In the heart of the gaming world, a colossus has stumbled, and its fall might herald the end of an era. E3, which stands for Electronic Entertainment Expo, the annual event that has been a cornerstone of the gaming industry for decades, is in a bit of a struggle.
Based on recent public financial records, the Entertainment Software Association (ESA), which hosts E3, is grappling with a massive hole in its pockets following the economic fallout of its digitized expo in 2021, an event costing more money than it brought in.
The ESA spent an estimated $7.3 million on E3 2021, a staggering sum that includes $3.9 million that it paid to the Paragon Creative Agency for trade show management, $1.6 million to Game Cloud Network for creating an online platform for the event, and $584,000 to Smithbucklin, another firm involved in trade show management.
These ballooning expenses, fueled by the significant challenge of the shift from a physical to a digital platform because of the COVID-19 pandemic, resulted in an alarming deficit. E3 2021 drew in revenue of just $3.4 million, which means it lost the ESA roughly around $4 million. This, on top of the fact that the ESA experienced a $274,000 loss in 2020 due to the cancellation of the event because of the pandemic, suggests that E3’s financial footing is far from stable.
Unfortunately, the costly endeavour seemed to underscore a trend. The financial records indicate that even in 2019, during the most recent major in-person event, the ESA faced a loss of $2.2 million, despite making $40 million in sales. Expenses that year exceeded income by $2 million, indicating that even pre-pandemic, E3 was grappling with financial issues.
While it’s clear that E3 has been under significant financial pressure, the ramifications extend beyond balance sheets. The fallout is likely to impact future E3 events, and indeed, the very model of how gaming conventions operate. The fact that big companies like Nintendo, Xbox, and Ubisoft have pulled out of E3 2023, resulting in its cancellation, paints a grim picture.
One cannot help but ponder: are the high costs and losses indicative of a more profound shift in the gaming industry’s needs and expectations? Or do they represent the growing pains of transitioning to an increasingly digital and remote era of engagement and marketing? Only time will tell.
Whether E3 can course-correct, adapt and continue to deliver an exciting, industry-defining experience for gaming fans worldwide remains to be seen. The reported losses, combined with the alleged cancellation of E3 2024 and 2025, could signal a potential sea change in how the gaming industry markets and showcases its products and innovations.
At the end of the day, as Geoff Keighley puts it, E3 killed itself, so then it stands to reason that it can’t rely on anyone else to pull it up from this financial hole.
