The End of E3's Excess

Computer gaming's premier trade show is being scaled back; the industry may be better off for it

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For many gaming enthusiasts, the third week in May is the highlight of the year. That's when nearly every game company in the world converges on the City of Angels to strut its stuff at Electronic Entertainment Expo, video gaming's premier trade show. The spectacle, informally known as E3, has become renowned for excess—including pounding music, miles of showroom floors, and massive booth displays by the industry's biggest players.

But next year's E3 will be decidedly less spectacular. The Entertainment Software Assn. says E3 2007 will be "a more intimate event focused on targeted, personalized meetings and activities." It will lack the "large trade show environment of previous years," according to the trade association. More than 60,000 people attended this year's E3.

Why the change? ESA President Doug Lowenstein says he and other industry executives decided E3 had become ineffective in helping exhibitors reach their desired audience. "You have to ask, is E3 the most efficient way, the most cost-effective way to interact with the media? And I think the answer to that is no," he says. "I think the main thing that's going to be different is, by making it invitation-only, people are going to be interacting with the people they want to see."


  While attendees may miss the show's extravagance, a scaled-back E3 may ultimately be a good thing for the industry, says Wedbush Morgan analyst Michael Pachter. "I'm not sure that it was conducive to getting the right kind of message to the right kind of constituency," he says. "The show has evolved to a show for gamers, even though it was only open to members of the industry."

Gearing up for E3 has become something of a nightmare for publishers, developers, marketers, and others involved with its organization, Pachter says. A publisher always wants to have something to show at E3, but it's not always feasible or practical to spend time making playable demos or putting together a workable trailer. And a demo of a game that's still in development can fail to impress game journalists, resulting in negative buzz, despite a costly effort.

Still, there's no guarantee that money saved on E3 will be well spent elsewhere. "I think it's a mistaken assumption that if it costs a publisher $10 million to $20 million to go to E3, that they're magically going to have that back in their operating line next June," says American Technology Research analyst P.J. McNealy.

Indeed, some smaller game publishers could suffer from the lack of publicity their products would otherwise get at a full-blown conference, Pachter says. Hardware companies such as Nintendo, Sony (SNE), and Microsoft (MSFT) and bigger publishers will probably host their own media events in hotels during the new E3. But smaller companies with just one or two products might not be able to afford a private showing.

It's too early to declare E3 officially dead. Pachter says while E3 in its current form is no longer, exhibitors will continue to come out in force. "I think everybody's going to support this new format," he says.

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