Big Deal: EA and NFL ink exclusive licensing agreement

Five-year contract gives EA sole rights to the NFL, including teams, players, and stadiums. Take-Two reacts, calling it a "tremendous disservice to the consumers."

Electronic Arts has signed the biggest sports free agent on the market. In a devastating blow to competitors--and in a deal sure to reshape sports gaming--the software giant signed an exclusive agreement with the National Football League and the NFL Players Inc., a subsidiary of the NFL Players Association.

The deal, one EA admits to having lobbied for over the past few years, is an exclusive five-year licensing deal granting EA the sole rights to the NFL's teams, stadiums, and players. However, the publisher and Players Inc. denied a similar deal was in the works in May 2004, even requesting publications that ran the story run public retractions.

The NFL/EA arrangement encompasses action, simulation, arcade-style, and manager games made for PCs, consoles, and handhelds (both the DS and PSP, included), giving EA a firm hold on the football gaming market. The deal does not include titles for mobile phones or Internet-based games, but does include online features of consoles. With next-generation consoles scheduled for release next holiday season, EA looks to handily dominate the professional football market for the duration of the license.

EA's current roster of NFL games includes the top-selling Madden franchise and the extreme football NFL Street franchise. Given that EA currently has no "manager games" per se, there is clear writing on the wall that the publisher will announce a new sports management lineup of products, though it refused to comment on when.

A source close to the negotiations said it was at a spring 2004 off-site meeting attended by top NFL officials that the league determined it would take the league license exclusive. GameSpot was told the league put the license up for bid and that EA was among as many as five software publishers competing for it. An EA spokesperson said today, "Obviously, exclusives are more expensive. We are most certainly paying a premium."

In a statement, Larry Probst, chairman and CEO of Electronic Arts said, "We are excited about the opportunity to further enhance our relationship with the NFL and PLAYERS INC. The five-year agreements will usher NFL fans through the console technology transition with new ideas and innovative game play experiences."

The deal is obviously bad news for EA's competitors, particularly ESPN Videogames, Sega, and Take-Two, who stole a respectable chunk of EA's Madden Football market with their NFL 2K series and it's budget price tag this year of $19.99.

Arguably, the deal will impact consumers negatively as well. With less choice, theories of competition no longer apply. Some industry insiders speculate the exclusive deal was embraced by the NFL after it saw Take-Two lower the price of its 2K5 product earlier this year. No licensor likes to see a price war being fought with its brand value at stake. At the same time, exclusive licenses in the sports world are more the norm than nonexclusive licenses. The NFL's apparel license is a Reebok exclusive, as is its beverage license with Gatorade.

This afternoon, Take-Two issued the following statement: “While sports games in general are an important part of Take-Two's product diversification strategy, the licensed NFL game we distributed on behalf of Sega this year was not a material contributor to our profitability to date, nor was it expected to be a meaningful contributor in the upcoming year. We remain committed to continued diversification of our product portfolio, including sports."

"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.”

"I really respect them, but the consumer really loses," one analyst told GameSpot. "EA is both evil and really smart."

As for such a deal affecting quality of future football products, EA's vice president of corporate communications Jeff Brown told GameSpot, "The onus is on EA to keep making a better game each year…that's the hurdle you have to clear every year."

Even before the news was released, trading of EA stock had its value spiking north. On trading nearly three times its usual amount, EA stock was up more than $3 today. The stock closed at $57.57, up $3.38, or 6.24 percent, with 16,574,606 shares trading hands on the NASDAQ. In after-hours trading, the stock at press time had jumped another $2.88 to trade at $60.45.

For more information on all things athletic-game-related, visit GameSpot's new Sports Games section.

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Discussion

14 comments
dchase2k8
dchase2k8

I was such a huge fan of *football* video games. This single "event" has tainted my perception of capitalism. It makes my gut turn. I used to love Madden before this exclusive deal with the NFL. I can't believe that sites like IGN and Gamespot don't do more to bring awareness as to how frustrated gamers like me are about this deal. I haven't purchased a football video game in 7 years. And one of my favorite pastimes has been taken from me by EA (the company that spent hundreds of millions of dollars to single handedly monopolize an entire genre). What if Activision was the only company who could make a shooter? What if Nintendo was the only company that could make a platformer? How stale would that make those particular genre's and how frustrated would the fans of those genre's be? IGN, Gamespot, ANYBODY who has an audience, please help end this deal. please. Please give me back my wonderful, glorious, amazing, football video games, and all the wonderful yearly variety and excitement back with it. Please.

Dancito13
Dancito13

Los monopolios nunca son buenos. En el mercado debe haber variedad de productos por el bien del consumidor. EA es pura mierda. Como saben que sus juegos son arrasados por 2K mejor prefieren jugar sucio comprando la licencia solo para ellos. Los juegos 2K son mil veces mejor q las basuras de EA.

youngsay
youngsay

**** EA SPORTS! Their games blow...as soon as this contract ends, people will go back to buying NFL 2k for 20 bucks

PlayerPrezident
PlayerPrezident

Lets just hope the contract isn't renewed come 2009.

Swimmerking33
Swimmerking33

[This message was deleted at the request of a moderator or administrator]

modemmack
modemmack

Exclusivity deals blow. NFL has been helping kill competition, and in the long run innovation.

stevenj05
stevenj05

madden games are not even good anymore after this deal...madden on the 360 is garbage...we want 2k back....one more year to go

JSharpe_187
JSharpe_187

[This message was deleted at the request of a moderator or administrator]

RaiKageRyu
RaiKageRyu

SO this is how it all happend...

Wario_and_Fox
Wario_and_Fox

This is the worst thing to happen to football games and it lead to the ruining of MLB games as well

tomservo51
tomservo51

Is there any question that this deal has hurt Video Game football? I can't Imagine the NFL is happy with this deal. I miss 2k football.