Madden Class-Action full of shoddy logic, misrepresented facts - RaychelSnr's Blog

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Madden Class-Action full of shoddy logic, misrepresented facts Stuck

Posted on December 23, 2010 at 01:27 PM.

(31)

This is going to be one of my most hated blog posts I have yet to write -- but I have always strived to tell the truth as I see it in this blog space. With that in mind, I know there are A LOT of people on OS that hate EA for entering into the exclusive license agreement the NFL offered gaming companies via a bid process and are looking for any reason to tear that agreement down. And while the common cry among Madden haters is to try to tear down anyone defending EA as an EA homer or shill, I'd think this blog's history would depose a lot of that venom.

Simply put, the class-action suit which came to light yesterday is just a poor attempt at trying to villanize EA for entering into the exclusive agreement via anti-trust law. It will fail because the case is simply built fraudulently or incompetently -- neither of which will win you a court case.

I spent some time and read the suit in it's raw legalese form in order to discern what might it's chances be. I'm no lawyer, but I did contact a friend who actually does anti-trust work in the law field and I'm adding in his expertise throughout this article -- not that you'd need anyone with more than a law degree from a cracker jack box to win this case.

The key and core claim of the suit is this

Quote:


	"prior to signing the exclusive agreements referred to above, Electronic Arts charged $29.95 for its flagship product Madden NFL. Immediately after the exclusive agreements entered into effect -- and the effective withdrawal of it's only competitor from the market -- Electronic Arts increased its price for that software nearly seventy percent to $49.99."

Um, ok.

What the suit doesn't mention is that in the business of sports games, prices are dropped regularly before the new games are released. In this case, Madden 05 sold at $49.95 BEFORE it was dropped to $29.95 in response to NFL 2K5's very aggressive pricing. Then the next year's Madden again sold for what was a standard market price of $49.95.

If the logic were to be followed in this claim, 2K Sports and Take Two are also guilty of price gouging every year when they raise the price of a new game to the full price of $59.99 after the previous title was dropped in price over time. But it gets better, if the claim were true that EA is price gouging by the tune of 70%, all new AAA titles should sell at an average of $20. That has never been the case in the history of gaming and it most likely never will be.

Quote:


	Interactive football software is a distinct market...EA has the ability to raise the price of its interactive footall software substantially for a significant period of time without consumers substituting another product. As a result...EA now has a monopoly on the market for this interactive footall software.

This is at best a weak case in the sense of anti-trust law. To prove someone has a monopoly, you have to establish a market for which a company operates in and then say they have taken all competition out and then harmed the consumer by price gouging. To simply remove competition is not enough for anti-trust law, the consumer has to be harmed.

Since we've already established the 'harm' to the consumer is actually standard and accepted practice in the gaming industry and that the key claim is at best derived after an incompetent study of the facts and is at worst a fraudulent attempt to try to get a quick buck from EA and clueless plantiffs.

In a vacuum this claim will not hold up either. The market for a football video game is not all to itself. You can easily make the case that products from other sports and genres effect the sales of Madden and other footall titles, so to prove anti-trust uncompetitive action you'd have to also prove that EA is harming the consumer across the whole gaming landscape with their NFL license agreement. There is a reason most anti-trust cases fail, and what seems to be a open and shut case to the uninformed mind is actually a very complicated thing to prove.

Quote:


	despite NFL 2K5's superior quality, Take Two priced the game nearly thirty dollars below the Madden NFL title...

Wait, didn't you just claim in your core claim that EA rose the price 70% after charging $29.95 for Madden against NFL 2K5? So which is it?

Quote:


	By far the most important football league from the perspective of interactive football software makers is the NFL. The NFL's fan base as well as it's team and player recognition are unrivaled by any other professional football league or amateur athletic league. In december 2004, Electronic Arts signed an exclusive agreement with the NFL and the NFL Players Union that prevented any other company from producing NFL branded interactive football software.

Now the case is trying to say the exclusive agreement was wrong from a legal standpoint. It is only wrong from an anti-trust standpoint if the relevant market for the game is controlled by the company in question who then harms the consumer in some way. To prove the exclusive agreement is wrong requires a whole other leg of legal action which will be almost impossible to prove, despite what some might say.

The other thing the case refuses to explain away is how there have been literally dozens of football titles over the years that have competed with Madden which were better critically and even outsold EA's game. None of these titles were consistent enough to topple Madden, but EA didn't enter into an exclusive agreement before 2005 either. The reasoning behind entering into the agreement was that it was good for business for EA, and only a fool would argue it has been bad for business.

Furthermore, to prove EA is at fault for the exclusive agreement is legally unfounded. Peter Moore has claimed that EA was asked to submit a bid to the NFL for the license along with other companies. EA has come up with the top bid twice. It has been the NFL, not EA, who has determined the license would be an exclusive arrangement with video game makers. To prove otherwise would probably require someone steal Roger Goddels hard drive and search through his e-mails and see if he's gotten any from Peter Moore and/or John Riccitiello discussing nefarious plans to manipulate the bids.

Otherwise the license was done in standard business practice and the top bid won. That's how A LOT of licenses are given out in the video game world (and business is divvied out in other realms). For the most part, this is a legal and acceptable way to conduct business.

So not only was the base of the case (consumer being harmed from price gouging) blatantly false, but the claim of a specific market for football games is false and the claim that the agreement between EA and the NFL is anticompetitive in the context of the prior two claims also almost certainly false.

Quote:


	As a direct result of the Defendant's anticompetitive actions, competition in the market for interactive football software has been restrained.

No one is stopping other companies from making other football games. In the interactive NFL football market, then yes there would be restraint. But in the interactive Avatar, Harry Potter, Batman, and Spiderman markets there is restraint too. Companies shop their brands out to video game makers via a bid process and the top bidder gets the license. That's not unfair, it's how business is done in Video Games AND in business in America every single day.

This case is built on a fraudulent conclusion from a misrepresented set of facts. The logic used is at best full of holes and at worst not even logical at all. The impact this will have on EA, if anything, will be to strengthen any future bids for an exclusive NFL license should the NFL decide to continue that arrangement in the video games landscape.

Those are the facts, and while some will run around with emotional yells of blasphemy, you cannot change the way the law works without a carefully worded Act of Congress. Anti-trust cases are almost impossible to prove and this one is doomed from the get go.

While I have found plenty of reasons to criticize EA and the Madden series (both probably the main targets of this blog if I have any) this case and the people supporting it represent the worst form of the disease running through America of trying to create facts to fit your own opinions. That's not how it works, you have to take the facts and then form opinions based off of them.

If you are mad that you can't stop spending money on Madden every year, just quit buying the game. You are not being forced to buy an NFL video game and you are not required to give the next version a chance. You willingly enter into an agreement with the software publisher with a purchase which says, "I approve of your direction and how you conduct business with my purchase of your product." Anyone wanting exclusivity to stop simply needs to quit buying Madden, NCAA and any other products they don't like and want changes to come to.

As far as this case goes, it won't get much farther in the court system and any competent anti-trust defense lawyer will easily squash it. As far as the future of football gaming goes, that's up to the NFL. If they determine they want to keep one company as the holder of the video games license -- then EA will almost certainly win the bid to keep the license. This case won't change the NFL's thinking on the matter and, if anything, will strengthen their defense should any future problems arise since this suit is so poorly put together.

Comments

# 16 cdon2k @ Dec 23

This lawsuit has little chance, EA could deflate it instantly by dropping the price back down to $29.95 and charge for the ball as dlc.

# 17 EnigmaNemesis @ Dec 23

Very well written blog. While others will use their feelings to attack what you have put together, the prosecution putting together cost of games has no legs, since it is done industry wide.

As far as the whole license thing, we will see how that will play out, but again, I still think that has no legs either, considering the NFL can do what it likes with it's license.

# 18 Dazraz @ Dec 24

The key thing about this case is not who wins & for what reason. It's the fact that it raises attention to the negative impact exclusive license deals have on the consumer.

# 19 rudyjuly2 @ Dec 24

Another silly lawsuit in a sue-happy world. I hated the exclusive deal too but I got over it. It's been a long time people. Accept that 2K football is dead.

# 20 BlackRome @ Dec 24

Is your friend really a lawyer or did they get their degree from the same place Orly Taitz did.

You may want to tell your friend a precedent has been set and the NFL will be going to trail shortly over exclusive agreements which harmed American Needle. Starter.

I found it funny your friend never once mentioned this case. Does he even know about it.

The pricing is just an example of what happens when you eliminate competition. I guess you like paying $25 bucks for a baseball cap.

http://www.scotusblog.com/case-files...dle-inc-v-nfl/
Lyle Denniston Reporter
Posted Monday, May 24th, 2010 10:42 am
NFL may face legal penalty

American Needle v. NFL
AZ Christian Sch. Tuition Org. v. Winn
Rejecting the National Football League’s claim that it has across-the-board immunity to antitrust law when its teams join in a commercial activity, the Supreme Court unanimously cleared the way Monday for trial of a lawsuit against the joint marketing of the right to use the teams’ logos and trademarks on consumer goods. The ruling applied only to that specific joint venture, and did not cover any other collective action that the NFL — or any other pro sports league — might carry out. The Court also did not decide whether the NFL did in fact act illegally in this specific marketing effort; that will be decided at a trial, with the legality weighed under a “rule of reason” standard.

Holding: The NFL’s team joint licensing of the use of trademarks on clothing and other consumer goods may be challenged under the Sherman Antitrust Act’s section 1.
Judgment: REVERSED, 9-0, in an opinion by Justice John Paul Stevens on May 24, 2010.

The exclusive agreement harmed 2k sports. The same way Nike and Reebok harmed Starter.

It eliminates competition.

I would strongly suggest you not use your lawyer friend for any advice concerning the law.

Sounds like your friend is the cracker jack lawyer or is your friend really Orly Taitz.

# 21 BlackRome @ Dec 24

"If you are mad that you can't stop spending money on Madden every year, just quit buying the game. You are not being forced to buy an NFL video game and you are not required to give the next version a chance."

Are you a republican or an idiot. Probably both. The issue is not if I have to buy Madden. The problem is I don't have a choice.

When I did.

I'm not even a fan of 2k Football. I call 2k5 the most overrated sports game of all time.

But I am an American who doesn't want competition stifled.

This is a country that has a government that is based on "We the People."

Not the people for Corporations.

The greatest feat pulled off by the Republican party was fooling and convincing Middle class people that when they say they are for Americans they really mean Corporations.

I see you have been fooled.

9-0 was the ruling in the American Needle vs The NFL case.

Seems as though your on the wrong side of what a corporation can do.

# 22 Knight165 @ Dec 24

Well....if nothing else Chris...I see your blog has probably eliminated two members!

Now...on to the $20 2K "anomaly". We'll actually never know, will we? Was there plan to keep the price in the $20 range?...in which EA felt that the only way to stay in the football video making market was to eliminate the competition?...sounds like a valid point to argue in court right there as far as Anti-Trust.
While I didn't read through the file....there may be more merit to this case than laid out here in this blog. I guess that's going to be determined in court.

BlackRome;
You seem like you're a bright guy...but you've got issues. They don't belong here. Forget the fact that you've got your head in the sand about the entire issue(the other side so to say)...but that's neither here nor there. Poor job.

M.K.

# 23 Houndy @ Dec 25

I agree, the lawsuit is BS. Even though I dislike Madden

# 24 Shinyhubcaps @ Dec 26

Chris, I appreciate your effort, but your blogs are often very smarmy. I would say that khaliib made a good point about undermining the opinions of others as a lack of information. In reality, I think some of your points are off-base. They're useful for mentioning to engage a discussion, but they are by no means the bottom line of what needs to be said.

One logical flaw I wanted to address is as follows:

Quote:


	"prior to signing the exclusive agreements referred to above, Electronic Arts charged $29.95 for its flagship product Madden NFL. Immediately after the exclusive agreements entered into effect -- and the effective withdrawal of it's only competitor from the market -- Electronic Arts increased its price for that software nearly seventy percent to $49.99."

and

Quote:


	despite NFL 2K5's superior quality, Take Two priced the game nearly thirty dollars below the Madden NFL title...

You made these two quotes seem like they were contradictory. In fact, these two things are not in conflict at all if you read them in the opposite order than posted. First, Madden was $50. Then, 2K made a game that cost $20. As a reaction, Madden had to drop its price to $30. 2K took the hit by decreasing the price of its game in order to invoke competition. Then Madden raised its price back to $50 subsequently; how the price behavior would have reacted otherwise goes back to the anomaly question that was raised, but it's not open and shut as you have laid it out here.

Note that the second quote does not refer to which version of Madden was $50; in fact, all of them probably would have been (for that era) if it weren't for NFL 2K5 being $20 new. In this case, the direct presence of a direct competitor altered EA's market behavior, something that existed under the conditions of a free market that hadn't existed since the exclusive license.

Back to the point on the FTC:

Quote:


	Free and open markets are the foundation of a vibrant economy. Aggressive competition among sellers in an open marketplace gives consumers — both individuals and businesses — the benefits of lower prices, higher quality products and services, more choices, and greater innovation.

If the attorney for the filers wants to open this for debate, he could point to this very line, like how companies look at mission statements. They're broad, but they provide guidance. While this does not probe the actual law, if this is before a jury, the jurors will take this line just as significantly as any of the actual standing points of contention in the expanded law.

Of those things highlighted in red, just ask the consumer. Every one of those has been violated at some point (the price issue discussed here withstanding).

______________

SUMMARY

-The price issue comes down to a.) how the prices may have been set had Take Two been in the marketplace and b.) what the industry standard is for comparable games. (from the comments, I agree with this)

-NFL offered the license against which other companies had a chance to bid, meaning that EA is not at fault given their legal compliance with participation in the bidding process. (from the article and comments, I agree with this)

-The American Needle case will ensure that all of the NFL's exclusive licenses are scrutinized in the future such that equitable deals are achieved for all parties. (from the comments - this does not directly apply to the EA case since it's about the teams' ability to choose suppliers apart from the whole, but there may be a minor takeaway for this case which I hoped would have been mentioned in the blog)

-Having the lawsuit reach this far is, in effect, a moral victory against exclusive licenses as the NFL and EA Sports will be forced to take notice despite the notion that the lawsuit will likely fail.

It's not fair to say that the consumer hasn't been harmed in the exclusive license. That is something from the blog I would definitely contest. However, everyone who points out that the NFL is to blame and not EA, sadly, that is accurate, and that is the point that should have been made most prominently. However, I'm not sure that Harry Potter is the best analogy since all Harry Potter licensing is done through the publishers of the books and films, and as much as Harry Potter stuff sells, I don't think there's even a market for multiple games to be released annually like in sports.

# 25 EmmittSmithx22x @ Dec 27

I agree with a lot of what has been posted on both sides here. But as I said about the NBA Elite fiasco. I hope Elite is able to recover and make a marketable game because without competition 2k Can turn around and become the EA of the basketball market (And I HATE Elite I hate EA). Competition breeds innovation. Without competition in any market its bad thing.

And as some have said, regardless if the lawsuit works or not. The biggest F*** YOU you can send to a company is to not buy their game. I bought Madden this year just to play with friends, and i regret that decision cause after evaluating the game I said i wouldn't get it. Well this year I have decided no matter how much they fix madden. If it is not the fixes that we have been asking to see for years now... I will not get the game. I hope if people feel like I do, and you really want to see a change in football. Don't play football this year (at least on a video game system, I will be playing outside

). Yeah its always nice to get our football fix, but at the cost of better gameplay? its not worth it.

# 26 dp68 @ Dec 27

The lawsuit has no chance. But I believe the one positive that can come out of this is that many gamers such as myself have been disgusted with the lack of competition in the football gaming arena, and this will finally be voiced on a national scale.

I had not purchased a Madden game since the late 1990s. I've always felt the Madden series was a weak sim, which got by on name recognition and the strength of EA's advertising power. But I decided to take a chance this year, based mainly on the positive review given here on OS.

The game was terrible as far as I am concerned. Nice action, decent graphics. But the game play was unrealistic, particularly the way the secondary simply lets WRs run by. Want to win a Madden game against the CPU? Throw streaks constantly. It's that simple. The 4th and final patch was basically an attempt by EA to get me to purchase more items, rather than fix any code. This is the support I get for putting down $60?

The long and short of it is I no longer have much respect for OS's reviews because of Madden 10. That may seem harsh, but sometimes a little criticism is needed. For the life of me I don't understand how the same outfit which reviews serious sports sims could give a high ranking to Madden 10, unless perhaps they feel a need to because its developers are active on OS.

I don't care if this lawsuit fails. I just hope it gets enough attention to let as many people as possible know how fed up many of us are with the exclusive license deal, and the shoddy games and lack of competition which result.

# 27 wangmeiyu @ Jan 3

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