Game expo, playing to shrinking crowd, may be taking its final shot

By Alex Pham

July 10, 2007 12 AM PT

Times Staff Writer

For 11 years, the ogres and elves roaming Figueroa Street sent a clear message: The video game geeks were back in town, selling out hotels, packing restaurants and keeping taxi meters clicking.

But the monsters, booth babes and celebrities that were hallmarks of the annual Electronic Entertainment Expo, known as E3, are gone from downtown Los Angeles.

The convention attracted 65,000 people last year, making it the city’s best-attended conference, according to LA Inc., the city’s convention and visitors bureau.

This year’s event, which starts tonight, has moved to Santa Monica and radically downsized. Now called the E3 Media and Business Summit, it’s a sedate, invitation-only affair that’s expected to draw 3,000 people for PowerPoint presentations and schmoozing over quiet cocktails.

The video game industry is still booming, with revenue from games predicted to grow 18% this year compared with 2006. But Sony Corp., Microsoft Corp. and other major video game companies that backed the huge show didn’t think it was worth the energy or cost anymore.

L.A. is taking a financial hit as a result. The smaller show should contribute $7.8 million to the area economy, compared with more than $16.5 million from last year’s event, according to estimates from LA Inc.

That contribution could drop to zero next year. Many of the event’s biggest participants this year question whether it’s worth the effort and predict the 2007 show will be the last.

“The E3 as we knew it, loved it and hated it is officially dead,” said Mike Wilson, chief executive of Gamecock Media Group, an Austin, Texas-based game publisher that’s holding a New Orleans-style funeral procession from Santa Monica Beach to Venice Beach to bid the show farewell.

Organized by the industry-funded Entertainment Software Assn., the event first came to Los Angeles in 1995 with 30,000 exhibitors, retailers, analysts and journalists. Except for a detour to Atlanta in 1998, the show has filled the Los Angeles Convention Center every year since. It often spilled over to other L.A. venues such as Dodger Stadium, the Shrine Auditorium and the Hollywood & Highland shopping center.

The booths became increasingly elaborate, the costumed characters ever more flamboyant and the parties bigger and louder. Activision Inc., publisher of the “Tony Hawk” series of games, one year installed a half-pipe for skateboarders in the convention center. Another year, the U.S. Army had soldiers rappel from helicopters. Sony, Microsoft and Nintendo Co. tried to outdo one another by inviting big-ticket entertainers, including music artists the Killers and Beck, to their parties.

“E3 became an arms race where everyone was trying to be bigger, louder, flashier,” said Geoff Keighley, editor of Gameslice.com, a site for game enthusiasts. “It was for the game industry what the Cannes Film Festival is for the movie industry.”

It wasn’t cheap. The biggest spenders, often console manufacturers, each shelled out $6 million to $10 million a show, according to company executives. Major software publishers also spent several million dollars each.

They were hoping to garner media coverage and win big orders from retailers for the holiday season. The event also gave the industry a touch of glamour as it sought legitimacy as a mainstream form of entertainment, on par with the movie business.

The region reaped the spoils of that extravagance. The show was so important that the city agreed to lease the convention center for just $1, provided that a certain number of hotel rooms were booked, LA Inc. said.

“For Los Angeles, it was the largest trade show we had,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. “It generated a lot of hotel stays, restaurant visits and other types of spending.”

Some of that spending trickled down to Jenny Howard and Lisa Cornwell, who were paid $500 a day to don elfin costumes, cheerleading outfits and schoolgirl uniforms to promote games.

“You used to be able to plan on getting a few extra thousand dollars every year in the middle of May to help out with the bills,” said Cornwell, a 34-year-old Venice woman who now works as a part-time receptionist.

Another E3 beneficiary was Mekebib “Mike” Seifu, who made an extra $800 to $1,000 each year ferrying attendees all over town in his Yellow Cab.

“It easily tripled our business,” Seifu, 47, said. “They run up and down the city from Santa Monica, Beverly Hills, Hollywood, you name it. We miss that.”

This year, the spending is expected to slow. The projected 3,000 convention-goers have booked 15,000 nights in local hotels, compared with 33,400 nights last year, said Michael Krouse, senior vice president of sales for LA Inc.

That’s not as steep a hit as one might expect, given the huge drop in attendance. Many attendees in previous years were locals dropping in for a day or two, so they didn’t require hotel stays, Krouse said.

But many game companies now see E3 as redundant. They stage their own events throughout the year for game reviewers, the media and retailers -- the same audience attending E3. Sony, for example, hosts Gamers Day for critics and Destination PlayStation for retailers.

A smaller E3 made sense. This year, over-the-top stadium parties have given way to hors d’oeuvres and jazz bands. Many game companies report spending a fraction of what they have historically doled out for the show.

“So much money has been spent on this show with varying degrees of return,” said Jack Tretton, head of Sony’s U.S. PlayStation business and an Entertainment Software Assn. board member. “We felt it needed to change completely or go away.”

Walt Disney Co.’s Disney Interactive Studios expects to spend 60% less this year. It’s flying in fewer people and cutting back on marketing materials used in years past.

“Last year, our marketing production did nothing but E3 a month prior,” said Graham Hopper, the studio’s general manager. “This year, it’s much less. So the savings are occurring in multiple places.”

Many publishers, including Sony and Disney, are waiting to see how this year’s event works before deciding whether to participate next year.

“Everyone is just reserving judgment until they have a chance to evaluate what happens,” Tretton said.

For Los Angeles, the sting of a loss of E3 may be lessened by a new show for game enthusiasts in October at the Los Angeles Convention Center.

Organizer IDG World Expo Corp. calls it E for All -- shortened, of course, to E4.

alex.pham@latimes.com

(BEGIN TEXT OF INFOBOX)

E3: Then and now

In previous years

Venue: Los Angeles Convention Center

Attendees: 70,000

Companies exhibiting: 400+

Hotel room nights: 33,400