Economist, analyst spar over cost of Madden NFL exclusivity

As a class-action lawsuit against Electronic Arts alleging "blatantly anticompetitive conduct" due to an NFL exclusivity agreement, one of the key questions is how much the publisher's practices have cost ordinary consumers. Common sense would suggest it's impossible to put an exact figure on how...

As a class-action lawsuit against Electronic Arts alleging "blatantly anticompetitive conduct" due to an NFL exclusivity agreement, one of the key questions is how much the publisher's practices have cost ordinary consumers. Common sense would suggest it's impossible to put an exact figure on how much extra gamers were made to spend on football games in a different hypothetical scenario, but that's not going to stop the various parties from trying.

Earlier this week, GamePolitics reported on an estimate of that number made by University of Michigan economist Dr. Jeffrey MacKie-Mason. According to MacKie-Mason's estimates, EA overcharged gamers between $701.5 million and $926 million over the alleged stretch of anticompetitive behavior.

EA attorneys responded to that estimate in a court filing by calling it a work of "pure fiction," a sentiment echoed today by Wedbush Morgan Securities' Michael Pachter.

"What kind of fool is this [University] of Michigan economics professor," Pachter said in an e-mail to GamePolitics, adding, "I rarely read anything that gets me so incensed... They may have some odd estimates I'm not aware of, but based on what you printed, they should be embarrassed. You can quote me."

To explain his incredulity, Pachter noted that Madden games have sold 23 million units since 2006 (the period in question), with total retail sales of just over $1 billion. Assuming that 20 percent of the revenue went to the stores who sold the games, that leaves EA with about $800 million in revenue from the sales.

"How in the world does [MacKie-Mason] conclude that EA overcharged by more than they generated," Pachter asked.

It's worth noting that Pachter and MacKie-Mason used different sources for their sales numbers. Pachter based his Madden sales figures on the industry-tracking NPD Group's data, while MacKie-Mason used worldwide sales figures from the publicly accessible VGChartz. The NPD Group receives its data directly from retailers and extrapolates to account for non-participants like Wal-Mart, while VGChartz divines its estimates based on polls of gamers, retailers, and publishers; historical sales trends of similar games; and fluctuation of resale prices.

62 Comments

  • gamesguru123

    Posted Jul 31, 2009 3:54 am PT

    How did I miss this story? I'm always late to the good parties.

    This is why so many industry folk take issue with vgchartz. Taking that site's numbers seriously - even using them as a benchmarking tool - can get you into some hot water.

    Hey, those of you touting the prowess of vgchartz, I have a little surprise for you. Just because it's free, that doesn't make it good. I can go down to my local grocer and pick free food out of the trash, but do I want to eat it? Nah, I think I'll just look at it, thank you. I'd prefer to walk into the grocery store and buy the stuff that won't make me sick.

    And Polybren, you give vghcartz too much credit when you write "VGChartz divines its estimates based on polls of gamers, retailers, and publishers; historical sales trends of similar games; and fluctuation of resale prices." If only the 'genius' running that mess of a Web site was actually that talented.

    God, I really wish someone would get off their lazy butts, partner with the real firms that know what in the hell it is that they're doing, and put together a competing site that wouldn't blatantly crap on the very industry it says it intends to support. Seriously, why doesn't anyone do that?

  • dahamsta

    Posted Jul 29, 2009 4:30 pm PT

    i have a few comments
    you can't say all the prices went up since they all did on the next gen consoles
    ea has only bought the right of names and you can still create football games
    it's a business not a democracy
    will it have create a playbook

  • damonkeypirate

    Posted Jul 21, 2009 6:28 am PT

    Only reason EA bought madden exclusive is because they knew and we knew that 2k sports was finally getting better than madden. End of story.

  • draphtmasta

    Posted Jul 18, 2009 1:20 pm PT

    You can't put a price on the amount of suffering the sports world has faced due to ea sports exclusive deals... football, nascar on and on. I hate you ea! They drop nascar on pc, then 360 and ps3, now you can only get nascar on wii. What a joke. They found a way to use crappy last gen graphics and rip off mario kart (wii nascar) and make money. Celebration when that company goes bust! Lets start planning now.

  • ajbad4ever

    Posted Jul 17, 2009 12:01 pm PT

    people i think Dr. Jeffrey MacKie-Mason is correct wit his number think about it most people buy their games used so wen u trade it in a $60 u get wat 15 dollars and then gamestop and or gamecrazy turn around and sell it for $45 to $55 and wen u trade in a $20 or $30 u get wat $3 to $7 so think of the math maybe EA didnt get the All the revenue but their practice of over pricing games did this is exactlly y i dont buy used games

  • ajbad4ever

    Posted Jul 17, 2009 11:49 am PT

    zintarr is a dumbass obviously u dont know wat is goin on go get educated on the siyuation and then come post ur coment

  • zintarr

    Posted Jul 16, 2009 8:18 pm PT

    How could EA have over charged when every fricking game costs $60?

  • aaronsguitar

    Posted Jul 16, 2009 6:31 pm PT

    In response to the $20 price of NFL 2K5, EA was forced to lower the price of their game. The following year EA went out and (essentially forcefully) bought the licensing rights, locking out other developers/publishers. The next year EA raise their prices to $60 a game. Sounds like a monopoly to me!!

  • donscrillinger

    Posted Jul 16, 2009 5:38 pm PT

    YESSSSSSSSSSSSS!!!!!THX the video game gods ....those a holes have been riding around in the cars we brought them but they have been saling us lemons on the 360 since 2006 in the way of football games ..plz judge give us back NFL from 2K PLZZZZZZZZZZZZZZZZZZZ!!!! this arcade crap e.a. has been putting out must stop..

  • Sparty_On

    Posted Jul 16, 2009 4:18 pm PT

    I don't feel like I'm being overcharged Jeff MacKie-Mason doesn't know jack and doesn't know what he is talking about either. 2K5 wasn't real football Madden is the real deal and get better every year and it isn't the same every year either. If Tecmo ever gets back into the football gaming business I would buy it even if it doesn't have NFL. Football video games haven't gotten ruined since Madden is the only game in town. People that are suing EA there lawsuit is baseless and should be throwin out as there claims are full of lies. I'm right as always.

  • mikeyvp87

    Posted Jul 16, 2009 11:20 am PT

    You know the 2k guys should do what the konami is doing. EA has the licences for FIFA and though they can't use their names or Stadium names it's close enough to the real thing that it is easy to put it in your self. In fact there is an unofficial site were the Jersey names and stadium names are done on the day the game launches.

  • saiyanman5215

    Posted Jul 16, 2009 10:23 am PT

    @Demobot Really, come on if you have a chance to “put away” your chief competition, wouldn’t you do it as well. Sure it hurts us fans, but you can’t hate EA for “taking care of home 1st”. Each of us would do the same in the same situation. Please don’t confuse “threatened” with trying to make as much money as they can with the least amount of work.
    @CardiacKid07 Lmao, thanks for summing that up Cardiac

  • saiyanman5215

    Posted Jul 16, 2009 10:22 am PT

    @sportwarrior ”In desperation they secured an exclusive agreement with the NFLPA, allowing them sole rights to the NFL license and free reign to price the game right back up at $60.”
    Not desperation, just smart business practices. If they thought they were doing illegal, they probably wouldn’t have taken the chance with it. Just because they are lazy with making their games lately doesn’t mean their legal department is stupid; please don’t confuse the two. And you know full well unless the company wasn’t in the business of making money the price was going to hike back up with or without an exclusive deal.
    @huerito323 People aren’t as sheepish as you think. Remember you can’t fool ALL the people ALL the time.
    @bhayes I don’t know if it went unnoticed, I just believe most EA loyalists decided to look past it. I mean to some fans, as long as they were getting at least one NFL game, they didn’t care you made it or how much it allegedly “sucked”. Most fans of Madden are bigger NFL fans than video game football fans. That’s the big advantage EA will have over every company from now on, exclusive deal or not. Disagree? Just take a look at any of the pregame shows this fall that use the demo field and see what game it’s been modeled from for years (since 2005 at my earlier recognition).

  • saiyanman5215

    Posted Jul 16, 2009 10:21 am PT

    @famguyfan2685 I agree that the actual appearance looks too similar from year to year (especially on the same platform) I have been saying that very same thing for years…..but for those that shift from older platform to newer platform (ie PS2 to X360/PS3), it’s like they’re playing a new game……just saying
    @bboysleepy32 “If you want EA to change, just don't buy its games.”
    simple as that….I agree
    @stziggy the NFL doesn’t care about innovation. That’s where the anger should be directed. They (NFL) are going to make their money, exclusive rights or not. I wonder why 2k sports didn’t beat EA to this move in this 1st place. @langway & ssk187 I agree. Competition is good. But when we stop thinking big business cares about fans and taking this so personally, it will put things into perspective.
    @draken2533 “If 2k came back in with NFL game's they would crush EA all day long I still to this day play 2k5 cause it's the best period.” That is totally subjective. @railroberto2007 I always wondered why no one else (including myself apparently) ever mentioned that. 2k isn’t the only other company/studio/etc to ever make a video football game. Personally, I would love to see Tecmo get into the game again with or without a full NFL license just to see what they could do these days.

  • rando22

    Posted Jul 16, 2009 10:21 am PT

    isnt this in lamen terms called a monopoly?

  • PatiusMehaffius

    Posted Jul 16, 2009 9:21 am PT

    The amount of money can't really be measured.


    The issue at hand is that this is highly illegal. A company cannot make a product equal to the other product, and slash the prices until the competition goes out of buisness, and then jack the prices up.

    EA should get a huge fine for breaking the law.

  • _Elric_

    Posted Jul 16, 2009 9:16 am PT

    The EA games suck because they only have a one year dev cycle and most of the casual players are happy with the base game play mechanics which do not change significantly from year to year: They just want the ROSTER updated. So, you basically pay $60 a year for roster updates + patch level game updates.

    It's a racket. I'd pay $100 for a good NFL game that guaranteed to have up to date player stats for 5 years.

    I think it's good that EA is being sued. Their NFL license truly is anti-competitive and unfair to the customer.

  • ronid76

    Posted Jul 16, 2009 4:04 am PT

    Yarrrr give us some money back!!!!!

  • famguyfan2685

    Posted Jul 16, 2009 3:12 am PT

    @railroberto2007 .. AGREED! The games barely change enough for me to notice the difference. I've really never been a huge fan of the series. Not bashing the game, it's just not for me I suppose..

  • HELMET1964

    Posted Jul 16, 2009 2:42 am PT

    there is a lot of big madden fan's out there,i think this year's game will be the best ever
    wot about being positive,if you are not into it then don't buy it
    -
    this doe's not change a thing , i am looking forward to the demo etc
    -
    i only have a couple of question's on madden 2010

    wot music will be in it this year ?
    -
    can you still load your created team into franchise mode ?
    -
    true madden fan - great

  • nurse_tsunami

    Posted Jul 16, 2009 1:57 am PT

    Hahah, Pachter calling someone a 'fool'? Kind of like a pot calling a kettle black?

  • bboysleepy32

    Posted Jul 16, 2009 1:15 am PT

    If you want EA to change, just don't buy its games. I know I'm not getting same old NCAA 10 (especially since there's no Percy Harvin lol)

  • Kabaro

    Posted Jul 15, 2009 11:10 pm PT

    I don't get the complaint here. Since when is a game $44.18? I know its an average but most games come out around the same price. Plus any difference in price is WHEN you buy the game. PLUS the fact is also the time period he used covers more than one console and especially now games are more expensive. The physical cost is not an issue as its so small if there even is. The problem is that you only get one game with the NFL. In reality its quite easy to bypass all of this. Release a regular football game with generic names but then allow the modding community to released a 3rd party patch. Or how Sports Interactive does. Include the teams and names but apply a .txt file that overlaps the real names. If you go and manually delete the .txt file you get the real names. Easy way around the licensing issues.

  • railroberto2007

    Posted Jul 15, 2009 10:12 pm PT

    who cares about madden anymore?

  • cid_007

    Posted Jul 15, 2009 9:16 pm PT

    EA = exclusivity arrangements

    Hey, maybe I can hire a lawyer and sue EA for millions of dollars because I bought a crappy game that they knowingly released, thereby "costing" me untold stress, frustration, psychological trauma, wasted time and money, etc. culminating in a potential class action lawsuit, seeking punitive damages. Duh!!!!

  • darknferno12

    Posted Jul 15, 2009 8:50 pm PT

    "I rarely read anything that gets me so incensed" if that got him mad he should really read Michael Pachter articles...oops

  • stziggy

    Posted Jul 15, 2009 8:33 pm PT

    I don't agree with Dr. Jeffrey MacKie-Mason. The NFL has the right to deal exclusively with EA. That's business.

    I think it's sad that the NFL has decided to go this route. With the absence of competition, innovation has been stifled. Sure they have made a few improvements, but if they had to compete with say 2K, the world of the video football game would look very different.

    Case in point, I was very disappointed that when Favre moved to the Jets, EA made little to no effort to correct the change. Would have it killed them to at least change the cover art of the game? Would it have killed them to cover this change on all versions of the game? They didn't have to. There was no incentive to.

  • Langway

    Posted Jul 15, 2009 8:27 pm PT

    @eggmcmuff - that's a KC Chiefs player, not a Redskin. LOL at the SB 18 reference though.

  • Langway

    Posted Jul 15, 2009 8:23 pm PT

    Same game or not, if you made a conscious choice to purchase the game at the same price everyone else payed in whatever country you live in, then you were not over-charged. Research, and try to demo a game before you buy. To many game consumers buy without knowing the details of what game they're buying.

    As for breaking up the hold EA has on the NFL license, I'm all for it. I'm in total agreement with everyone else who said 2K5 was the superior game. A little competition is good for the industry, and good for gamers.

  • eggmcmuff

    Posted Jul 15, 2009 8:08 pm PT

    Fake picture! A Redskin would never be stuffed by a Raider. At least not since Super Bowl XVIII...

  • ssk187

    Posted Jul 15, 2009 7:37 pm PT

    Just give us competition and choice. I loved the 2K series. I bought NFL 2K5 when it was releaed. I was blown away. Since the exclusivity began, I have played every madden game released for the next gen platforms. In all honesty, they have not lived up to the standard set by 2K5 and thats just a fact. I've seen the new features and camera angles giving to Madden 10, I just don't think it's enough. Presentation and gameplay are the selling points and I don't think EA has done a good job with either.

  • pimpo909

    Posted Jul 15, 2009 7:31 pm PT

    "Overcharging" is relative to the price of the same good elsewhere. For instance, if BestBuy sells a specific Dell laptop for $1100, and Walmart sells the same model Dell laptop for $990, then BestBuy is overcharging. Now, as far as I'm concerned, you cannot purchase Madden NFL games for cheaper than they are currently being sold; therefore, you are not being overcharged.

    And if that didn't make sense, consider this final thought: if EA knows it can get $60 for a new Madden game, why would it charge any less?

  • CMakaCreative

    Posted Jul 15, 2009 7:30 pm PT

    @Carpe_Noctum

    I don't agree that the exclusivity has ruined foorball or baseball. I do believe it have stumped the growth a lot but Madden is still playable & probably enjoyable to many. As for baseball, Take Two did the best thing by being exclusive to third party MLB provider. The fact that Sony is able to make MLB the Show doesn't kill the MLB license or stump it at all. Now if they had a tight grip like EA has on the NFL, I'd never play baseball games again but people who own Sony consoles are enjoying the much superior game of MLB. If EA let first party developers make NFL games, things would be a lot better...as far as the growth of the games. I'm sure people who made NFL 2k5 would have been brought in to MS or Sony to develope something spectacular. One day...we shall all get our fix of NFL from other than EA.....some day.

  • NuKkU

    Posted Jul 15, 2009 5:53 pm PT

    @KhanhAge: its not just americans all of EA's sports titles throw out the same game every year same thing goes with FIFA which mostly Europeons buy

  • slidet22 posted Jul 15, 2009 5:29 pm PT (does not meet display criteria. sign in to show)

    slidet22

    Posted Jul 15, 2009 5:29 pm PT (hide)

    People who say "It's just the same game" have either not played the updated Madden games or are simply motivated to do so for another reason, but not because it's objectively true. They roll out TONS of new features each year. Some are done well, others are not. Many of them deal with gameplay, some do not. You don't have to like all the changes, but there ARE many changes. That said, I also contend that NFL 2K5 was the best football game ever...and for THAT - EA should be ashamed.

  • azureblade89

    Posted Jul 15, 2009 5:27 pm PT

    Wow

  • KhanhAgE

    Posted Jul 15, 2009 5:12 pm PT

    From those numbers it seems that Americans are willing to pay full price each year essentially for the same game. Amazing really. You do have to give EA some credit for pulling off such a scheme. (And people wonder why games are expensive. If the same game can sell for $60 each year, why would you want to lower the RRP?)

  • draken2533

    Posted Jul 15, 2009 5:08 pm PT

    Don't we all wish the NFL would get their heads out there a$$ and strip the rights. If 2k came back in with NFL game's they would crush EA all day long i still to this day play 2k5 cause it's the best period. EA got exclusive rights and sat back and haven't done jack to change up the game and just collected $$$$ really makes you wonder how long ago it was finished and they are just waiting on rosters to finialize (the new one that is)

  • Carpe_Noctum

    Posted Jul 15, 2009 5:05 pm PT

    Whatever the case, I like Madden and I play it every year, but I rent it and see if it is worth buying. Sad enough it never is. I actually thought that Madden '09 was pretty good, but it's still not a sim NFL game, it's an arcade style football game and that is the biggest bummer. If I want to play a real sim-style football game I play NFL 2K5, which is still the best football game that has been made. Both the football and baseball exclusivity deals ruin our, the gamers, enjoyment of these sports; we are the ones that lose-out and have to suffer. EA and Take Two should have to end their deals.

  • maverick_76

    Posted Jul 15, 2009 5:02 pm PT

    I'd likely say that EA actually overcharged us about 150-200 million dollars. If they made $800 million, and since the price is about $60, that means about 16.7 million games sold since 2006. If 2K sold their game for the price that they sold APF 2K8 when it first released, I think it was $49.99, that is $10 overcharging for each of the 16.7 million games sold.

  • railroberto2007

    Posted Jul 15, 2009 5:01 pm PT

    they dont actually make a new game they just update the roster. i hope ea has to give up the rights. and why does everyone yell 2k. im sure another studio would make a game to blow them both out of the water if they had a chance

  • sportwarrior

    Posted Jul 15, 2009 4:50 pm PT

    Is it really that hard to tell how much they've overcharged? NFL 2K5 was $20 on release. EA HAD to respond by pricing Madden at $30. In desperation they secured an exclusive agreement with the NFLPA, allowing them sole rights to the NFL license and free reign to price the game right back up at $60. Had proper competitive practices been allowed to continue, NFL 2K could very well have continued charging $20-30. That means EA has overcharged between $30-40 per unit every year since 2004.

    Entirely quantifiable.

  • izmickey

    Posted Jul 15, 2009 4:41 pm PT

    Ive stopped buying madden games a long time ago. Without any competition, i feel like the football game got a little stale. The last madden game i bought was 2007 i think.

  • supersaiyinx

    Posted Jul 15, 2009 4:41 pm PT

    Most people buy the brand and overlook the actual gameplay mechanics, and if your buying EA Sports games this is more true, but some people do tend buy EA Sports games due to the lack of an alternative.

    Really the exclusivity is causing the genre to stale, with MOST of the changes from game to game being new players, yet it is marketed as better than the last.

    It's really a waste of licensing, money, and time.

  • McGregor

    Posted Jul 15, 2009 4:18 pm PT

    It's true, madden getting exclusivity ruined the NFL football game. It hasn't changed. If Back Breaker were able to use the NFL license they'd likely outsell madden (pending game play of course) but the initial concepts already put it above madden in my books.

    edit: As a side note I asked my bro-in-law if he planned on picking madden '10 up because he got a new PS3, in which he responded, "what for? It's the same as '09". I also showed him back breaker and even though he was impressed, he said, "From what i see it looks great, worlds above madden, but since they don't get the NFL license it's not worth it to me". For him the NFL license is what he wants to buy, but even he sees that madden is the same.

  • huerito323

    Posted Jul 15, 2009 4:12 pm PT

    Madden was great, not lately. It hasn't been great ever since it's been the only NFL game.

    ESPN 2K5 is still the best football game ever. I dont know if Madden outsold it, but I don't care! Madden is more popular because of the name and it's been around for a long time. People didn't give other football games a chance. Now they're stuck with the same game every year! Good job Madden fans.

  • bhayes

    Posted Jul 15, 2009 4:10 pm PT

    The whole point of the story is to make people aware of an apparently unnoticed fact that a few years ago EA put a monopoly on all NFL games, and that if anyone wanted a game that features their favorite NFL team or player then they will have to go to EA to get their fix. While EA does not have a monopoly on all football games they made an arrangement that allowed them to claim a huge chunk of the football games market because of their exclusive access right with the NFL (when football, not soccer, they think NFL).

    I personally wasn't a huge fan of Madden and am still not a huge fan. Companies such as 2K sports and ESPN (my favorite) had a lot of good things going for their franchise games and EA essentially stole that from them. Although I think EA will win the court battle, since the NFL is a private organization and can give exclusive rights freely, they went for a huge power grab in the gaming market and won.

  • nickfogal

    Posted Jul 15, 2009 4:06 pm PT

    no but if you want to play football games your "forced" to play madden. Dumb ass ward cleaver.

  • umbrae

    Posted Jul 15, 2009 4:04 pm PT

    Should be easy to calculate. NFL games prior to the agreement were $19.95. After the agreement the games went up to $49-59. Take global sales and math out the difference per game per year. I think 701 mil is a pretty good estimate.

    I hate football, so it cost me nothing. However, I was very mad at this deal for gamers that did buy NFL games.

  • WardCleaver02 posted Jul 15, 2009 4:00 pm PT (does not meet display criteria. sign in to show)

    WardCleaver02

    Posted Jul 15, 2009 4:00 pm PT (hide)

    To all those saying that your "forced" to buy Madden:

    Did EA come to your house with a gun a force you to buy a VIDEO GAME?!!

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