Fewer Players in the Gaming Group

By Mike Musgrove
Sunday, June 8, 2008

Why is the ESA shrinking?

In recent weeks, the video game industry's Washington-based trade group, the Entertainment Software Association, has seen a number of its high-profile members -- video game design studios and publishers -- leave the organization.

Out the door are a formidable collection of game companies: Activision, Vivendi, LucasArts and Id. Some industry insiders say other game companies may follow.

Together, the four companies represent millions of dollars of video game sales and a big chunk of the industry. Activision is one of the world's largest game publishers, and it puts out the Guitar Hero games. Vivendi Games publishes the popular computer game World of Warcraft, which 10 million fans pay a monthly subscription fee to play. Those two companies, by the way, are working on a merger that should be completed in coming weeks.

In a phone conversation last week, ESA President Michael Gallagher played down the exits as not-unusual trade group churn.

"There are hundreds of trade associations in Washington and virtually all feature member turnover and the ESA is no exception," said Gallagher, who took over last year. He is only the second person to lead the 14-year-old association.

The ESA was formed to give the young industry a voice on Capitol Hill and keep the government from regulating violent videogames. In the same way that the movie industry's trade group oversees movie ratings, the ESA runs the Entertainment Software Rating Board, which rates game content with the aim of keeping violent, "M"-rated titles, such as the latest Grand Theft Auto game, away from children. The organization has a successful track record.

The recent exits come as the video game industry has never been more successful; despite signs that consumers are trying to tighten their belts, video game sales are up this year.

Most of the companies who have left the ESA haven't explained their move, though it appears that rising dues may be a factor. The organization's fee structure has increased twice in recent years and now amounts to millions of dollars in some cases; one company says fees quadrupled from one year to the next.

The fees fund an organization that goes after issues of concern to the industry, such as piracy, which costs game makers billions of dollars annually. Earlier this year, for example, the ESA worked with local authorities to shut down a bootleg game operation in Mexico. Whenever a politician tries to make the sale of violent video games illegal, the ESA legal team goes into action. The day I talked to Gallagher, he said he'd spent the morning on Capitol Hill talking to staff about the effectiveness of the industry's game rating system.

Jeff Brown, vice president of communications at game publisher Electronic Arts, said that it is "unfortunate" that some industry leaders have left the organization, though he would not speculate on their reasons for departing. As for EA, "there's no thought of leaving the organization," he said.

A little backstory: The ESA used to throw a major annual trade show called E3 that was the organization's main revenue source. But somewhere along the line, game publishers came to question the cost effectiveness of spending millions of dollars to make a splash at the show. The ESA opted to reinvent the show into a smaller and more intimate, "invitation only" event. One year, the show saw 60,000 attendees, the next it was down to around 5,000.

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