ESPN NFL 2K5 - Sayonara! (EA gets exclusive NFL license)

Aliasbuck · Post by **Aliasbuck** » Tue Dec 14, 2004 12:14 pm

The NFL in its infinite wisdom has given an exclusive license to EA Sports for Madden NFL Football. Sony and Take2 are left out in the cold. What a shame, because these two forced a price war and could have created a quality battle too - all good for the consumer.

http://news.bbc.co.uk/2/hi/business/4093861.stm

(edit - I just can't get the spacing right to get the url to show - finally got it on try 3)

The Preacher · Post by **The Preacher** » Tue Dec 14, 2004 12:20 pm

Well THAT sucks! I'm sure EA paid out the ass for this, not to mention that they won't have any competition now, so I wouldn't shocked to see a price increase. I hate this.

Fretmute · Post by **Fretmute** » Tue Dec 14, 2004 3:14 pm

From an email I received today:

EA and the NFL signed a 5 year exclusive deal yesterday. The terms were not announced, but it's widely rumored to be a $250 million per year deal--yes, that is $1.25 billion dollars.

I think most people expect EA to either break even or lose money on the deal. They would need to sell roughly 7-10M units per year to break even under those terms, and that's a pretty aggressive target to hit. They'll be in the ballpark, but they'll be under a lot of pressure to turn _some_ profit on this deal. The NFL is clearly the big winner here. Previously, they were handing out individual licenses in the $10-25M dollar range, so $250M is a big step up. I guess it goes to show that even a social club full of boy billionaires like the NFL is not immune to someone driving a dumptruck full of $20 bills in front of their house to persuade them to go against their best interests. In the end, the ultimate losers in this deal will undoubtedly be the consumers. This year they had a legitimate choice of two really good NFL football games (both have metacritic scores over 90)--the 2k5 game sells at $20 and EA, scared for its life, was forced to drop Madden to $30 or force being humiliated. Being the only game in town, and feeling pressure to make back over a billion dollars, there is no way that Madden will ever sell below $50 again. They won't even have any incentive to lower prices late into the season. They also won't have any incentive to innovate as long as they are hitting sales figures.

All very valid points. It's interesting to me that the NFL can now leverage their protected monopoly status to create sub-monopolies.

Edit: Different sources across the web have quoted wildly varying numbers, ranging from $50 Million / year to the number that I received above. I'd guess that the initial email I got was a probably wrong by several degrees, but most of the main points remain the same.

yossar · Post by **yossar** » Tue Dec 14, 2004 4:50 pm

Fretmute wrote:From an email I received today:

I guess it goes to show that even a social club full of boy billionaires like the NFL is not immune to someone driving a dumptruck full of $20 bills in front of their house to persuade them to go against their best interests.

It does? To me it shows how they got to be billionaires - go for the deal that gets you the most money. How is making money going against their best interests? Or does it mean that since they're "boys", they want to have the best available video game to play?
Oh and there's another thread here.

Aliasbuck · Post by **Aliasbuck** » Tue Dec 14, 2004 6:01 pm

I was going to claim mine was at least in the right thread, but then I noticed this thread is PC Gaming in General, not Gaming in General - oops

naednek · Post by **naednek** » Tue Dec 14, 2004 10:20 pm

well this deal affects pc football titles as well, so both are fine

Fretmute · Post by **Fretmute** » Wed Dec 15, 2004 11:36 am

yossar wrote:
Fretmute wrote:From an email I received today:

I guess it goes to show that even a social club full of boy billionaires like the NFL is not immune to someone driving a dumptruck full of $20 bills in front of their house to persuade them to go against their best interests.
It does? To me it shows how they got to be billionaires - go for the deal that gets you the most money. How is making money going against their best interests? Or does it mean that since they're "boys", they want to have the best available video game to play?

My apologies for the ridiculously long quote, but context is important to me.

This deal will certainly get them the most money in the near future, but the NFL makes scads of money anyway. I'd argue that while this will have measurable fiscal benfits now, it will be to the detriment of the NFL as whole.

EA now has no incentive to make their game any better, since there will be no competitors whatsoever. So they'll certainly be the best game available, but I doubt that it will be the best game possible, which is what the NFL should really want. The best interest of the NFL would be to have two or even three companies making football games and contending for the position of best.

Furthermore, as has been mentioned in the other thread, when this deal expires, costs may be prohibitively expensive for other companies to get back into the game at all. At that point, since they'll still be the only company around, what incentive do they have to pay EA that much money again? I doubt EA will say "Well, we paid you this much last time, so we'll just go right ahead and do it again." And I can't see the NFL not licensing anything, because those video games are essentially a bunch of free marketing that the NFL loves to have out there. [This line of thinking first brought to my attention by the always great Bill Harris.]

EA also is getting something of a black eye in the press recently, and there is a subset of gamers that feel that they ought not purchase games from them. Class action suits that allege bad employee treatment certainly don't help EA's image . . . and now that company is the only one that's allowed to make an NFL game. In other words, there are people who feel that the NFL has just contracted with a sweat shop to produce their game, and that sort of thing probably isn't in the best interest of the NFL either.

Of course none of this can be proven to be true, and all of my detriments are largely intangible, while the benefits are very easily summed. So my arguments rest on shaky ground, which I acknowledge.

Rich in KCK · Post by **Rich in KCK** » Wed Dec 15, 2004 4:12 pm

NASCAR did the same thing with EA a couple of years ago and put an end to the only good NASCAR game on the market. EA has released two horrible console versions and one PC port and say they will release a sim based NASCAR game for the PC fans this February, I don't hold out much hope for it.

Knowing that EA resorts to these tactics to eliminate their competition in the sport titles pretty much guarantees that I'll be playing older games to spite them even if I'm alone in doing so.

jaskerr · Post by **jaskerr** » Wed Dec 15, 2004 6:24 pm

Petition to reverse agreement. (Taken from Bill Harris's site)

http://www.petitiononline.com/nfleacon/petition.html

jaskerr · Post by **jaskerr** » Wed Dec 15, 2004 6:26 pm

BTW, he posted at 4:06 and was 7761. I signed it at 4:27 and was 7827. Word is getting around quickly!

Grifman · Post by **Grifman** » Wed Dec 15, 2004 8:23 pm

jaskerr wrote:Petition to reverse agreement. (Taken from Bill Harris's site)

http://www.petitiononline.com/nfleacon/petition.html

That and about $50MM might do some good. These things are worthless.

Grifman

jaskerr · Post by **jaskerr** » Wed Dec 15, 2004 8:27 pm

Grifman wrote:
jaskerr wrote:Petition to reverse agreement. (Taken from Bill Harris's site)

http://www.petitiononline.com/nfleacon/petition.html
That and about $50MM might do some good. These things are worthless.

Grifman

Definitely worthless, but.....BY GOD I DID MY PART!!!

I mean seriously, what are your choices? Boycotting EA is pointless. Writing a letter to my congressman? Meh, the intern will just laugh...might feel same way...but he'll just throw it away.

What can you do other than bitch about it?

Kyosho · Post by **Kyosho** » Thu Dec 16, 2004 3:15 am

I guess this just means there will be a lot more college football games. Or even Arena football games.

raydude · Post by **raydude** » Thu Dec 16, 2004 11:13 am

jaskerr wrote: I mean seriously, what are your choices? Boycotting EA is pointless.

Why do you say that? Microprose started putting out bad games and now its gone. Acclaim put out average to bad games and now its gone.

The fact is, the EA deal has now put the company in a position where it could see millions of dollars of loss each year. From a previous calculation it was estimated that EA had to sell 7-10 million copies EACH YEAR just to break even! There's no better time to prove that the consumer dollar can change the fate of a company than now.

So vote with your wallet instead of signing a petition and then buying an EA game.

jonsauce · Post by **jonsauce** » Thu Dec 16, 2004 1:43 pm

So vote with your wallet instead of signing a petition and then buying an EA game.

I'll be voting with my wallet. There are lots of good games put out by other publishers that I'll pick up instead. I'll just have to skip Pro Football games.

jaskerr · Post by **jaskerr** » Thu Dec 16, 2004 3:09 pm

raydude wrote:
jaskerr wrote: I mean seriously, what are your choices? Boycotting EA is pointless.
Why do you say that? Microprose started putting out bad games and now its gone. Acclaim put out average to bad games and now its gone.

The fact is, the EA deal has now put the company in a position where it could see millions of dollars of loss each year. From a previous calculation it was estimated that EA had to sell 7-10 million copies EACH YEAR just to break even! There's no better time to prove that the consumer dollar can change the fate of a company than now.

So vote with your wallet instead of signing a petition and then buying an EA game.

The main reason I think it's worthless is because you, me, and everyone on here can boycott EA games. People on other forums may do the same thing. I can tell my buddies that play to boycott them as well. How much is that really going to affect EA? How many people will actually boycott everything EA makes? 5000 people would be around the most that I can think of. How many kids really care? How many parents of kids really care? The kids are going to want to play a football game where they can choose their favorite NFL team. You think a parent is going to take the time to explain to them why they're not going to buy it?

Parent - I'm sorry Johnny, I'm not going to get that game, we don't like that company.
Kid - Ok, well buy me Tiger Woods then, his wife is smokin!
Parent - Same company Junior. Not gonna happen.
Kid - Ok, well what about The Sims 2? Medal of Honor? James Bond?
Parent - Sure, wait, nope, all EA as well.

Kid's aren't going to care why, Wal-mart people aren't going to care why, they'll buy Madden and Buckmaster 12 at the same time. The 5000 strong who are really pissed off and will boycott EA just don't factor into EA's bottom line. 5000 times 50 bucks is 250K. EA had 27 titles that sold at least one million copies this year. They had 3 BILLION in Net Revenue for fiscal 2004. That 250K? That's what they wipe their butts with. I think they can figure out how to pay whatever godly amount their shiny new license with the NFL without us 5000 people.

That's why I think boycotting EA is worthless.

Biyobi · Post by **Biyobi** » Thu Dec 16, 2004 3:43 pm

Does this exclusivety include the NFL Players Association too? In the early days of hockey on the Sega Genesis I believe there were games that had generic city names for the teams ("Los Angeles" rather than "Los Angeles Kings") but used all the player names because they got the license. Is something like this possible with football?

gellar · Post by **gellar** » Thu Dec 16, 2004 4:28 pm

Biyobi wrote:Does this exclusivety include the NFL Players Association too? In the early days of hockey on the Sega Genesis I believe there were games that had generic city names for the teams ("Los Angeles" rather than "Los Angeles Kings") but used all the player names because they got the license. Is something like this possible with football?

It includes the NFL PA.

There is no loophole. EA pwnz j00.

gellar

raydude · Post by **raydude** » Thu Dec 16, 2004 4:44 pm

jaskerr wrote:They had 3 BILLION in Net Revenue for fiscal 2004. That 250K? That's what they wipe their butts with. I think they can figure out how to pay whatever godly amount their shiny new license with the NFL without us 5000 people.

Um, I'm not a financial analyst but I did learn something while doing my own stock investing:

Revenue for EA is not the same as net income and saying "net revenue" is misleading. Yes, the revenue for EA is 3.22 billion.

However, earnings before Interest, Tax, Depreciation, and Amortization is only 804 million. However, the bottom line that makes a EA pay attention is "Free cash flow". Defined by Yahoo Stocks as thus:

Free Cashflow: Cash not required for operations or for reinvestment. Calculated as operating cashflow plus minus change in working capital plus net interest expense minus capital expenditures.

EA's free cashflow for the current fiscal year stands at $557.93 mil. Assume one of the previous posts is correct and it costs EA $250 million per year for the exclusive license. So EA *HAS* to increase its revenue in order to maintain the same free cashflow. Otherwise it has to answer to investors. Heck, even maintaining the same free cashflow is not enough. EA has to show growth.

Now it starts getting into the area where people can start making a difference. Besides, it doesn't require a total boycott of EA products. If you can get people to boycott JUST the EA NFL games it can make a difference. And I bet you can sell little Johnnie on that a lot better than a total EA boycott.

Coskesh · Post by **Coskesh** » Fri Dec 17, 2004 8:48 pm

Guess I'm in the minority who finds Madden to be more fun? Live pretty much sucks tho.