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.
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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.
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