All Madden, all the time
Electronic Arts, the leading maker of sports video games, signed an exclusive five-year contract with the National Football League and the NFL Players Association, deals that will give the company sole possession of the licensed football video game business.
The partnership, which will commence with the publishing of Electronic Arts' Madden game next August, eliminates the competitive battle EA endured this year with ESPN's NFL 2K5 game, a joint venture between Sega and Take-Two Interactive. Without the use of team and player names, generic games have struggled for survival in the current environment.
Before this year, EA's Madden franchise -- which the company has sold more than 40 million copies of since its debut in 1989 -- previously dominated the football game marketplace. Bit players, including Midway, 989 Sports and Microsoft, dropped out of the licensed football game business this year.
But the Madden 2005 game was seriously challenged by NFL 2K5, thanks to good reviews and a pricing war. NFL 2K5 was available in stores in July for $19.95. For three months, the Madden game was priced at $49.95, until the company finally relented on Nov. 8 and lowered it by $20.
"We considered a whole variety of factors in making this decision," said Gene Goldberg, the NFL's vice president of consumer products. "We chose EA based on game quality, marketing ability and track record."
As part of the deal, EA will have access to NFL resources, including video, audio and music scores from NFL Films. The partnership pertains to every aspect of gaming, including content for hand-held games and personal computers.
Goldberg said he's not concerned that the monopoly on the business will cause EA to relax the year-to-year innovations that have been pushed by recent competition. Though financial terms of the deal are not known, Goldberg said there is "a lot of self-imposed pressure to improve the product to make it stand out in a robust and diverse marketplace."
Sports video games accounted for more than 20 percent ($1.2 billion) of the $5.8 billion video game market last year, according to the NPD Group, a market tracking firm.
EA spokesperson Trudy Muller said that the deal is not a financial risk for the company.
"We believe this is a good investment for us, as well as the league and the players," Muller said. "We know we have a responsibility to our fans to continue to make the best game. We have plenty of competition with other games in the marketplace."
Electronic Arts also has exclusive deals with NASCAR, FIFA and the PGA Tour.
"This exclusive relationship will maximize the value of NFL players through EA's continued commitment to bring fans closer to the game," said Gene Upshaw, executive director of the NFLPA and chairman of Players Inc., the organization's licensing body.
In a statement, Take-Two spokesman Ed Nebb disagreed.
"We believe that the decisions of the National Football League and Players Inc. to grant an exclusive license for videogames do a tremendous disservice to the consumers and sports fans whose funds ultimately support the NFL, by limiting their choices, curbing creativity and almost certainly leading to higher game prices," Nebb said. The game was "not a material contributor" to the company's profitability, "nor was it expected to be," Nebb said.
An ESPN spokesman said the company will evaluate the impact that the deal has on the company's licensing business.
The EA deal continues an unprecedented business year for the league. In January, the NFL signed Visa to a six-year deal worth $400 million. In February, Gatorade ponied up $500 million for the right to be called the official sports drink of the league for the next eight years. And PepsiCo signed a contract worth $560 million to use the NFL shield on its Pepsi, Frito Lay and Tropicana products in March.
Darren Rovell, who covers sports business for ESPN.com, can be reached at Darren.email@example.com