Sunday, July 30, 2006

E3 history? Not in an industry of cheats

Next-Gen reports that this year's E3 may be the last of its kind. The article cites "senior industry sources" as saying that the big budgets spends aren't justified for the media exposure gained. Therefore, big publishers plan to pull out next year and spend their money elsewhere.

Well, hmm, this is interesting.

Can this be true? More importantly, if it is, will it actually work? My gut feeling is that it won't.

We have a classic case of game theory here (pun intended). More specifically, we have a form of the prisoner's dilemma. Quitting E3 will only work if all the major publishers do indeed agree to stop spending huge bucks. But let's look at a simplified decision matrix:

  • Everyone decides to leave E3
    • Everyone spends less
    • There's no competition for media, no one has a media advantage.
  • Everyone decides to stay at E3
    • Everyone continues to spend
    • There's high competition for media, no one has a media advantage.
  • Everyone else decides to leave but someone cheats and goes big.
    • Cheater spends money
    • There is no competition for media, cheater has a media advantage.
Will all the big publishers be able to resist the temptation to cheat? Ha ha ha. Someone will cave. This news story is interesting in that I don't doubt a lot of executives are tired of spending money on E3. Unfortunately, I really don't think they have a choice. As long as E3 remains an event where someone who is willing to spend money can get exposure, this arms race will continue.

The only way to break this prisoner's dilemma is if the ESA (industry group, E3 organizer) mandates certain rules and budget constraints. Otherwise, the free market will demand that everyone competes as much as they can. So everyone may play nice in 2007 but I guarantee there will be cheaters the next year (if not in 07 itself). Therefore, it's not a decision for the publishers, it's a decision for the ESA. Do they have the guts to nerf the most exciting industry event of the year?

This should be very interesting. An industry without a major trade event? That's tough to imagine. If the ESA does this, they have their own problems. They're not the only organization that can put out a convention.

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