Why this one man always gets the best seats at E3 (interview)

GamesBeat: Do you feel like you have a new generation of politicians that understand this industry better?

Gallagher: We’ve absolutely seen that on display. We’ve had three wave elections in my time here, meaning where you have very large amounts of House and Senate turnover. What happens every time is that lowers the average age of legislators. Of more than 5,000 state officials out there, we’ve probably seen over 50 percent turnover in my seven years here.

The younger that demographic skews, the more easily they understand how compelling the video game experience is as an entertainment medium, how good it is for their families, and also what a great job-creating engine the industry can be, with $22 billion in sales last year and jobs in 38 different states earning an average wage around $100,000 a year. 22 states today have incentives to attract our industry. They do that because our industry is now much better understood by politicians and policy makers.

We have to work hard every day. Certainly there are people that still don’t fully understand the industry. We’ll reach them eventually. But a very large number are positive. To give you one major example, the E-Tech caucus on Capitol Hill, which is a bipartisan caucus that focuses on advancing the video game industry. That was launched in the same year as the Supreme Court argument. It now stands ready and is very engaged with us at ESA in making sure that the growth of the industry is known and the responsible approach we take to parents and to children is known. It’s a very good partnership.

There are plenty of places to be optimistic. Just recently we gave Rick Perry and the comptroller of the state of Texas awards down at SXSW for their commitment to advancing policies that grew our industry to a remarkable degree in Texas. The more that word gets around, the better. There are plenty of reasons to be very optimistic about the environment that we’re in. But we stay vigilant every day.

GamesBeat: You talked last year about the creative destruction in the industry. How do you feel about the shifts that are going on, where we see fewer of the console developers and a lot more of the mobile folks?

Gallagher: I’d say you see more of both. You may see fewer titles, but that doesn’t mean less investment. It means there’s a lot more going into each of those games. If you played any of the games on the PlayStation 4 or the Xbox One, a remarkable amount of talent went into making those experiences. If you look at the games that will be shown at this year’s E3, you’ll see a powerhouse level of technical ability, on the console side, on mobile, on tablet, and on PC.

It’s additive. While there’s creative destruction that goes on amongst the various companies and elements, you do see an overall expansion of the market. The latest figures are that we’re going to be a $90 billion worldwide industry in 2017. Plenty of people, as you look at ESA in its 20th year, are going back and thinking, “Who would have thought?” That creative destruction, overall, is a very positive component of the industry. We take the talent that moves off of one title or out of one company, put it into another, and create the next fantastic entertainment experience. No industry does that better than the video game industry.

Above: Candy Crush Saga

Image Credit: King

GamesBeat: I would guess that you might have some work to do making sure that the voice of the mobile game industry is heard just as loudly as the voice of the console makers?

Gallagher: That is a challenge that we grasp with zeal and a great desire. We have member companies at ESA that are in the mobile space and are successful in mobile, but we also know that we need to do more to be attractive and better known among the mobile game community. We’re dedicated to that. The experience that you see when you have cross-platform gameplay, whether it’s PlayStation Now or the ability to play FIFA on virtually any device with a screen and have a different interaction depending on the medium in your hand, it shows that our industry and our leadership at ESA, they understand mobile.

E3 is a great place to cut through the noise in mobile and get your game seen and heard and talked about. You can get out of the ocean of mobile games that currently exists in the app stores. You have the ability to step up a notch by coming to E3. We’re looking forward to growing the experience for mobile in a big way.

GamesBeat: Those guys might have some concerns on the horizon about the Children’s Online Privacy Protection Act II (COPPA) law. (It requires that game makers proactively protect children from privacy invasions).

Gallagher: You’ll remember, at the GamesBeat conference, one of the things I underscored was that if you’re making games today that are targeted at children or may reach children, you’ve got to be very responsible. Not just for the sake of your own company, but for the whole industry. The FTC rules are a big challenge for everyone in the industry. Being responsible is job one.

We stand ready here at ESA to help in that effort. We do that for all of our members. We extend that further into the mobile community, to make sure that great entertainment experience they’re building connects successfully with the marketplace and doesn’t get misdirected because of problems with the government or with consumers. ESA is a proven, effective partner in that regard. We look forward to extending our work in that area.

GamesBeat: Fair use has been on your agenda from time to time as well, I think?

Gallagher: It has, absolutely. Fair use is interesting. Our industry is the most connected to the consumer when it comes to intellectual property that there is. In many cases, the consumers are part of the creative experience themselves. The magic that happens when you’re playing these games is partially directed by and influenced by the gamer.

There is this closer connection than with a movie or a song, where it’s one-way. It’s one production, done one time, and it’s consumed in the same manner by every consumer. Our difference – that interactive nature, the partnership with the consumer – leads to a very nuanced perspective on intellectual property issues like fair use.

The example I use that’s very iconic is how it’s hardwired now, into at least one console – and I’d argue it’s embedded in all of them, but the PS4 has the specific share button — this notion that I did something great, it was my experience, and now it’s recorded and uploaded to a social media outlet where the entire world can view it. They can see what I’m really proud of — or embarrassed by – in my video game play.

That share button is indicative of how open-minded our industry can be on issues like fair use. It does not mean that theft is allowed. It does not mean that compromising the economic models that make up the industry is acceptable. It does mean that there’s a very positive relationship with the consumer, and we do well navigating issues like fair use.

Above: GlassLab’s project with NASA on Mars.

GamesBeat: I saw you had a release with the Mars project.

Gallagher: This is the GlassLab. It’s something I’m very proud of in our time here at ESA. It’s a great collaboration of remarkably dedicated education specialists. Those are in the orbit of the Gates foundation and the MacArthur foundation, who put it together, and our member companies. In this case it’s Electronic Arts, which has housed the Glasslab for the last two years.

The idea was, let’s make great video game content that is immediately usable in the classroom, that teaches children core curriculum-compliant subject matter. It’s not a babysitter. It’s not meant to be a detour from the education experience. It is the education experience.

We did that with the first game, with SimCity, and we’re very proud of the results we’re getting back from that beta launch last November. That’s tracking very well. The second game, what we’re doing with NASA on the Mars project, is also looking to be very exciting. We’re seeing traction not only with the quality of the games and in the classroom, but also our partners. There’s a lot of interest in what’s going on with Jessica Lindl, who runs the Glasslab. You could see a very significant force for education, an expansion in the quality of education in the United States, come from the video game industry and from Glasslab.

You also can’t forget the College Game Competition. We’re in our second year of that, and I don’t know if you went by and saw the schools that were able to be there, but we had five colleges exhibiting. We had a tie for the winner. To think about being a college student today, where you get to compete for the college game of the year at E3 and be on the floor at E3 with companies like EA and Activision, Microsoft, Nintendo, Sony, Bethesda, they were floating on air for three days. It was very successful last year. We have terrific interest this year. From my experience of looking at these games, they’re fantastic. Everyone’s going to be impressed with what the college guys are bringing to E3.

Above: Watch Dogs gives players the capability to hack into bank accounts. Your smartphone prints money.

Image Credit: Ubisoft Publishing

GamesBeat: Do you have some favorite games of your own this year?

Gallagher: There are so many different rumors about what’s available on each of the platforms. One of the most recent articles had something like the 27 games to watch at E3.

For me, right now, I’m glad my son is home, because we just started playing Watch Dogs, which is just phenomenal. Given how, in Washington, there’s a very robust debate about the government monitoring individual communications, Watch Dogs touches that in a very significant way. I think it’s very well-done. I’m looking forward to the new FIFA, because my son’s a big soccer player. The World Cup couldn’t make that better timing. Skylanders is kind of a new thing for me. I want to make sure I get a full dose of that.

If you look at what Nintendo’s doing, I’m fascinated to see how the first ever competition at E3 works. I’m sure there’s going to be people camping out to get into the Smash Brothers tournament. I love Smash Brothers. I played it on the GameCube with my kids, endlessly. The new Mario Kart’s out and in our lobby.

I could go on and on with you about how much excitement there is in the market today, but that’s what this E3 is going to be about. It’s the future revealed. What about you? What are you hearing that’s going to be hot or that intrigues you?

GamesBeat: I still see some of the smaller mobile game guys trying to figure out what to do. Some of them have their hotel suites outside the show, or they’re doing something down the street. It would be interesting to see more of those guys figure out how to participate. They have such short leads between when they announce a game and when they ship it. They don’t want anybody to copy their games. It’s an interesting timing issue for some of those guys, still, how they can make a show like E3 work for them.

Gallagher: Yeah. If you look at the timing issue, you have a number of companies that’ll be showing titles – previewing them or letting you play them in a limited way on the floor – where it might come out in the fall or in the following year. That cycle is something they’re very comfortable with. But as you point out, for mobile, there’s a very quick pivot between finishing it and getting it out there.

On that note, it shows the relevance of E3 that they’re there, even if they’re on the margins. We can do a number of things. We have a lot of flexibility. We just need to hear a bit more from them about what they’d like.

GamesBeat: Another thing I was going to note is that it seems like most of the big games see two E3s before they ship. The number of titles that have delayed into 2015 is getting a little alarming at this point.

Gallagher: I wouldn’t say it’s alarming. I think it’s a product of the new console cycle. That’s a disruptive force for new game releases, in the timing and in the economics. That’s probably what’s driving that, although I’m not a game developer. I think that’s a significant hurdle for them to clear. We’ll see if it continues into the future.