Catching up with the ESA on the eve of the first digital E3

With the Electronic Entertainment Expo returning this weekend after a year off, it’s a good time for a check-in with Entertainment Software Association president Stanley Pierre-Louis.

Speaking with GamesIndustry.biz this week, Pierre-Louis answered questions about loot boxes, toxicity, cryptocurrency, and social justice, but started off by talking about the first all-digital E3.

“This will provide us with an opportunity to present to members of the industry, media, and fans an opportunity to participate fully, and I think that provides a real unique opportunity to learn this year what we can apply to future events that will probably be a mix of physical and digital,” Pierre-Louis says. “But that’s to be determined. We’ve got to figure out where we all are moving forward.”

Pierre-Louis goes on to specify that the expectation is for the ESA to return to running physical events, but with some digital component as well.

“The shape of that is yet to be determined, and we hope to learn from this year’s event what transfers well,” he says, adding, “I can’t speak to future E3s because we really want to focus on E3 2024 and ensure this is a great experience for exhibitors, the media, and fans alike.”

“We’re in this golden age of video gaming because more people have been exposed to games over this past year than before”

As a show designed to promote the industry’s upcoming slate of products, E3 in the past has been a chance to take the temperature of various trends and potential growth opportunities. We ask Pierre-Louis which emerging trends seem to have the most traction these days.

“We’re in this golden age of video gaming because more people have been exposed to games over this past year than before,” he says. “The video game audience was large, and because of the pandemic, many people were reintroduced or introduced for the first time to games, and that created lots of opportunities for these platforms to really emerge.

“I think the other thing you’re seeing is with products like Xbox Game Pass and what other companies are starting to announce about streaming games, there is still an opportunity for streaming to be another gateway to games. I think people still love consoles, PC gaming and mobile gaming, and those are mainstays, but I think people do still love experimentation. From a technological standpoint, there’s still some way to go in terms of broadband deployment to make it a more seamless experience, but I think it’s one place people are looking to as a growth area. The fact that Netflix is now looking to get into video games through its platform suggests that they see the investment as worthwhile.”

One trend we ask about specifically is cryptocurrency and NFTs. Our stance on the technology has already been made clear, but we ask Pierre-Louis if it’s an area the industry should avoid given environmental concerns, security concerns in light of cryptocurrency facilitating ransomware attacks, and the lack of legitimate uses beyond speculation.

“That’s not been a focus of our public policy advocacy,” Pierre-Louis said. “I think different companies have taken different positions on it. Some companies take a stake in some cryptocurrencies and others are looking at NFTs. Some of these design elements have been part of games in the past. It’s newer to the conversation to the general public, but in the video game industry it has been part of the dialog for some time.

“At ESA, it has not been an area of advocacy for us but I know that many of our companies are looking at how and whether they’ll engage in NFTs, cryptocurrencies and the like.”

Given legislation around unregulated cryptocurrency markets seems likely to be proposed, is the ESA prepared to add it to its policy platform?

“Trade associations work to build consensus among their members on their public policy priorities, and we work with our members on any issue related to public policy that impacts their ability to create and sell their products,” Pierre-Louis says. “So we work, as many trade associations do, on that consensus model.”

“One of the things we have focused on is ensuring our member companies have the ability to — at least in our jurisdiction — to look at various opportunities for experimentation for consumers”

Along those same lines, we ask Pierre-Louis about betting. In North American pro sports, betting has gone from illegal activity to something you can do in the arena during halftime in three short years. With a number of upstart companies already exploring esports betting and Bobby Kotick of ESA member Activision Blizzard having once called betting “the Holy Grail of the video game business,” is the ESA prepared to tackle policy challenges more familiar to trade groups from a gambling industry than an entertainment one?

“One of the things we have focused on is ensuring our member companies have the ability to — at least in our jurisdiction — to look at various opportunities for experimentation for consumers,” Pierre-Louis says. “This doesn’t speak to any particular issue, but one of our goals is to preserve the opportunity to meet the consumers where they are. This does not mean we would particularly get into any particular issues, but our role and our goal in our jurisdiction is always to ensure the ability of companies to experiment and to think through the dynamics of issues. As an organization we operate under a consensus model so we would only enter an area of public policy concern based on a consensus of members believing that we have that capability and unanimity of support from members.”

Moving away from hypotheticals about the ESA’s future, we start to ask about topics where it has already been active, like loot boxes. While there had been increased scrutiny around loot boxes and proposed legislation in the US in 2019, the subject seemed to take a back seat to other concerns in a presidential election year marked by the pandemic. So with nothing imminent on the legislative front in the US, does the ESA consider the issue settled?

“As an organization, we are alert to any issues that may arise that may impact our industry so we treat every issue with the reverence it deserves and provide information as necessary and a defence when necessary,” Pierre-Louis said. “With respect to loot boxes, several organizations around the world and here in the US have looked at it and almost all have determined loot boxes don’t raise legal concerns. They don’t raise gambling concerns.”

He mentions the Federal Trade Commission’s 2019 loot box workshop, saying it “found the labelling information on games and the transparency involved in the disclosure that the video game companies decided to provide were very helpful and didn’t recommend further action.”

“[P]olicymakers have reviewed the facts, they’ve seen the impact, and have determined [loot boxes] should not be a high priority. And we think that’s the right outcome”

(The FTC released a staff perspective paper about the inquiry last August supporting further academic research into the impact of loot boxes, saying the public had raised “significant questions about loot boxes,” and noting that the pandemic-related increase in gaming playtime “potentially amplifying the loot box concerns raised at the workshop,” adding, “The FTC will continue to monitor developments surrounding loot boxes and take appropriate steps to prevent unfair or deceptive practices.”)

“We’ve seen several institutions looking at the issue have found that it doesn’t trigger regulatory concerns,” Pierre-Louis adds, “so therefore at least in our jurisdiction, we are ensuring that we continue to provide policymakers and regulators with the information they need about everything in our industry, including loot boxes.

“But we also see that the issue hasn’t been as present in public policy matters since that time, and I think it’s because policymakers have reviewed the facts, they’ve seen the impact, and have determined it should not be a high priority. And we think that’s the right outcome.”

Moving to larger cultural issues, we talk about the murder of George Floyd and the rush of gaming outfits — the ESA among them — who last year released statements condemning systemic racism, expressing support for Black Lives Matter, and pledging to support Black communities in a variety of ways. Specifically, we ask about how Pierre-Louis thinks the industry has followed up on those statements and commitments from last June.

“This past year was a very trying year for everyone,” Pierre-Louis says. “We started the year with the coronavirus, which impacted our industry and others in significant ways. Then we had several conversations of public reckoning on matters related to not only race but to equity on a number of fronts. Our industry, several of them for the first time, spoke out on some of those issues and made commitments that they’ve been following through on.”

He mentions the ESA’s partnership with Black Girls Code, Take-Two’s contribution to set up the Gerald A. Lawson USC Endowment Fund for Black and Indigenous students, and commitments from Microsoft and Xbox.

“We’ve also started working within the policy world with how we increase opportunities for Black, Latinx, AAPI, students and fellows who are looking for careers in public policy and working with groups here in Washington and a few other places that promote opportunities for people from underrepresented backgrounds, people of color, LGBTQ and the like,” Pierre-Louis says, adding, “And I know many of the companies have individual announcements speaking to their particular flavor on how to address these issues.”

“ESA and its member companies believe that equity is important in a variety of ways throughout society. And we support opportunities that increase equity”

So given the ESA’s support for those marginalized communities and support for Black and LGBTQ developers, we ask if that means the group has to take a position on a wave of recent US legislation including anti-trans bathroom bills, legislation preventing minors from receiving gender-affirming treatments, laws restricting teaching of critical race theory, and laws looking to restrict voting rights.

“What I would say is the ESA and its member companies believe that equity is important in a variety of ways throughout society,” Pierre-Louis says. “And we support opportunities that increase equity. Our focus at ESA has been much more on the public policy issue, so when you talk about things like equity in the workplace — whether it’s LGBTQ, trans and the like — what you’ll see among I think all of our member companies is an openness and support for increasing equity, opportunity, diversity, and inclusion.”

The industry has grown incredibly in recent years as it’s gotten better at building passionate and engaged fanbases. However, there’s no shortage of stories of those passionate and engaged fans lashing out at the developers whose work they supposedly love, from the sadly common flow of hostile tweets to more serious incidents, like last November’s fake hostage situation at Ubisoft Montreal. We ask Pierre-Louis what the industry can do to fix the problem, and what responsibility it has when these actions are coming from the fandom they have cultivated.

“Because several of the items you point out happened on specific platforms, that’s really where a lot of the work goes in trying to address online toxicity,” Pierre-Louis says. “Obviously our members believe online toxicity negates the experience, negates a positive experience online. And it’s important we have safe places for people to convene, to engage with one another and for developers to engage with gamers and get that feedback. As a general premise, online toxicity on our platform—I think the work done on this ends up being on those platforms themselves.”

He points to a joint statement released by Nintendo, Sony, and Microsoft in December as evidence of the industry’s action.

“I think we’re seeing steps taken on that front, at that platform level,” Pierre-Louis says. “I think that’s where it will have its deepest impact.”