How To Analyze E3 2011

I believe this refers to the level of hype.

The circus is in town this Tuesday, and it's going to be loud. That's always been the case with E3; at the beginning of the show it's not so bad, but gradually each display with speakers on it gets turned up louder in order to be heard better over the crowd noise and the other booths... and once one is turned up, nearby ones have to be turned up also... and before you can hack a Sony website, the expo hall is pulsating with the maximum volume output from hundreds of speakers. It's an almost physical assault on your body when you step in there.

Equally powerful is the onslaught of marketing hype. Claims are inflated, then pumped up a little more... then untethered from reality to float freely into the blogosphere. E3 is a cacophony of thousands of voices all shouting to be heard, waving shiny objects to catch your attention, and claiming to be the most important thing at the show. (Just check out this list of press conferences for the first day... imagine attending a dozen of those.)

How do you deal with this wave of information? How can you derive any useful data from it? First you have to decide what you're looking for, since there's many things you can learn at E3. Are you trying to find out what will be the hit games for a particular platform for 2011? That narrows your search considerably, and you can just compare lists of Top Games of E3 2011 from a batch of game enthusiast websites to find the names that recur on each list. Information found, and you didn't even have to sit through a press conference to get it.

If you're looking for something more subtle, such as industry trends for the next year, or whether Nintendo's new console will be a hit, answers will be harder to find. Determining industry trends may be easier from a distance than when you're actually at the show. I plan on sifting through the reporting on E3 to look for key pieces of information. For instance, what are the three most important announcements from the biggest companies? Finding out what they consider to be most important gives you a clue to where they will be putting their marketing emphasis in the year ahead... and you think about whether that is really something important that can change the industry, or is just another AAA game that might sell well but won't affect the direction of the industry.

Look for major new business initiatives, new investments, new hardware, new business models, acquisitions and mergers, major business deals. Ask yourself "If this things goes as well as it possibly can, how would it affect other companies?" If the answer is "Not much" then it's not an important industry event no matter what happens. Ignore it and move on.

Once you skip past the 47,000 new product introductions and just look at the list I mentioned in the last paragraph, you'll find it's going to be much easier to figure out what's going to be happening in the industry over the next year.

Oh, and in general you can expect companies to be cheery and upbeat about their prospects for the next year, regardless of whether or not they actually expect that to happen. They'll also probably be positive about the industry as a whole. Third-party publishers will likely say they are excited by new hardware (like Nintendo's Project Cafe or Sony's NGP) and think it's going to be a hot seller. Why? Whether or not they really do, they hope that saying those things will help make the hardware sell well... because if it does, any products they create for it will do better. So they're just trying to help themselves out.

Ignore all the happy talk. Look back at last year and see how positive everyone was about Nintendo's 3DS. It was awesome, killer new technology that would really boost the business for everyone. Uh huh. The reality is much more anemic. The 3DS has had a good first week and lackluster sales since then. We can hope Nintendo will boost its sales with some powerful new titles and heavy marketing spending, but that's by no means certain. Me, I think its problems go beyond poor launch titles and not enough marketing; I think 3D is a gimmick that people aren't really that interested in, and the hardware is clunky and expensive, and their business model is antiquated. All those things can be fixed... but I'm waiting to see if Nintendo begins to address them at E3.

So discount what industry types with a vested interest say about new hardware. Look for hard numbers when execs speak about their products. If they really are happy they won't be afraid to quote actual sales figures. If they say things like "We're thrilled with the sales!" rather than a specific number of units, they really aren't thrilled. You shouldn't be either, in that case.

Best advice: Follow the money. And follow the sales numbers. Don't follow the shiny objects.