Gaming's E3 loses luster as developers go direct to fans

Electronic Arts launched the beta test for "Battlefield Hardline" at the Electronic Entertainment Expo in 2014. This year, EA won't be on the E3 show floor. Instead the video game developer is hosting its own party at the Novo theater next door. (AP Photo/Electronic Arts, 2014)

When the Electronic Entertainment Expo kicks off Tuesday in Los Angeles, one of the largest companies in the video game industry won't be there, at least not on the show floor.

Electronic Arts Inc., whose giant booth was the first many guests saw as they entered the Los Angeles Convention Center in years past, is instead hosting its own party at the Novo theater next door. Fans who signed up online will get to play unreleased versions of titles such as Madden NFL 17, the World War I-themed Battlefield 1 and the sci-fi shoot 'em up Titanfall 2 for the first time, at an event called EA Play. In the past, the company largely limited such sneak peeks to the retailers, journalists and industry insiders who attend the show.

"The way that we talk to our audience about our games has fundamentally changed," said Chris Bruzzo, chief marketing officer for the Redwood City, California-based company. "It's not about setting up an appointment to find out what's coming out in the coming year."

The shift speaks to broader changes in the industry. Consumers are buying fewer game discs at retail stores. Manufacturers are establishing relationships directly with players, selling them monthly subscriptions, digital downloads and in-game products.

Physical sales of games fell 2.5 percent to $5.17 billion in the United States last year, according to NPD Group Inc., an industry researcher. Manufacturers such as Activision Blizzard Inc. and Electronic Arts now get the majority of their revenue online.

Electronic Arts isn't alone in rethinking E3, the most-attended trade show in Los Angeles and the biggest confab annually in the video game industry. Activision, the largest U.S. game publisher, won't have a booth this year. Walt Disney Co., which killed its Infinity game platform, also won't be appearing. Activision will still hold meetings at the show with the press, analysts, investors and industry partners, and will demo the latest Call of Duty at Sony Corp.'s booth. Disney will be represented by game licensees, a spokeswoman said.

"We are witnessing the evolution of E3," said Ophir Lupu, an agent with United Talent Agency in Beverly Hills, California, who represents game developers.

E3 was created in 1995 as way for game makers to show upcoming titles to retailers and journalists. The event is still expected to reach its capacity of 50,000 attendees, said Rich Taylor, a spokesman for the Washington-based Entertainment Software Association, which runs the show. All meeting rooms and suites are sold out, as are most spots on convention floor, he said.

More than 200 companies will be exhibiting this year, including Take-Two Interactive Software Inc., which is building a replica of the fictional city of New Bordeaux from its upcoming game Mafia 3 and hosting a party one evening with musical performances.

E3 continues to evolve, with mobile and virtual-reality games taking up floor space alongside console and PC titles, Taylor said. Last year, E3 allowed 5,000 everyday fans into the convention center for the first time. This year it will host an event for the general public outside of the convention center. The 20,000 free tickets were claimed within a day.

Events designed for fans, instead of insiders, have risen in importance in the industry. Pax, a series of festivals for enthusiasts that began near Seattle in 2004, has since expanded to Boston, San Antonio and Melbourne. Game makers also host their own conclaves, such as Activision's BlizzCon, and sponsor e-sports events where players compete for prizes. To some degree such events are substitutes for the TV commercials and traditional media that game companies historically used to market their products.

Electronic Arts expects to attract about the same number of people to its EA Play event outside E3 as it used to get in its booth at the show. Giving fans the opportunity to try out games online or at events is the best way to generate new sales and has allowed Electronic Arts to reduce its marketing outlays as a share of sales, according to Bruzzo. Such spending fell to 14 percent of revenue last year from 21 percent four years ago, company filings show.

"Electronic Arts has been going through a pretty significant shift in putting players at the center of everything," he said.