At this year’s Electronic Entertainment Expo in Los Angeles, I had the chance to sit down with Entertainment Software Association (ESA) President and CEO Michael Gallagher to discuss gamers, the future of E3, and how political issues like immigration reform and NAFTA impact the video game industry.
More than 60,000 attendees from more than 100 countries joined me at this year’s expo, the inarguable epicenter of the gaming industry. In many ways, E3 marks the turn of a year in video games and entertainment technology. 42 million people virtually attended last year’s show through streams and video content, tweeting about the show over 17 million times. This year, the Entertainment Software Association extended that invitation into physical space, welcoming 15,000 members of the general public to walk the floor amongst the biggest names in gaming.
Attendees browsed the wares of over 250 exhibitors hoping to catch eyes and spark imaginations. More than 80 were exhibiting at E3 for the first time. Included were 126 virtual reality teams, making E3 2017 not only the biggest convention in gaming but the biggest VR show ever. Just four years ago, there were only six such displays.
Michael Gallagher, president and CEO of the ESA which operates E3 each year, said that he was “really excited about the trajectory of the industry.” He immediately laid down some hard numbers to validate that excitement. This year, two-thirds of US households owned a dedicated video game medium of some sort. In every one of those households, at least one member of the family will spend more than four hours a week on the hobby. Another two-thirds of those families have parents that play games with their children on a regular basis, and 71% believe that games have a positive influence on their children’s lives.
Gallagher concluded that “we are a nation of gamers, a world of players, and this is our show.” He’s absolutely right: Worldwide, the gaming industry already has over 2.2 billion active consumers, and that crowd is growing at an astonishing rate, as new generations begin to define their experience in popular culture using controllers, rather than TV remotes. Video games are even taking the competitive world by storm, as eSports have begun to transition into the dominant form of public competition.
Altogether, that has brought gaming as a whole well past $30 billion in annual consumer spending. Of the famed Mary Meeker Internet Trends Report, no fewer than 70 slides were dedicated to gaming’s history and its impact on both the tech economy and the general public.
Gallagher described the gaming industry as a pyramid, with “the gamer” at the top. He said that “everyone is chasing the gamer,” whether they want to admit it or not. For all the ways in which “gamer” has been used to insult enthusiasts by members of its own press, this was a bold statement about the ESA’s focus precisely on the commonly maligned. E3 is “driven by the creative energy of developers and gamers,” a “tour de force” of their “unbounded” creative energy.
Fortunately for us, the Entertainment Software Association’s influence doesn’t end at the walls of the expanding Staples Center in Los Angeles, California. As the chief lobbying force in Washington, D.C. for gaming as a whole, their efforts have had a tangibly beneficial effect on the constant growth and relative creative freedom that the medium continues to enjoy in our country.
1.7 million enthusiastic volunteers have dedicated their time and energy to industry advocacy on the state and federal levels through the Video Game Voters Network. It has been a long time since video games were relegated to the basement. Gallagher stressed the importance of taking part in the ESA’s mission, by joining the effort.
In contrast to those in the industry who have made their careers on the backs of those they appear to disdain, Michael Gallagher was enthusiastic about the national community of players that he represents. Gallagher spent quite a bit of time describing upcoming releases about which he was personally excited. His energy was effusive and contagious. He stood out very clearly as a man who wasn’t just passionate on the sidelines but was representing himself among that legion of gamers. What began as a conversation about numbers quickly evolved into a dialogue about vision.
Where so many other industries are “not connected to their consumers,” the ESA doesn’t have that luxury. Gamers are active and involved at every level of the process. Gallagher highlighted the fact that “the industry has thrived because of the internet and direct connection with the gamer.” This was the primary motivating force behind pulling members of the public into the E3 show for the first time.
Gallagher also didn’t shy away from the politics of the day. He observed that 80% of gamers said that they were either “highly disappointed” or “really excited” about the election outcome and acknowledged the strong feelings on both sides. But rather than focus on the division that creates, he praised the political engagement that those numbers represent: gamers are active parts of their communities and government, despite the negative stereotyping as social recluses to the contrary.
He sees the ESA as “sitting in the middle of that conversation,” and it’s their job to advocate for policies that will both protect and extend the frontiers of the industry without excluding either side of the political spectrum. To that end, he provided an optimistic list of reasons that the current administration had the potential to be good for the industry as a whole.
First, he noted tax cuts were “fantastic” for “bringing in capital, more investment in the industry,” as well as “encouraging dynamic creativity” by reducing some of the associated risks of innovation and the development of new ideas. He praised the idea of those cuts creating “more jobs at home” and being potentially “very favorable for our industry.”
He also echoed President Trump’s dissatisfaction with NAFTA and zeroed in on the fact that “the number one thing that the administration wants to add to NAFTA is digital trade.” To Gallagher, that is a vital goal. As he said, “just ask Apple and Google where their revenue is coming from.” Spoiler alert: It’s their respective app stores, where games are king.
Gallagher also took some time to praise the new administration’s stated focus on immigration reform — and H-1B visa reform in particular — as “a very powerful force for growth” in the gaming industry as a whole. He asserted how the fast-paced world of gaming technology employs “the very brightest, highest-qualified” people from around the world. Sewing up abuses in the system allows even more of those people to join us. Finding a safe, legitimate, and effective way to bring the world’s sharpest creative minds into the field is a benefit to everyone concerned.
That does not, however, mean that the ESA is afraid to stand up and speak out if they feel that the administration is making decisions that would hurt the people and businesses it represents. Gallagher said that it is their job “to be clear with the administration when they are on the wrong track,” and that they have already “found opportunities to point out improvements” that could be made.
In a broader sense, Gallagher called gaming “a worldwide industry” that “thrives when we have more leaders all around our offices, all around the world.” He wants them to learn “how each part of the world channels its creative energy.”
He does, however, share President Trump’s opinion of the Trans-Pacific Partnership, saying that it was “super clear that TPP was a dead duck,” an opinion he asserted was shared “with a legion of other tech companies.” While it may have “originally been the vehicle at that time that was going to give our country the best step forward in trade,” that is no longer the case. Gallagher applauded the idea of making “better one-to-one agreements, as opposed to big group agreements, which only fill the lowest common denominator.”
And the ESA is ready to be persistent to make sure those better deals get made. According to Gallagher, the ESA is “right there, at the doorstep” of our trade representatives, saying, “Let’s go! Let’s make sure we have the right deals, let’s make that a priority. Here’s our stuff, we’re ready.'”
The average wage in this industry is $97,000 a year. We have 220,000 jobs in all 50 states. Let’s go grow that number right now. That’s our engagement with the administration; we are looking forward to them keeping their promises on this new approach to trade. TPP was already a dead letter at E3 2016, and we are now moving into the future with the pathway that the administration is providing.
Along with very consumer-facing stuff at the Electronic Entertainment Expo, our heart is in the advocacy of what is probably the most important growing industry in the country right now.
It was an encouraging, inspiring message to gamers of all stripes, with hope for the future and ambition to spare. In an E3 2017 post-mortem interview we are arranging, I will talk to Michael Gallagher about how he thinks that this year’s show — and its sudden evolution into a public event — turned out.
Follow Nate Church @Get2Church on Twitter for the latest news in gaming and technology, and snarky opinions on both.
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