When Sega and Take-Two first announced ESPN NFL 2K5 would sell for just $19.99, Electronic Arts scoffed at the idea. "Sounds like they're throwing in the towel," Jeff Brown, Electronic Arts' vice president of corporate communications, told the San Jose Mercury News following ESPN's announcement. "They're signaling to consumers, retailers, and the NFL that they are no longer selling a premium product." Similar noises were made when ESPN NBA 2K5 and ESPN NHL 2K5 were also discounted to $19.99.
Two months later, Electronic Arts is singing a different tune. Speaking today to an assembly of analysts and traders at the BancAmerica Securities 34th Annual Investment Conference in San Francisco, EA CFO Warren Jenson announced a two-pronged attack to counter ESPN's pricing strategy.
First, Jensen revealed that NBA Live 2005's sticker price would be cut by $10 to just $39.99, a $10 drop from EA Sports' games standard $49.99 price point. Secondly, Jenson announced that EA is launching an across-the-board, buy-two-get-one-free promotion for any EA Sports title.
[UPDATE] Subsequent information provided by EA to GameSpot outlined the deal. "Consumers who buy two new EA Sports titles between September 27 and November 14 can get a coupon online for a third free game," said a representative for the company, who said details would be forthcoming on the official EA Web site. The EA rep confirmed the online coupon would be good for any and every EA sports title. "The promotion aligns with the holiday and the launch of a lot of our most popular franchises," said the rep. "It also shows our competitors that we're playing to win in every category."
Despite the discount announcements, EA's CFO was eager to point out that EA Sports titles are selling very well at full price. "Through Sept 18, 2.4 million units of Madden sold worldwide," said Jenson, "and the $60 [PlayStation 2] Collector's Edition is virtually sold out." He also emphasized the enduring strength of all the EA Sports franchises, which are best sellers year after year.
However, just in case anyone doubted that EA would not be competitive in Q4--worries exhibited in yesterday's $1.29 drop in the company's stock price--Jenson threw down the gauntlet. "There will be battles this holiday season," he said, "and we're going to be ready."