Rumored developer displeasure with Entertainment Software Association president Mike Gallagher may be partially to blame for half a dozen publishers dropping out of this year's E3 conference, Kotaku has learned.
This morning we broke the news that not only are Vivendi and Activision not attending this year's E3 they've both decided to drop out of the association all together. We've since learned that Codemasters, NCSoft, Her Entertainment and id Software have all decided not to attend this year's show, though they are all remaining members of the association.
Only NCSoft had returned calls about the decision as of press time, saying that their decision to not attend E3 this year, the first time they won't in the company's history, was due to the development cycle of their games and in no way reflects on the ESA or it's leadership.
But several industry sources who wish to remain anonymous say Gallagher is in part to blame for issues surrounding this year's E3.
Wedbush Morgan analyst Michael Pachter also believes that the drop-outs are spurred by decisions made by Gallagher, who he says is less knowledgeable and sophisticated than his predecessor, Doug Lowenstein.
"Lowenstein was a very savvy industry veteran who paid attention to the goings-on in the industry and cared what the community had to say," Pachter said. "The new person... whose name completely escapes me because I've never met him or heard from him, is far less knowledgeable and sophisticated about this industry than Doug was and is going to make some rookie mistakes."
"Doug used to be a very visible spokesperson in congress... when you'd get these [things like] Barack Obama saying videogames are corrupting our youth or MADD saying that Take-Two should pull GTA off t he shelves, you would hear Lowenstein immediately shoot back. I would guess that Activision doesn't perceive the same value from the ESA as they did under Doug's leadership. I criticize [Gallagher's] lack of drive to learn about the industry."
While the ESA and Gallagher declined to comment for this story, several sources tell us that Gallagher has come under fire for what is perceived as his poor handling of the association.
In March, GamePolitics reported that the ESA shuttered its New York office, and in so doing fired that office's head, senior VP and general counsel Gail Markels. Markels, who reportedly earned $317,000 in 2005, successfully led all the ESA's litigation efforts against unconstitutional video game laws.
The ESA apparently trimmed its lobbying initiatives throughout 2007 while budgets rose, according to a report made by GameSpot on public filings. Last year, the Association spent a record $2.86 million on lobbying ? even though it chose to confront fewer issues, removing lobbying on online gambling, taxation of virtual property, and Internet privacy in favor of focusing solely on constitutional, copyright and relevant trade issues.
Pachter points to the timing of this year's E3 as another mistep. He believes that the new July date just doesn't work out for Activision and Vivendi for financial reasons. Most game companies have a financial quarter that ends in June. Those companies usually have observe a two-week "quiet period" following the end of the quarter, during which they may not speak to investors ? and Pachter says that Activision is especially strict about observing theirs to the minute.
With that in mind, the July E3 is just financially inopportune for both Activision and Vivendi based on the schedules of their fiscal quarters.
"And a Vivendi that feels snubbed could be a big detriment to the ESA, Pachter said. "Vivendi's revenues are so heavily from online subscriptions, which technically don't fall under the ESA... but if ESA ever cares to represent the MMO companies, they really have to have Blizzard as part of their consortium. And there's no question that the market in 20 years is going to shift to a more heavily-utilized download model."
Activision and Vivendi, for their part, say the decision to not renew their membership in the ESA this year was purely a business one.
"After careful consideration, Activision has decided not to renew its ESA membership for business reasons and will not be participating in any official E3 activities. We appreciate the work that the ESA has done over the years in promoting the interactive entertainment industry with state and federal governments and wish the ESA best of luck with the show."
Vivendi sent a similar statement to us today. Both declined to comment about Gallagher's leadership of the ESA.
Activision did confirmed with us that while they will not be attending the show, they will be holding an event on the first day of E3, though not at the convention center. Vivendi has not yet commented on whether they will be showing outside of the convention center during the show's week.
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