NBA evades exclusivity
Pro basketball league spins around dishing out sole rights to one party, grants long-term licenses to five publishing all-stars.
Meet your starting five for NBA-licensed basketball games for the next half-decade: Electronic Arts, Take-Two Interactive, Midway Games, Sony, and Atari. The five publishers signed long-term contracts (five-year or six-year deals) with the National Basketball Association, giving them rights to use the NBA properties in future games beginning this October.
Since late last year, publishers have been elbowing each other frantically, trying to gobble up exclusive rights to various sports leagues.
It all began in December, when EA dropped a bomb on sports gaming by signing a five-year deal with the National Football League for exclusive rights, effectively preventing any competitor from making an NFL-sanctioned game. The deal guaranteed that any gamer looking for an NFL game would have two choices--EA's juggernaut Madden series or EA's extreme-themed NFL Street series.
The move was considered by many to be motivated by Take-Two, who had been gaining on EA's share of the sports gaming market, particularly with its own NFL game, NFL 2K5, and its budget retail price of $19.99.
EA followed that haymaker with a jab to Take-Two's gut by signing the Arena Football League to an exclusive deal January 10, forcing Take-Two to punt with regard to the football market.
Take-Two, owner of Grand Theft Auto publisher Rockstar Games, countered with a shot of its own. Two weeks after EA signed the AFL, Take-Two scored exclusive third-party rights to Major League Baseball, forcing one EA rep to mutter, "As far as we're concerned, this looks like stupid money. They are paying an exclusive price for a nonexclusive agreement."
While this deal doesn't lock up Take-Two as the sole proprietor of baseball games--console manufacturers can still make baseball games for their systems--it did shut EA out of making any MLB games at least until 2012, when the deal ends.
The small draft felt around the world this morning was probably the result of the collective sigh of relief let out by sports gamers following the NBA announcement. While exclusivity bodes well for the publishers who own the licenses, many consumers feel that gamers lose out due to a dearth of competition.
By allowing five different publishers to have a share in the NBA license, the league felt it would avoid the potential threat of lackluster games. "It's been our experience that relative competition among [publishers] has inspired a tremendous amount of creativity," said Sal LaRocca, senior vice president of global merchandise for the NBA. "We felt that having a real diverse offering of products that runs the gamut in terms of demographics, that we would maintain a greater share of mind, day in and day out," he said.
"We had discussions about exclusivity with some of our current partners and with a company that is not a partner of the NBA," said Adam Silver, president and chief operating officer of NBA Entertainment. "We got to a dollar number, which is a significant increase off our current deals, but at the same time we're able to maintain relations with our current partners," Silver said.
That one company that is not a partner with the NBA could very well have been French publisher Ubisoft. Late last month, the publisher of such game franchises as Tom Clancy's Splinter Cell and Prince of Persia, decided to enter the sports gaming market for the first time by signing golfer Vijay Singh, direct rival to EA's golf game cover boy Tiger Woods, and scooping up sports game engines from now defunct XSN Sports, Microsoft's sports games studios.
Without an NBA license, Ubisoft did the next best thing by signing with And 1, hoops clothing company and sponsor of the And 1 Mixtape Tour, an extreme basketball organization that has gained immense popularity in the past few years.
While the financial terms of the five agreements were not disclosed, the publishing terms were. EA and Take-Two will be able to continue making simulation-style basketball games for multiple platforms, keeping EA's NBA Live franchise and the aforementioned NBA 2K franchise alive. Sony will also contribute its NBA Shootout franchise to the simulation games, though only on the PlayStation 2 and upcoming PSP.
On the extreme side of things, EA and Midway will have to share the court. EA's NBA Street and Midway's NBA Ballers will alternate years on multiple platforms, though it isn't clear who will take the stage first. However, with NBA Street V3 being only a month and a half old and NBA Ballers approaching its first birthday, it stands to reason that Midway will get first possession. Atari's Backyard Basketball, aimed at a younger crowd, will continue on with yearly editions.
One of the deciding factors in the NBA's decision to spread the love was the growing popularity of in-game advertising. Publishers and licensors are reaping the benefits of online ads in games.
"In the online games, we can insert virtual signage in the same way we do during the telecasts," Silver said. "As part of the reality, we're going to be selling advertising in the same way we do in our arenas."
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