It’s a bit late, but given the timeliness of Jeff Brown’s opinions of late, we thought this might clear up some air on the ESA issue. It appears that a copy of an Internal Revenue Service (IRS) document accounting for the financial transactions at the Entertainment Software Association (ESA) has made it to the hands of the media, and what has been discovered might be the real reason why major members are bailing from the premiere software organization. Check the full article for more details.
After news that Vivendi (Evil Genius), Activision (Call of Duty, Guitar Hero), Her Interactive (Nancy Drew), NCsoft (EverQuest, Tabula Rasa), and LucasArts (Star Wars) have left ESA for good, Electronic Arts VP Jeff Brown rained harsh words on their departure. To the publishers’ credit, however, there was probably good reason to leave.
According to an IRS document on hand, Kotaku found that the membership fees for the Entertainment Software Association was effectively higher recently than it was years ago. The dues more than quadrupled to US$ 4.5 million at the end of fiscal year 2006. 2007’s fiscal year figures were not completed yet as of press time. Initially, it was somewhere around US$ 1 million in 2005.
Rich Taylor, senior VP at ESA, says that the dues in the past weren’t as costly since the organization had a sizable income during the glory days of E3. The last big show of E3 raked in US$ 18.5 million in revenue – an estimated US$ 1 million increase from the year before.
Now that it has become more intimate and business focused, however, fees would have inflated and overall revenue would drop. E3 went from a “profit generating” event to a “revenue neutral summit.”
And to make matters more complicated was that in order for E3 to move out of Los Angeles, the ESA had to pay cancellation fees amounting to US$ 5,377,808. That fee was paid before finding out that returning to the LA Convention Center was the most ideal decision. The pay would most likely be passed on to its members in form of increased membership dues.
Last year, E3’s overall outlook appeared somewhat bleak, but this year’s developments would most likely strike a note of certainty with speculations. Taylor remains firm that 2008’s E3 will still be a success, however. More updates as we get them.