Question: Something we’ve all been writing about a lot, every time there’s a school shooting video games come up. There have been all these meetings. Can you update us on that? Are video games still the whipping boy?
Gallagher: One thing I think that’s sunk in, to a great degree, is the truth: video game violence has no connection to real world violence. More and more authorities accept that. If you look at the major media, this last cycle of this, say this year—major publications, top of the headlines, say that video games have nothing to do with these shootings, in Parkland or Sante Fe or Vegas or Orlando or anywhere else. If you recall, five years ago was the opposite of that. The media was feeding the notion that there was this connection. Now the media has rejected that connection. I think that’s very powerful.
We continue to have episodes where we have to intersect with public officials on the state and federal level, and also outside groups, experts or critics, on the subject of the alleged connection between video game violence and real world violence. We’ve seen from experts, from the Surgeon General, from the U.S. Supreme Court, and from your own experience that there is no connection. When we go in with the assets, with the research that’s been done, with the analysis that’s been done internationally—these games are sold around the world. There are 2.6 billion gamers. Yet this crisis of gun violence and mass shootings is uniquely American. If these games are played everywhere, we should see these outbreaks in all these other countries, especially ones like Canada. We don’t. It’s got to be something else. That’s a very powerful point, and that’s had impact.
We continue to engage on that issue. I would say, 10 or 11 years ago, when I started, that was more than half the job for me, going around and making that case. Now it’s an infrequent part of it. It’s important when we do it, and I believe we have a great team and great industry leaders making the point very well. That’s why you’re not hearing as much about it. We’re very good at making this argument and having the facts be clear, and then moving through it to get to the truth of the industry.
Above: Assassin’s Creed: Odyssey — don’t try to kiss Socrates.
Question: To encapsulate, then, aside from whatever politics smokescreen stuff might be happening on the front-facing side when it’s convenient, when you’re engaging with policy makers, they’re getting it. They’re not going down that path.
Gallagher: We have an ever-growing number of policy makers that reject the notion outright. They don’t entertain it. We have a number of champions of the industry that point to us and say, “This is a great industry. There is no connection to this crisis of gun violence.” Then I would say that the industry has never been more capable and effective at making the truth known about what we are, about the creative energy of game makers, and the lack of any connection to real world violence.
Question: Did President Trump ever come back with any sort of invitation to you, after that meeting you guys had in the White House? Did any formal feedback come back about whether they were going to do something or not do something?
Gallagher: I’ll give you two levels of analysis on that. There was a media feedback and it was public. The three members of Congress who were in the room – Marco Rubio and two other Republican Congressmen – each put out statements. Senator Rubio, after that meeting, said it’s clear that video games don’t have a connection to real world violence. The points were effective on more than just the President. The two other Congressmen also put out statements, and those pointed to other factors and the need for this dialogue to be focused in other areas. There was, in real time, a reaction to it.
Then the President put out a response. We had one as well, and since then that’s covered the subject. Now, he also pointed to the so-called School Safety Commission that Secretary DeVos is chairing. There are, whatever, 24 items that commission is supposed to look at. One of them is the impact of media – that’s all media, not just video games – on youth, and specifically on rating systems, the impact of rating systems on the consumption of media by youth. We’re engaged with that commission as they have questions they’d like us to answer. We’ll of course participate and provide the information that we already provided the President. That’s the current status as to follow-up from the meeting.
Question: Were you content with your response to the situation? Is this something you want to be more aggressive on next time in terms of putting your own people in front of the press, on social media, on TV?
Gallagher: I’d say we’re never content. We’re always vigilant. Our approach—you have to ask yourself, from where we sit, what does success look like for that engagement? Often confrontation is very helpful to your industry, the media, and cannot be helpful to ours. We need to educate. We have a lot of other things we need to focus on when it comes to growing the industry and the increasingly global connectivity we have.
When you look at the ecosystem of the video game industry, 95 percent of the world’s customers are outside the United States. Outside the U.S. this issue doesn’t come to the forefront. We need to have the bandwidth to deal with other things, and then also continue to extend and protect the frontiers of interactive entertainment around the world by working with our other colleagues. This issue is not one where, if we just keep talking about it, it’s serving the industry well. Especially when it’s proven that there is no connection between the atrocities happening in our country and the entertainment our artists make.
When you answer the question that way—if I look at the response, I believe we’ve done an excellent job as an industry in responding, and the industry is bigger than just ESA. You see that in the responses, from the source of the responses, to the last go-round. You have plenty of speakers. You have academics. You have IGDA. You have us. You have individual member companies. You have gamers. All of these voices are being heard by those that ultimately are sitting in judgement, the media and policy makers. You can see that tide has turned fairly dramatically in favor of the artist and the game maker.
Question: What about when something like Active Shooter pops up on Steam? How detrimental is that to this conversation?
Gallagher: Let’s put it this way. Active Shooter is not the industry. I’ve never met these people. I don’t know them. The game’s not actually been released. I don’t have any personal knowledge of this. But it’s not something I would play. It’s not something I think many people in this country would waste their time on. Valve runs a platform. They’re a fantastically successful, very well-respected platform for the industry. They’re a great Northwest success story. I visited them to talk through this issue. Their response is very thoughtful. It’s one that they’re being very careful about. There’s more to come. That’s another thing they indicated in our conversation.
I think it’s best if we continue to let that unfold. They are absolutely motivated to do the right thing for their gamers and for their developers. We share the same motivation in our capacity as ESA. Active Shooter isn’t in the best interest of any of that.
Question: It sounds like, despite the evidence you present, that the issue isn’t necessarily one of facts. When you have this coming up over and over again, and Active Shooter is a good example of that—it’s obviously not representative of the industry, but it keeps coming up. One of the prime motivators behind that is the NRA, I think. Oliver North, despite the fact that he was in a game, or contributed to one, recently brought up video games again. What are you doing in terms of the NRA? Not the politicians, but maybe the people behind them.
Gallagher: We have a common—I won’t use the word “target.” But we have a common objective in the sense that it’s getting to the hearts and minds of policy makers with the truth. Ours is proving to be more compelling because there are fewer of those that take on the lie that is peddled, that there’s a connection between video game violence and real world violence.
Instead they have incentives to attract our industry to their states. We have 22 states that have incentives that say, “Bring your industry jobs here.” Several of those states are in the south. They’re seeing that the average wage in the industry is $100,000 a year. They’d like to have those jobs in their states. They see the industry for its truth. These other aspects are tired stereotypes that are finding less and less traction, wherever they’re coming from.
We know the NRA makes those arguments. We also know that they’re going to bear the burden of history. We will continue to be successful with policy makers as the industry continues to grow. We have a great capacity to tell the story and there’s a great receptivity from policy makers around the country. Just to keep the numbers in mind here, there are more than 7,000 state legislators in the country. You have 50 governors and attorneys general, plus federal legislators. You have to look at the whole. That’s what we’re focused on domestically.
We see continued acceptance. With things like the E-Tech Caucus, the video game caucus in Washington D.C., it’s the biggest caucus in Congress that doesn’t represent a disease or a country. It’s maybe 17th. There’s the cancer caucus or the diabetes caucus or the Italian caucus. Behind all those, the next one in size is the video game caucus. This is the type of environment we see and embrace and speak to. Our message is one of truth and optimism and hope. The others can say what they want to say. That’s going to remain our central point and our message.
Question: Three-thousand media professionals are here. I wonder if you include influencers in there. What would the distinction be these days? I would guess that a much larger part of those impressions now are coming through social media influencers. What do you notice about what’s different when it’s not all professional media driving this?
Gallagher: We do include influencers in that 3,000 figure. We’re one of the few shows that will badge Twitch and YouTube streamers as media. We see that as a very important part of the ecosystem. A lot of other shows will badge them as fans or as industry. As far as how we determine that, we look at number of followers, number of viewers they get, how often they publish.
Here’s how we look at this. If you look at the purpose of the show, it’s to connect the world with the industry. We can do that through all channels, not just through certain specific ones. When you look at the avenues, it’s our role as an industry to connect with everyone. We’ve seen gamers—they’re the ones with the voracious appetite. They’ll listen to you, but they also want to have a direct connection to publishers and game makers. E3 provides that in a major way, all at once. They know to tune in, around the world. So yes, we embrace all of those forms of media, because they’re relevant in connecting with the audience and those that impact the audience.
Question: How many attendees do you have this year?
Gallagher: It’s right around 60,000. We have 15,000 consumers, and then 45,000 industry. It’s capped. We’ve had to expand the show hours to try to relieve pressure and expand the footprint. We added a day to the Coliseum so there are more places for everyone to go than just the show floor. We’re trying to relieve the congestion there.
Question: Are outside fan events counted in that? Like when EA Play was running, that’s not part of that?
Gallagher: Correct, generally. But Microsoft is absolutely part of that.
Above: The Division 2 goes to Washington, D.C.
Question: Can you comment on the current conversation around unionization and labor organizing practices? Does the ESA have any comment about, for example, Game Makers Unite and some of the conversations that are starting now?
Gallagher: This is fortunately an issue that we haven’t had to deal with much in my time as the leader of ESA. I think there’s a reason for that. The wages in the video game industry are very high. The barriers to exit for employees are very low. The opportunities to create within the industry are abundant – multiple platforms, multiple publishers, multiple companies spread all around the company. The market is global. That provides a lot of opportunities for individuals to be fully empowered.
You see those choices being made every day. We have a map at areweinyourstate.org. It’s a map of what we count as all of the video game companies, as well as locations. The number of locations is somewhere around 3,000, around the country. The industry has been democratized. The tools to make games have been democratized. The returns and the revenue have never been higher. When you put all of those elements together it’s created great opportunity for individual laborers, for game makers at whatever level, to make choices that empower themselves. I think that’s why we’ve had less—it hasn’t been a significant issue for the industry in the last 10 years.
We are, of course, paying attention. We’re listening. These issues, we’ve learned you have to pay attention to them when they’re small, because they can become big. When they’re bigger they’re much more difficult to manage. But right now, the dialogue that’s happening is at a level that is, I would say, in its infancy. To the extent that it’s going to grow, I don’t know.
Question: It seems like it’s attached to the crunch issue that has been around for a long time, and continues.
Gallagher: What I hear about that, one, yes, where crunch is in effect, there’s a definite impact. But also, I hear more and more publishers saying—they’re doing this for competitive reasons, for cultural reasons. They’re rejecting crunch. They’re saying, “That’s not how we operate.” That is an attraction for the best and the brightest, to see those opportunities and make those individual choices to go to those companies. Again, through the marketplace, which is very competitive.
Remember, the marketplace for talent and labor isn’t just video games. It’s all of tech. When you broaden it to the internet and tech, you look at the skill set it takes to be a great worker in our industry—other industry are pulling at those people as well. You just have different challenges in those industries, and probably a lot less excitement. That’s what I would say. There are other choices to be made. We’ll see how it plays out.
But yes, we’re listening. I heard a little bit at GDC, and then I had a longer conversation that provided more light on it for me when I was at the Nordic Games Conference, three weeks ago.
Question: I wanted to ask about esports and how that’s changing E3. Is that growing? Where do you see it headed? How is it going to affect the show?
Gallagher: We take this measurement after each show. Last year we had an activation right out here in Microsoft Plaza, and then we had another one inside the south hall. Those were very successful, which led to the increase you see this year.
On the bigger level, the global level, we’re seeing massive engagement. The revenue in esports is nowhere approaching the entertainment revenue you see from the platforms themselves and the core entertainment product. But the engagement levels are off the charts. When it comes to maintaining eye share and mind share, it’s fantastic that you can have esports with more viewers than game seven of the NBA Finals. Non-endemics are looking to connect with an audience.
Every August they put out the average age of major sports viewers. I think the broadcasters do it. This last August, the oldest sport is Golf, with an average age of 64. Baseball is 59. NFL is 50. The youngest, for the NBA and MLS, is 40. That’s the average viewer of these sports. The leagues are looking around—you look at what the NBA is done. They’re saying, “We need to connect with younger viewers now or we’ll lose them forever.” They’re watching esports, because the average age of esports viewers in 28. That’s the sweet spot.
That force is very strong. It’s not yielding enormous revenue right now, but if you look at the success of Activision setting up their league, it’s fantastic for them. You look at the formality of structures being set up around players, leagues, standards, arenas being built. These are the types of things that drive a lot of intensity and growth. You’re seeing that now come into E3, as E3 continues to adapt with the market we address. We’re providing outlets for the game publishers to connect with gamers. Esports is a great way to do that.
It extends beyond just, “Here’s the best in the world against the best in the world.” That’s not how sports are played. We all play sports. It doesn’t mean we have to be the best. We still like to watch other people do it, and maybe we want to play ourselves.
Question: When it comes to engagement, we’re talking about this premium demo of 18-32 year old males, high disposable income, and so on. You have all these traditional sports organizations getting involved in esports. Do you think that will spur larger network outlets like CNN, MSNBC, or Fox, on their sports sides, to start paying attention to this?
Gallagher: Change is hard for incumbent industries. We’re disrupters. We disrupt ourselves, routinely. Our industry is much more comfortable with that, and our customers, the gamer, demands that. That’s what keeps them coming back. It’s not always going to be the same. Our mindset is one where we’ll make that investment. We’ll take the risk. We’ll use new technology. We’ll use different pathways to connect. That’s our DNA as an industry, and in our consumers as well. That’s what gives vibrance to esports. It happens almost completely outside of these incumbent mindsets.
When you’ve been doing something for broadcast more than 100 years, or 40 years for cable, and you’ve been doing it a certain way, and your economic metrics are set up in a certain way, and your incentives are set up to reflect that, and you’re being judged as a public company by traditional metrics, the things that are happening on the outside can be the meteor that hits you. You get disintermediated.
If you look at what’s happening with over the top plays on the internet for access to content, traditional content, or you look at the declining number of cable and satellite subscriptions, where are people going for entertainment? The indicators are already there. Eventually those same media centers of power will either make the right decision or they won’t. Then there will be consequences. We’ve seen this play out in other technologies and other media over time. Remember that ESPN rejected esports first. Then they took it on and you can see that they’re at least dedicating some assets to it. But it feels like it should be better. It should be more.
Right now, here’s how I would look at it. I think this is also how the winners in AR and VR are going to see it. If you just say, “Here’s a traditional way of doing a video game. Now I’ll strap you in a headset and you’ll play it in VR,” it makes you sick. It doesn’t work. You have to design the game and the technology to create an experience that somebody wants to come back to. That’s experimental right now. We’ll figure that out as an industry. We’ll figure it out first, ahead of others.
When it comes to connecting with that audience, it’s probably not going to be happening out over a cable network that people don’t even subscribe to. If they’re disconnecting because they’re going over the top or getting their content in different ways, the networks are going to have to come up with their own Twitch, or a similar approach, and say, “This is how we’ll connect with this audience, because that’s how the audience wants to be connected.”
