Lt. Governor’s Economic Development and International Relations Committee Video Game Industry Briefing November 19, 200

1. Lt. Governor’s Economic Development and International Relations Committee Video Game Industry Briefing November 19, 2008

2. The Entertainment Software Association • Serves the business and public affairs needs of U.S. computer and video game publishers • Has more than 20 member companies, including Microsoft, Nintendo, and Sony • Activities include: • Global anti-piracy program • Business and consumer research • Government relations • Intellectual property protection • Also operates the ESA Foundation and annual E3 Expo

3. From Niche Market To Mass Medium • In little more than a generation, computer and video games have gone mainstream • Pong (1972), Pac-Man (1980) and Tetris (1985) helped to put industry on the map • Today, 65% of American households play computer and video games

4. The Evolution of Games • A wide variety of games are available today • Newly popular genres include: • Role-playing games • Music games • Strategy games • Puzzle games • In 2007, the ESRB rated 94% of all titles appropriate for ages 13 and under • Life-like graphics and motion-sensing controllers have created a new video game experience

5. A Broad and Diverse Consumer Base • Widespread gaming has become part of our cultural landscape • The average gamer is 35 years old • Women represent 40% of gamers • People older than 50 represent 26% of gamers

6. Games Tackle Important Issues • Organizations across all sectors of society now view video games as an effective tool • Doctors use Re-Mission to teach young cancer patients about the disease • The Department of Defense uses Virtual Iraq to treat Post-Traumatic Stress Disorder • The United Nations uses Food Force to teach children about world hunger

7. Games Mean Serious Business • An ESA survey found that 70% of businesses use games to train employees • IBM developed Innov8 to teach graduate students business and IT skills • The MITRE Corporation developed Job of Honor to create awareness of the company • Hilton Garden Inn employees practice customer relations skills in a virtual hotel

8. Source: 2008 Pew Internet & American Life Project survey Games Benefit Childhood Development • Teenagers who play games with others tend to be more civically and politically engaged • 52% reported playing games where they think about moral and ethical issues • 43% reported playing games where they decide how a community should be run • 40% reported playing games where they learn about a social issue

9. An Economic Powerhouse During Uncertain Times • Entertainment software is one of the fastest growing industries in the U.S. economy • Since 1996, sales have nearly quadrupled to $9.5 billion from $2.6 billion • Including hardware sales, the industry generated $18.85 billion in 2007 • Recent data shows that current 2008 sales have increased by 30% over last year • Analysts expect global sales to top $68 billion by 2012

10. Industry Supports a Growing Workforce • Industry directly and indirectly employs more than 80,000 people in 31 states • Total national compensation equals $2.2 billion • Industry projects to support over 250,000 American jobs by next year • More than 200 academic institutions across the U.S. offer game programs and courses • Institutions include: • University of Washington • Art Institute of Seattle

11. State Video Game Tax Incentive Competition • 15 states provide economic incentives to encourage computer and video game production • States like Florida, Georgia and Texas as well as Vancouver, B.C. are aggressively luring computer and video game development by providing tax incentives. • Canadian provinces offer tax credits for the video game industry that range from 30 - 45 percent. • States like GA and MI just enacted tax credits of up to 25-30 percent for game development.

12. Web Wise Kids • National 501(c)3 nonprofit organization • ESA Foundation partner • Helped create and distribute Internet safety program to kids in school • Teaches kids about essential safety and privacy issues including: • Internet predators • Online romances • Bullying • Cyber stalking • Identity theft

13. Web Wise Kids’ Approach • Divergence from the lecture format: Using a hands on, minds on approach, Web Wise Kids offers educational computer detective games for middle and high school age students called MISSING, Mirror Image and Air Dogs. • Ongoing support and education: Web Wise Kids offers parents, teachers, youth leaders, and law enforcement the use of a prepared Internet safety program.

14. About the ESRB • Founded by the ESA in 1994 • Non-profit, self-regulatory body for the entertainment software industry • Assigns ratings, enforces industry-adopted guidelines, and ensures responsible online privacy practices

15. ESRB Rating System • Two equally important components to ESRB ratings: • Rating Symbols suggest age appropriateness (on front) • Content Descriptors indicate elements that may have triggered a particular rating and/or may be of interest or concern (on back)

16. Rating Category Breakdown

17. PSAs: Radio and TV • ESRB will kick off a PSA radio campaign on Nov 28 ‘08 (Black Friday) with spots airing on ABC Radio Networks • Previous radio campaigns generated 190 million impressions from English and Spanish language stations and networks • Washington State Governor Chris Gregoire • 31.7 MM impressions on TV and 5.3MM on radio

18. PSA Ads – Print • ESRB has launched a national PSA print campaign featuring testimonials from 3 parents about their experience in using the ratings • The ads were distributed to 150 publications with approx 10 (Family, Redbook, Ser Padres, Mira, Stars and Stripes, etc) committing to run an ad, so far

19. Rating Summaries: NEW! • Although 69% of parents say ESRB ratings are the “most” or a “very important consideration” in their purchase decision….. • Parents also say: “the ratings do not provide sufficient information.” Solution: Rating Summary • Each Rating Summary will explain in concise (typically 2 or 3 sentences), objective terms the context and relevant content that factored into the rating assignment, with an emphasis on embellishing the content descriptors. • 80% of parents said they are interested in Rating Summaries and 78% thought they would be very helpful in choosing appropriate games. Sources: Hart Research 2/08 500 parents and Parenting.com 7/08 400 parents

20. Ratings Search Widget Push Apr – Sept 08 - 14,000 users conducting 36,000 widget searches - 2 million widget views (10% interacted views) - 2,000 widget installs - Holiday widget outreach to over 100 websites

21. Ratings 2 Go! • Accessible on: • ESRB.org • Rating search widget • Mobile Website (m.ESRB.org) • E-newsletters

22. Partnership – PTA • PTA/ESRB booklet: A Parent’s Guide to Video Games, Parental Controls and Online Safety • Launched: April 2008 • Distribution: 750,000 booklets to all 26,000 state and local PTA chapters • Webcast & radio: Panel discussion hosted by Alex Goldfayn, The Technology Tailor, with PTA national president Jan Harp Domene, ESRB president Patricia Vance and GamerDad Andrew Bub • Online:Downloadable version of the booklet in English and Spanish on ESRB.org and PTA.org

23. ESRB Retail Council (ERC) • Established in November 2005 • “Commitment to Parents” Code adopted in June 2006 • ERC members include: • Best Buy • Blockbuster • Circuit City • GameStop (EB Games) • Movie Gallery (Hollywood Video / GameCrazy) • Sears/Kmart • Target • Toys ‘R’ Us • Wal-Mart

24. FTC Mystery Shopper Audits

25. Additional Information For additional information, please contact Jean Leonard at jmleonard@att.net