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In-Depth Analysis: Why the Decision to Extend One Year Just Bought Madden a Decade Stuck
Posted on February 14, 2011 at 08:39 PM.


Ok everyone, let's relax and take a deep breath -- because I really don't want a bunch of irrational hate following the words I'm about to type. Not because I'm a wuss, but because what I'm about to explain is really a brief manifesto of the future of gaming and hits on a lot of different topics.

But what I want to stress at the onset for the short-attention span crowd is that by extending their deal out one more year, it's very likely EA Sports has bought Madden at least the next decade: exclusive license or not. But that's not where the story can be explained fully -- the real story is in exactly how we're getting to this point in sports gaming.

Sports simulations are an expensive undertaking in this era, they are games which require to simulate very complex interactions between human beings in a believable manner and they must be pushed out once a year. To say just any company can jump in and compete with the big dogs of the industry today is to be naive of the current situation in gaming.

Companies everywhere are cutting back on the number of titles they develop and focusing on profitability on the big consoles. The reasoning is the amount of money you have to put into your games is more than it used to be.

That's also why you don't see five MLB Games and three NFL games anymore. The smaller companies have already been weeded out of the business, and only a few companies have the ability and resources to make sports games in 2011.

Why is that? Just look at this graph, which loosely represents the point I'm making:



Basically, the more console hardware power there is to take advantage of, the more Development for the game costs. For big IP games like Grand Theft Auto, developing a title every few years spreads the development cost out a bit, allows for more innovation, optimal quality and maximum profitability. For sports games, development time is squashed, costs are higher, and profitability is nowhere on the level of the other titles.

So if you are wondering why most companies don't make sports games, even when given the opportunity in sports like Basketball -- the reasoning is the cost is just too high this generation.

Now add another console generation on top of this one. More power, more complexity required, more costs to develop the game each year. Then add the likelihood that we will be down to just 2-3 Publishers maximum with the resources capable of making a yearly sports title.

Now I hope you see where this is going.

The next console generation, by most estimates, will start in 2013 or 2014 -- the timing of which is insignificant at this point. What that means is that EA has effectively made a deal which ends any hope of another NFL Game this generation. To get into the NFL Development game, another company will have to basically start from 10 year old technology and bring it up to speed with whatever EA has in another four years -- and then that same company will have to go beyond what EA has in order to attract an entrenched fan base to their title.

Conservatively, even if the license was no longer exclusive in 2014 (which I have serious doubts it'll be open for a long time to come) -- any company, including 2K Sports, will basically be playing from a couple of years behind in a best case scenario where Madden treads water in quality the next three years.

To develop a game which could rival Madden in quality would take two years minimum on the next generation of consoles under the best case conditions -- to gain some semblance of profitability would be a three to four year process under those same conditions. People rave about NFL 2K in a lot of places, but the simple fact is the game didn't sell exceedingly well compared to Madden -- it took a $20 price tag for the game to even begin to enter the realm of competitive in terms of sales. In three more years, that environment NFL 2K was trying to compete in will be even more harsh towards competitors trying to gain a slice of Madden's market dominance.

Any gaming publisher looking at this task from a pure business perspective will see a path full of landmines and booby-traps for sure. Profitability in the future of gaming lies within the internet and mobile gaming -- each major gaming company has shown its strongest profit gains in those areas. With such announcements as a quad-core mobile processor coming out, mobile gaming will become a relatively low cost, high margin platform to enter into with quality on par with consoles of the past decade.

A company could take a risk on 20 new mobile projects a year, each with profitability prospects much better than an NFL title or they could dump money into a project that will at best be a losing proposition for a couple of years before it might start making a slight profit. Any gaming CEO will almost certainly choose the sure-thing in the coming decade where economic prospects are going to be unsure to put it lightly.

What EA and the NFL agreed to today was more than just one more year, it has effectively bought the next decade and probably beyond. So long as video games are in their current format (which is not guaranteed through the end of the decade), it appears Madden NFL Football will be the only choice for gamers looking for an NFL fix on their TV screens.

Of course, this isn't just the NFL you'll see this trend continue in. Indeed, this is a trend which is carrying over into every other sport, and it is likely each sport will only have one game carrying its banner by the start of the next console generation. That's harsh news to deliver, but it's the most realistic scenario given the current business environment -- there isn't enough room in the marketplace for two games to be profitable enough to sustain high quality yearly releases anymore. Costs are higher, profits are more unsure, and many franchises are going to have to go away.

Let's just hope that the options that are left are worthy of our time and attention.
Comments
# 16 mestevo @ Feb 15
Good read. We could be 'stuck' with a lot worse.
 
# 17 89OneHanded @ Feb 16
Very rational way to look at the situation, and I do believe you are certainly right. EA knows it too, perhaps they knew it when they first made the bid for exclusive rights. Let's just hope their monopoly can manage to put out a quality product.
 
# 18 videlsports @ Feb 28
If the Union Decertifies, what does that mean for madden? the Current Agreement would be void. ( I Hope) and that means nameless teams for Madden, right?
 
# 19 jjp2833 @ Mar 11
i think id be happy in 2 yr's if there was a better version NBA lives DNA , in madden and some really good add-ons, charge i dont care just make it deep.
 
# 20 detroitsun @ Mar 18
I like the article. I like the idea of just releasing games every 2 years with downloads. I'm not a diehard gamer and would much more likely purchase a download than buy a new game if I'm still enjoying the current game
 
# 21 detroitsun @ Mar 18
I also wonder how to have your "wish list" heard by developers as they make the next games
 

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