ESA calls for more digital sales transparency

Trade group president says lack of insight distorts perceptions on industry's health, defends E3's ongoing relevance

For several years, the NPD Group's monthly sales reports have painted a picture of a gaming industry on the decline. However, the scope of those monthly reports has been limited to US retail sales, and doesn't account for the rapid expansion of digitally distributed game sales. This hasn't gone unnoticed by the Entertainment Software Association, and the trade group is now openly pushing for more transparency in digital sales reporting.

Speaking to a handful of journalists at a pre-E3 dinner last week, ESA president Michael Gallagher brought up his "high-degree of dissatisfaction" with the revenue reporting for our industry, adding that the digital side of the industry was not being adequately reported, understood, or covered.

"I think we've seen the consequences of that over the last two years," Gallagher said. "On the retail side, the 'traditional' side of the business where you have a physical product that's sold, you've seen a flattening and a decline in those sales, as you would expect at the end of a console cycle, as you would expect when you have different technological opportunities for consumers to experience video games."

Gallagher said the result is that it creates "a misimpression" of the industry's health.

"The numbers are coming in that way, but yet you look at the energy in [the Los Angeles Convention Center], the investment that's being made, and the stories you hear separately from each one of these companies and you know it's not true," Gallagher said. "In fact, there's a very robust opportunity. It reaches more people faster, cheaper, and the margins are higher. But it's happening outside of what's covered and what becomes the storyline of the industry."

"There are other industries that do this well, and they enjoy the upside and the downside of having truthful numbers...I think the industry's better off if there's a standardized reporting mechanism"

Despite having acknowledged the problem, Gallagher said the ESA's options to address it were limited. For instance, the trade group must avoid actions that could be considered collusion by its members. And even if it could require its members to cooperate with a monthly data release, that would not encompass the countless non-member companies earning money through digital sales of games, whether they be on consoles, PCs, or mobile devices. There is concern then that such a one-sided release would put its own members at a competitive disadvantage.

"It's something we have got to get right," Gallagher said. "There are other industries that do this well, and they enjoy the upside and the downside of having truthful numbers...I think the industry's better off if there's a standardized reporting mechanism that is seen as whole, and complete, and truthful."

He added, "Because if we deliver the perfect product and the same headlines come out, why bother?"

Gallagher also fielded questions about the ongoing relevance of E3 in light of Nintendo's lack of a media briefing and Microsoft and Sony holding their own separate events to unveil new consoles in the months leading up to the show.

"When you look at those, they all pointed toward E3 when they did it, as well as the publishers," Gallagher said. "They said, 'Come to E3.' The steady refrain in all of the reporting was, 'See this at E3. You'll see it at E3.' So if you want to see the games that will make Xbox One come to life, where are you going to go see them?"

Gallagher said that Nintendo still had a huge presence at E3 with its booth at the show. As for the Xbox One and PlayStation 4 reveals, he noted they were held in coordination with the ESA.

"What's happened is E3's position is preserved, but the pyramid got bigger because the market's bigger," Gallagher said.

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Latest comments (5)

James Prendergast Process Specialist 9 years ago
I agree with him. Lack of data leads to bad/poor investment and incorrect assumptions/conclusions being drawn because of the small data sets that are involved. Everyone can become convinced that they are on the right path when in fact most are not.

It also makes the industry more insular - which is never a good thing.
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Joshua Rose Executive Producer / Lead Designer, Storm Eagle Studios9 years ago
I second that.

Investors can't make informed decisions if they don't have the INFO to do so.

Every day in some form or another I see the classic headline "The Death of the PC" and think to myself, where are these people getting this information?

Steam, Origin, Google+, Facebook, the list goes on. All made possible by, you guessed it, the PC. *shocked*

However I think the biggest problem is the fact that such a huge company (still private) like Valve, which is pretty much the backbone of PC game sales now days, doesn't have to say jack squat to anybody about their earnings because they aren't a public company, and don't have to answer to shareholders.

So whenever somebody says something about Steam's revenue and all that, all I can picture is Gabe Newell leaning over the top of a wall showing a troll face, going "nee ner nee ner" and biting his thumb.
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Christopher Bowen Editor in Chief, Gaming Bus9 years ago
So how are we going to make the publishers - who have no interest in telling us sales data unless it suits them - come to Jesus, proverbially speaking?
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Shane Sweeney Academic 9 years ago
I wish the ESA had more teeth. They could merely suggest that no company could be a member of the ESA unless they reported their sales directly.

But the result would be that companies would no longer be members of the ESA.

It's so bad that Valve don't publish sales data. We really have no idea what's going on anymore.

No body is claiming the end of the PC anymore, it is the tale end of the Console generation so people are suggesting "Death to the Consoles", then as the consoles ramp up again I would not be surprised if people suggested "Death to the PC" again.

It's a pretty obvious pattern that people seemingly can't recognize. Hopefully we will reach a saturation point across all platforms as our industry cycles mature and we stop having knee jerk "death to..." conversations every time things shift. People want games *everywhere* so whatever happens we will end up having a healthy smorgasbord of platform options, mobile, lounge room, PC, car, outdoors, tablet, browser, VR, sifteo etc

But until things mature a bit we will as an industry have "flavours" of platforms that are new and exciting and then eventually just become another option.

Edited 2 times. Last edit by Shane Sweeney on 19th June 2013 5:00am

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James Prendergast Process Specialist 9 years ago
@Shane Sweeney:

I wish the ESA had more teeth. They could merely suggest that no company could be a member of the ESA unless they reported their sales directly.
But the result would be that companies would no longer be members of the ESA.

Well, the opposite is also true - since they are an "alliance" of sorts and derive their income from membership subscriptions they need to provide value to their subscribers. One way they do this is through a unified voice and point of contact with political interests - for example. A new way they could provide value is by requiring that each of their members contribute sales data to an internal resevoir of sales information that each member could access (access being granted by release of sales data in the first place). This would only be implemented by a majority vote from members, of course, but it would benefit all/most of the members going forward.

This wouldn't allow non-members, the public and investors to see it (though maybe investment companies/analysts could buy-in to the dataset for private commercial use) but it would help the industry.
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