E3, retail, dinosaurs, and mammals
Over a Monte Cristo sandwich the other day (deadly, deadly), I had occasion to discuss the E3 changes with a Silicon Valley guy who was curious. Of course, we recently saw what the E3 organizers told the smaller guys, the ones who lurk in Kentia Hall. (Not always so little — this year, that’s where Guitar Hero was, for example).
The underlying subtext here is that E3 is about publishers, big ones mostly, showing their wares to print media, television, distributors, and retailers. The people who are getting frozen out are the indies, the smaller publishers, the bloggers under a certain mass market threshold, and the consumers.
This seems like an odd step into the future, if you look at current trends.
First off, there’s the question of whether the retail model is where the publishers want to be. They’re heavily invested into it, of course, and it’s not going to dry up and go away overnight, but it’s certainly taking some body blows. Used game sales are rising; in North America, we’re down to exactly one specialty retail chain; numerous new business entities are developing methods of game streaming, digital distribution, and “long tail” sorts of plays… all in all, retail does not look like the place to be.
Next, the emphasis is on showing things off to print media and television. Why on earth? The gamer community is one of the most connected consumer audiences there are. Print mags are dwindling by the day –which is going to be a real loss on several fronts, don’t get me wrong — as audiences seek greater immediacy in their news. Most critically, they seek greater engagement with the media properties they consume and participate in: a high-falutin’ way of saying they want to chat in realtime on forums, speculate about rumors, piece together clues, and in general take a more active fandom role.
Third, the most fascinating growth segment in games today is in quirkier fare, in games that are not the bombastic mainstream. Nintendo has had a massive resurgence precisely by challenging the definitions of what it means to be a gamer. Games that do not show well on 20 foot screens and lack high-priced cutscenes and 3d graphics were always marginalized at E3; it was like a film festival that only showed summer movies.
In some ways it’s not a huge loss to the indies to lose access to E3. They were not the sort to regard it as crucial to their success anyway. Many of them reached for demographics that E3 did not serve, with its busty women and its blare: women gamers, puzzle gamers, niche markets like wargamers.
What’s interesting is that the current established publishing industry is closing the gates against the barbarians. The commonest refrain I hear from those celebrating the move (and in fact from those sick of E3) is complaints about the unwashed hordes of fans with a fake press pass crowding the aisles and getting to play rough builds for free, preventing the “people who matter” from seeing demos cleanly.
Folks, those are your customers. They are the “people who matter.”
A lot of folks have pointed to Penny Arcade‘s PAX event as the likely heir to E3. But PAX isn’t about print magazines. PAX isn’t about publishers and distributors. I doubt Gabe and Tycho care if WalMart gets a private demo and a semi-enclosed meeting room with air conditioning and bottled water. PAX is about the fans. Pricing is a modest $45 at the door. There’s actually official gaming on site. PAX is where the barbarians have their annual party.
Years ago, I remember being asked to give a demo of UO on the show floor to the most important category of visitor. Not press. Not player. Not publisher. Not CNN or the New York Times. No, he was a stock market analyst. On his word, EA’s stock price might rise or fall. He had very little idea of what he was looking at. But any stock market analyst worth his salt should know that the hot product is going to be the one that he can’t get to see because too damn many potential buyers are crowding the booth, salivating over getting a chance to see it.
The relationship between making an analyst happy and getting good games into the hands of players does exist, but it’s relatively tenuous one. These days, when Penny Arcade’s circulation is larger than that of most (all?) of the gaming print mags, one has to wonder who we treat as the royalty at the shows.
So, indies, small guys, lovers of Kentia Hall — I wouldn’t shed much of a tear. The drawbridge is coming up, and the dinosaurs may well starve within it as the mammals run loose over the landscape. I say this as someone who has spoken at E3 conferences for years, and who regards many organizers thereof as friends. It’s a backwards move; if anything, the big established industry should be looking for more ways to throw open the gates, because long-term, the revenue is going to live outside the walls, not within them.
15 Responses to “E3, retail, dinosaurs, and mammals”
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I can say with absolute certainty that Ray Bradbury has eaten at least one Monte Cristo sandwich in his lifetime, and I can say with less certainty that it appears not to have killed him yet.
Is that subtext really there? I see: “Our cake party has been cancelled. We’re planning a new party with different cake, but we’re still working out the details. Thanks for participating in our cake parties in the past.” I’m somehow totally missing the part where it says, “MUHAHAHAHA! NO CAKE FOR YOU!”
I don’t point at PAX as the likely heir to E3. In fact, I think that’d be a mistake. I do, however, recommend PAX as a good place for people who complain that they never had a chance to go to E3. The people who complain that they never got to go to E3 are mostly fans, who pictured E3 as a gigantic geek festival full of sneak previews, fellow gamers, bright flashy lights, and fun. If anything, PAX could potentially fulfill the gamer fantasy of E3 better than E3 ever could, because of E3’s Great Big Identity Crisis. PAX isn’t at all confused about what it is and who it’s for.
Because they left out the part where they say, “We hope you’ll come to our cake parties in the future.”
Then why mention them at all?
If someone spent one third of a letter telling me about her upcoming cake party, I’d be rather startled if I wasn’t welcome there. Why waste the keystrokes? Filler?
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Raph, if you install a "tags" plugin, you can create titles like that automatically. 😉
Like you said, what should be public relations in this industry is merely media relations.
In fact, they are the customers — the die-hard fans — who are most likely to become champions of the brand, if they’re not already. Businesses cannot build relationships with customers by running into a crowd shouting, "Hey, everyone, look at me!"
In business, the media exists to help companies connect with (prospective) customers. When customers are standing on the porch, don’t run inside, shut the door, and call a publicist. Greet them with open arms and invite them inside!
I thought the customers at E3 were publishers and retailers? Dev studios selling games to publishers and publishers selling games to retailers.
Maybe in the past that would’ve meant an event too small to sustain itself, and gamers were needed to bring the numbers up. I think the industry has grown beyond that now.
You aren’t kidding about dinosaurs. On multiple fronts.
They are falling back to established, decades-old ways of doing things, because it was good enough in 1975, so it ought to be good enough today. Somehow they fail to recognize the fact that WORD-OF-MOUTH advertising is the most powerful marketing tool (and the most difficult to control) in the book. While E3 was definitely a nightmare on wheels, it has still been an opportunity to build up that word-of-mouth hype, something which they may be sacrificing with this new move.
But I think the retail game industry really is getting into a fortress mentality. Rome started to collapse when it quit expanding and actually had to start defending it’s huge borders, and to a degree I believe the retail “AAA” game industry is in the same situation. It’s painted itself into a corner towards a meeting with the Law of Diminishing Returns. The market just can’t grow at the rate the industry has grown.
I’m curious what the shape of things will be. I will mourn the passing of E3 in that it provided the games industry with a lot more mainstream attention than we normally receive. But gaming has already become mainstream now, so perhaps it is no longer needed.
[…] retail, dinosaurs, and mammals E3, retail, dinosaurs, and mammals: “Over a Monte Cristo sandwich the other day (deadly, deadly), I had occasion to discuss theE3 changes with a Silicon Valley guy who was curious. Of course, we recently saw what the E3 organizers told the smaller guys, the ones who lurk in Kentia Hall. (Not always so little — this year, that’s where Guitar Hero was, for example). […]
Hmmm why do people who like Pie always get discriminated against? Never invited to the cake parties *weeps*
that was funny Morgan….
Unless your house is dirty or you have something to hide??
Jay-
What actually typically occurs is that economic players not only experiance diminishing returns but ALSO exceed their consumers threshold price points. This results in smaller economic players capturing market share. lack of focus on ROI = dated business modeling = loss of market share. Example: What IBM went through as an organization
In plain english, this means large game companies could price themselves out of the market by charging to much for games, exceeding what gamers are willing to pay, and resulting in these gamers going elsewhere…to indie games…
On a social/community level as a gamer:
If the choice is dependant on what games ALL my friends can play and what games only SOME of them can play, thats not really on option for me, I want to be around ALL of my friends, because thats about 80% of the reason I’m playing video games….
Allen –
Yup! Unfortunately, as much as I’d like to believe that indie games would be the heir apparent as the dinosaurs dissapear into the tar pits, there are other avenues that players have proven they WILL pursue when their individual threshold price points are exceeded: Piracy, and used games.
More likely, I expect these companies will evolve – slowly and painfully. At one point Nintendo looked unshakeable, but then Sega exposed their weakness, and Sony went for the throat. I don’t know how much Nintendo has actually evolved since the early 90’s, but it had to adapt and change from holding its command position.
I do hope that the slow evolution will allow indie developers to gain a bit more of a toehold on the public consciousness. That DOES seem to be happening, particularly with opportunities like the XBox 360 LiveArcade.
Tess, Ray Bradbury is going to live forever, everybody knows that!
I certainly hope PAX doesn’t turn into the next E3. I can see it aquiring all the glitter and glam and schmooze and whatnot, but…I went for the first time last year. All I saw were gamers and developers going “OMG this is cool! Oh wait that’s cool! This isn’t so cool. That is the COOLEST!” People stomping loudly on DDR machines, slapping Magic: The Gathering cards on the tables, sitting in the halls by the hundreds Pictochatting each other, holy crap.
The barbarians’ annual party indeed.
[…] so much on front-loading their sales? Here are some reasons, not necessarily in order of importance.#1 Physical Packages Have a Physical CostFirst of all, physical game packages take up physical space.If it were possible, they’d love to sell evey single copy they would ever possibly sell on day 0.#2 – Shelf Space Has An Opportunity CostBecause retailers and distributor warehouses do not havefuture sales cut off – arbitrarily clipped to zero – as they get cycled out for stronger sellers.#3 – Publishers Don’t Want To Compete With Themselves.Thirdly, major publishers do not want a gameit a sequel. So they invest a lot of effort into convincing consumers that newer is ALWAYS better.#4 – It’s Easier To Start An Avalanche From The TopFourth, massive initial sales helps cause “hype.”like what indies are doing already, on a much smaller scale. But I digress. What about #3 and #4?Avoiding Ancestor-PhobiaThe third problem is only an issue if you have a rapid release rate ofmammalsAnd that seems to speak to a previous article from a little over a year ago:No E3 for Me! # posted by The Rampant Coyote : 8:38 AM Post a Comment Links to this post: See links tothis post posted by @ if (typeof BL_addOnLoadEvent == ‘function’) { BL_addOnLoadEvent(function() { BL_writeBacklinks(); }); } […]
Total number of publishers + total number of press + total number of retailers is a number lower than 50. You can get to maybe 500 if you include all the extra people who probably don’t need to be there, but really — all of Walmart is represented primarily by one buyer, and so on.
The other tens of thousands attending — developers, bloggers, fans, store employees…
In practice, E3 is a terrible environment to show to press or to retailers. Retailers get demos when they want them anyway — it’s a major part of the sales calendar, and you don’t ignore them except for one day a year. And press, they get previews, they get visits, they get early builds…
The fact is, the entire US/European game market structure became untenable about 5 years ago, and E3 was the keystone of that structure. Too many different factors (rising costs, secondary sales, more connected consumers being harder to market to, others) are working against it. The first step will be the abandonment of the PC games market by the major publishers (already underway). But the whole thing is fundamentally flawed: Costs rise faster than revenues. That trend is not sustainable.
–Dave
By the way, Gen Con, as an alternative to PAX. There are Gen Con events in Indianapolis, Anaheim, and Paris.