the exhibitors will be a large part of the solution.

Yeah. We were joking in the office that E3 boothspace had become the nuclear arms race of the game industry. Are we seeing Reagan-era strategic arms reductions talks?

You mean SALT 2007? Show Area Limitation Talks? I don’t think you could ever get the nuclear powers of the world to be as calm and as focused as the major members of the interactive entertainment industry are, in terms of sitting down to and figuring out the solutions. Do we want consumer involvement in the show, and how much do we want?

People forget that there was a time when E3 had a consumer day, and the ESA companies decided that wasn’t the right idea. It’s ok to have a line that discerns the difference between marketing yourself to your retail partners and how you market yourself to game players or people in the interactive entertainment industry.

As much as many of your colleagues, both in terms of the blogs and in print and online, think E3 is a publicity engine, if you go back and look at many years of post-E3 coverage, it’s hard to discern the screenshots and publicity from one year to the next. It all looks the same. E3 just doesn’t work as effectively for publicity as the leaders of the entertainment industry want it to.

So do you think the new E3 will continue to be relevant? Will it be better?

I’m hopeful that the new E3 will be a better E3, and the fact that its size may be smaller in terms of attendees will not necessarily have a negative impact on what’s shown to the retail industry, which is why the show was created, and secondarily on the media, which is there to report on the latest changes and improvements on interactive entertainment. The time of year that E3 will continue to hold will keep it very relevant.

For nearly everybody at retail, your fourth quarter is set in the June/July. The retail community will always find a great place at E3 because it is the most logical time and the most logical gathering of the most significant players in interactive entertainment to come together.

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