7th International Conference on Entertainment Computing Speech
Delivered by Michael Gallagher, President and CEO, ESA
September 27, 2008
Thank you, Don, for that kind introduction. And thank you to the staff of Carnegie Mellon University's Entertainment Technology Center and W.S. Gaming, for inviting me to speak today.
I am honored to be here at the 7th International Conference on Entertainment Computing. This year's event brings together brilliant minds from around the world to exchange ideas about how to further advance the field of entertainment computing. Without the innovative work all of you do, the entertainment software industry would not be the recognized and accepted part of our cultural and economic landscape that it is today.
This is a remarkable time for our industry as computer and video games are more a part of how we live, work and play than ever before. Consider these facts:
- Sixty-five percent of American households play computer and video games and 38 percent of American homes have a video game console;
- Last fall's release of Microsoft's Halo 3 took in more revenue in its first day of sales than the biggest opening weekend ever for a movie, "Spider-Man 3," or the much heralded release of "The Dark Knight" this summer. This spring we witnessed another blockbuster release when Grand Theft Auto IV sales totaled more than $500 million in the first week;
- More than 400 colleges, universities and technical schools around the world offer programs and courses in video game design and development;
- Last week, The Pew Internet & American Life Project released a study showing what we have long known – that games benefit our children's civic and social development; and
- A recent survey by ESA found that 70 percent of businesses currently use games to train employees on how to do their jobs or do them better.
Today, there is a greater awareness, understanding and acceptance of computer and video games. Opinion leaders, members of the media and the public are all now beginning to appreciate the entertainment software industry's many positive technological, social and economic contributions. And the Pew study is a prime example of that as its findings are helping to replace inaccurate stereotypes with facts that illustrate both the mainstream use and empowering nature of games.
My message to all of you is that we must work together to continue to ensure that our industry's value is seen by all, while finding new ways to use games not only for entertainment but also to benefit our society.
As an industry, we accomplished in recent years a cherished goal that would make Senators John McCain and Barack Obama envious: we have expanded our "base." As these candidates know, in our fractured political world, success usually can't be achieved through the support of only one segment of the electorate. You need to keep finding new sources of support.
That's usually true in the business world as well. You need to attract customers from a variety of groups in order to continue to grow and that's what we in the entertainment software industry have done. We have maintained the loyalty and support of our "base" of traditional gamers but expanded our audience to new demographics and applications to an extent that was hardly imaginable a few short years ago.
Today, the average gamer is 35 years old; 40 percent of gamers are women; and one out of every four gamers is over 50. In fact, women age 18 or older account for 33 percent of the game-playing population, while boys age 17 or younger account for only 18 percent. Gaming has also become a family pastime. One of our recent surveys showed that 72 percent of the parents that play video games with their children feel it's fun for the entire family. Grandma and grandpa are even getting in on the act with nursing homes across the country using Nintendo Wiis to keep the residents entertained and physically active.
While the current adult generation seems to be adapting to using games, the next generation will become more involved, and products aimed at this group will help this process. As I mentioned earlier, Pew recently released a study on the subject which found that almost all teenagers, 97 percent of boys and 94 percent of girls, play games. While this is not surprising to the other parents in the audience, the research also provided insights into the benefits of games. It found:
- Teens who play games with others and interact socially on discussion boards tend to be more civically and politically engaged than their peers;
- 52 percent report playing games where they think about moral and ethical issues;
- 43 percent report playing games where they help make decisions about how a community, city or nation should be run; and
- 40 percent report playing games where they learn about a social issue.
The widespread use of computer and video games by all generations has turned the entertainment software industry into an economic powerhouse. According to NPD Research, in 1996, the industry had $2.6 billion in sales. In the 12 years since then, annual sales nearly quadrupled to $9.5 billion. When you include hardware sales, 2007 was an $18.85 billion year for our industry. Currently, year-to-date sales are up strongly in 2008, we could see the combined hardware and software sales total over $22 billion this year. And a recent PriceWaterhouseCoopers report projected video game software industry global sales will achieve double-digit growth for the next four years and top $68 billion by 2012 – with the United States accounting for $17.6 billion of that.
But there is a storm cloud on the horizon that threatens to dampen our growth. Some devalue the $20 million investment in an average AAA video game and the contributions of thousands of artists by weakening our intellectual property laws. According to a recent Institute for Policy Innovation study, the U.S. economy loses $58 billion and over 373,000 jobs annually because of global piracy. We must protect the innovation and creativity of our industry by encouraging governments to provide law enforcement with the resources needed to fight piracy.
In addition to fighting piracy, we need an ongoing supply of talented individuals, like yourselves, in order to continue to grow our industry. Thankfully, colleges, universities and trade schools around the world are responding by offering formal video game training. From Temasek Polytechnic in Singapore to the University of Abertay Dundee in Scotland to right here at Carnegie Mellon, an increasing number of students now play and study computer and video games.
These students are the future of our industry. They will help build the games that we will enjoy in the years to come and find new uses for our technology beyond the realm of entertainment.
Their efforts in non-traditional games already provide benefits. For example, Virtual Iraq is a commercial video game that University of Southern California researchers modified to help veterans cope with the debilitating post-traumatic stress disorder. The game takes exposure therapy to a new level, allowing veterans to experience the sights, sounds and smells necessary to emotionally process traumatic memories.
Young cancer patients, meanwhile, learn vital facts about their disease while blasting away malignant cells in HopeLabs' Re-Mission game. This third-person shooter game stars Roxxi, a "nanobot" that comes armed with a Chemoblaster, Radiation Gun, and Antibiotic Rocket. A recent report in the journal Pediatrics, published by the American Academy of Pediatrics, showed that patients improved in attitude and behavior as a result of playing the game. The ESA Foundation funded the distribution of this important game and we are extremely proud of its accomplishments.
Games are even helping address the energy crisis. Chevron created Energyville and took out full page ads in national newspapers about the game to promote public discussion on energy supply issues. In the game, players decide how to supply a cartoon city with enough power for its 3.9 million people. The player chooses from sources ranging from wind to coal and each choice has both an economic and environmental costs. The better players balance those costs which increases their scores.
And as the Carnegie Mellon attendees in the audience know, two CMU developers, Asi Burak and Eric Brown, created Peacemaker, which allows players to act as the Israeli prime minister or Palestinian president in simulated negotiations between the two nations. Inspired by the real events of the Israeli-Palestinian conflict, the game challenges players to assume leader positions and bring peace to their territories before their term in office ends. Players choose from three difficulty levels: calm, tense or violent, and face the consequences of their actions through opinion polls and indicators that signal progress towards peace.
Organizations from automobile manufacturers to financial services companies to beverage producers are also using computer and video games as valuable employee training tools. As I mentioned earlier, a survey we conducted this spring showed that 70 percent of businesses currently offer interactive computer training that includes game-like simulations, and that 78 percent of organizations not using this technology today are likely to offer it within the next five years. In addition, more than 75 percent of companies that already offer video game training, plan to expand this usage in the next three to five years. The findings of this research further illustrate the expanding use of video games and video game technology.
And these are just some of the examples of the ways the brilliant and creative minds of our industry, like all of you are helping to harness the power of games. With all this progress, where do we as an industry go from here? How do we ensure the value of games are seen and help our industry grow? In some ways, we will continue on our current path. In others, we must embrace change and extend beyond our current boundaries. With that challenge in mind, I suggest a few specific strategies to pursue.
- Remember Our Base – To continue with my political analogy we must never forget our "base." Many avid gamers have been with us since the days when Pong was widely popular. If we continue to deliver for them, they will remain loyal to us. We need to continue producing the compelling, traditional games that this consumer segment expects while searching for new ways to keep them engaged.
- Welcome New Gamers – We must make new gamers feel welcome and equally represented. As the Wii has so effectively demonstrated, our new fans are looking for games that are accessible. We need to provide them with an array of high-quality games that forego complex story lines, lengthy play times and don't require the dexterity of a 14-year-old to play. If we do so, we will have a new group of loyal followers.
- Expand Entertainment Relationships – Our industry also needs to stay true to our entertainment roots and continue to more closely align ourselves with our pop culture colleagues. As video games have become an entertainment medium on par with movies, TV and music, the lines between the entertainment mediums are blurring. We should encourage this cross collaboration in order to provide all our customers with the best entertainment experience possible.
- Embrace Serious Games – Our industry is already playing a role in the worlds of health care, advocacy and commerce. These new aspects of our business can only continue to thrive as the generation that grew up with video games – and all those that follow – naturally incorporate the entertainment and educational aspects of the games into their lives. Making more serious games is something our industry should embrace to help address problems in our society.
- Make Our Voices Heard – Unfortunately, many in the public eye still seek to mischaracterize our industry. They seek to lay every deficiency in our society from violence to obesity at the feet of our industry. Still others seek to tax video games to support pet projects. We must band together to face these challenges and make our voices heard by candidates and elected officials at all levels and in all nations around the world.
Here in the United States, the ESA is proudly leading many of these efforts. We are attacking game piracy with a combination of enforcement and education. And we are working to ensure that efforts to subject video games to unconstitutional sale and rental restrictions do not pass.
But, we can't do it alone; we need your help. Therefore, we created the Video Game Voter's Network. VGVN is a place for American gamers to organize and defend against threats to video games by registering to vote and letting government officials know how important and vocal the gamer community is. Without a critical mass of gamers who are registered to vote and willing to stand firmly behind their games, politicians will continue to fire criticism at games and game players in order to score easy points for their political campaigns. If you haven't done so already, I encourage you to join the VGVN at videogamevoters.org.
- Nurture Video Game Courses and Degree Programs – As computer and video games become an integral part of life across all sectors of society, the scholarly study of video games takes on increasing importance as a way to qualify students to pursue careers in our industry. Despite the movement's infancy, the positive impact is tangible. Disney, for example, recently selected Carnegie Mellon as the site for a new research laboratory that will develop the next generation of entertainment. In order to ensure progress on this front, we all need to support this movement by constantly comparing course offerings and research projects with our needs and serving as mentors for the next generation of video game designers.
This industry has come a very long way in a very short time. And we're finally gaining the respect we deserve. Respect from members of the media, business community and elected officials. Now is the time that we need to keep working and doing what we do better than any other industry so that today's level of recognition and accomplishment will pale in comparison to what we are about to achieve.
Thank you for your roles all of you have played in helping the computer and video game industry reach the heights at which we now stand. I look forward to working with you to ensure our industry's value is seen by all and find new ways to use games to benefit our society.
Thank you again for your time. Now, I would be happy to take any questions that you might have.