E3 Expo Reveals New Energy for Video Gaming Industry, New Releases, and Star-Power Including the Beatles, Tony Hawk, Steven Spielberg, and More

Tony Hawk hawking his new game Tony Hawk Ride at E3 Expo

Story by Kathleen Gasperini
Photos by Tom Wallace

E3 Expo, the world’s largest video gaming trade show is back, going on now from June 2-4 at the Los Angeles Convention Center and this time, it’s attracted a wide range of entertainment industry moguls, media, celebs, and even the mayor of Los Angeles. One reason is because the gaming industry is one of fastest and strongest growing segments of entertainment. As movies, TV, magazines, and music continue to redefined themselves in the wake of lost revenues, video gaming is morphing at the speed of light and in the last year alone, generated $22 billion in revenue–$5.3 billion in December 2008 alone.

E3 started off with a bang, as usual with top video gaming companies hosting exclusive press conferences to reveal their coveted latest releases. The biggest news came from Microsoft and their new Project Natal system. Basically, it’s a camera system on an Xbox360 that tracks body movements, so somewhat like playing a Theremin from motion, it picks up the motion of one’s body, and supports voice recognition, basically skipping the need for a controller altogether.

Activision booth at E3 was off the hook

Motion was the theme at the show overall as many games showcased proved that gaming and couch potatoes are no longer synonymous. Movement via Wii devices, handhelds, dance pads, musical instruments, and even the new Tony Hawk Ride game which takes place a on an actual skateboard-looking “controller” has people on their feet. Tony Hawk was on hand to demo his new game at the Activision booth, which was off the hook itself, and even competed in a game with a fan from Chicago -who actually beat Tony at his own game (and in “vert” mode, no less).

Paul McCartney, Ringo Star, Yoko Ono, and Olivia Harrison made a cameo appearance in support of the upcoming Beatles Rock Band game, which generated serious buzz. Tapping into the popular vein of music games which are on the rise with the popularity of Rock Band and Guitar Hero, debuting this fall the bevy will also include the Beatles Rock Band, DJ Hero, Band Hero.

Beatles RockBand game is going to be a big hit this fall

The energy at E3 Expo this year was unique in that it was a scaled back version from its monstrous size 3 years ago. The show in fact had gotten so big and expensive, that it was sort of shut down last year and only hosted a small fraction of a show in Santa Monica. The idea was to eliminate the high volume of fans that somehow got into this trade industry show, and the questionable booth babes, and get the show, which is hosted by ESA, back to the business of video gaming. This time felt more like the 2006 version with Microsoft, Ubisoft, Activision, Nintendo, Sony, CapCom, THQ, Sega, Disney, MTV, Warner Bros., Konami, and EA all creating magnificent booths that make it feel like you’ve stepped into a virtual world of whatever game play was being promoted.

Other top games that we were able to get sneak-peak debuts and demos from include Final Fantasy XIII, The Sims 3, Need for Speed SHIFT, a bunch of fun and interactive mixed martial arts games, several versions of music games, Modern Warfare 2, updates to Resident Evil, Mario & Sonic at the Olympic Winter Games to debut just before Vancouver in 2010, and The Lord of the Rings: Aragon’s Quest.

Gamers demo-ing at E3

Video gaming stats and the future forecasts were delivered at the ESA President’s conference by Michael D. Gallagher. One of the key statistics that always catch our attention is that the average age gamer is actually 35 years old. Hardly “youth culture” and yet video gaming is often considered a young person’s entertainment mode. In our North American Youth Culture Study 2009 under Video Gaming, we have additional insight on the differences in video gaming preferences and patterns of 13-25-year-olds vs. older demographics. One thing is the increase in preferences for handheld gaming devices such as Wii, and new gamer preferences that are shifting from the hardcore genre of the past.

There’s also greater crossover with video gaming and movies and video gaming and cell phone entertainment systems. Now everyone in entertainment is interested in collaborating with the industry, according to Gallagher, and as was proven with the appearance of Steven Spielberg who was endorsing Project Natal as “the next historic moment in entertainment.” Since many games have such developed story lines, characters, color, design in fashion, and narrative, the crossover of games as movies (and art as showcased in “Into the Pixel” art display) is completely blurred, which was another hot topic of conversation. Because of this, many top artists, designers in fashion, and of course musicians are jumping on board to somehow be involved in video gaming. Growing segments are music games, as mentioned before, but also fashion designers from gaming (and vice versa).

New Olympic themed game to hit shelves just before the Vancouver Winter Games

Musical scores in games are also becoming more elaborate with the use of orchestras and top bands -which is also creating an outlet for musicians to generate revenue and reach larger audiences than every before. This is a growing category making up lost revenue in CD sales. Many old rock bands have been “rediscovered” via video games, ranging from Aerosmith to Kiss, Boston, and even the Beatles.

Other waves of the future include the “4th platform” as Gallagher describe smart phones and mobile gaming, which is up 20%. Online downloads and mobile gaming has created a seismic shift in gaming, allowing smaller publishers and developers to get into the action of gaming with a greater range of platform possibilities. In November of 2008, $8.5 million in revenue was generated in that month alone from downloadable mobile games, indicating a strong new market opportunity. With the widespread access of broadband, interconnectedness within gaming is increasing. Coupled with the increase in social networking, the borders are crossing: 62% of gamers play games with other gamers in person. This is an increase from 59% in 2008 and from 56% from 2007.

Everyone has a music game now

In addition, in-game ads are the hot commodity now and proven to be better than TV ads because the replay value of a game is high. It’s estimated that in 5 years, the in-game ad market will reach $1 billion. Even President Barack Obama endorsed this concept running early voting dates and registration information in in-game ads during the Presidential election, making him the first President to use video games as a platform.

More than 200 universities now also host video gaming courses and degrees, and a growing number of states (up to 18 to date) offer incentive programs for interactive production to attract some of the revenue generated by gaming developers and publishers.

Finally, here’s quick list of stats from the ESA 2009 Essential Facts Report that we found quite interesting:
%u2022    Women age 18 or older represent a significantly greater portion of the game-playing population (34%) than boys age 17 or younger (18%)
%u2022    The average age of the most frequent game purchaser is 39
%u2022    68% of American households play computer or video games
%u2022    Of game purchasers, 52% are male and 48% are female

Overall, the E3 Expo proved that despite the recession, this is a strong market with a wide range of collaboration possibilities for brands marketing to youth culture. Even through licensing of products, gaming device bags, electronic purses, and computer bags are another enormous category that’s growing and providing a space that has yet to be tapped to its full potential.

For more information about Label Networks’ Video Gaming segment and youth culture from the North American Youth Culture Study 2009, email info@labelnetworks.com; (323) 630-4000.

Tony Hawk demoing his Tony Hawk Ride

Playing live against a fan from Chicago. The Chicago fan won (even though the game was in vert mode). Tony tweeted about his lost after.

Here%uFFFDs what the Tony Hawk Ride game “controller” looks like

Motion via Wii games are trendy

Nintendo DS accessory bags with Hello Kitty licensing. Market opportunities via licensing and computer and video gaming app bag products is a growing category.