Why the NFL’s Labor Strife Might Be the Best Thing That Happened to Madden (Kotaku)

[SpeedyMikeWallace]

Quote: Originally Posted by LiquorLogic

The NFL won't make more money by selling licenses to multiple publishers because, without exclusivity, publisher's aren't guaranteed the entire market share. It's doubtful that any publisher would agree to pay an upfront fee. Why would they when another publisher, that the NFL also awarded a license to, may garner a lot of sales, thus the company takes a hit financially.

They won't be guaranteed an entire market share, but they're still able to make NFL games. Sports games without the teal teams and players just do not sell anywhere near the "real thing".

The opportunity to possibly increase a market share that is currently 0 is worth something, especially in market as lucrative as NFL video games.

You also have to consider that individual licensing opens up opportunity where none now exists. Another company, like 2K, could come around and knock Madden off the top.

Madden wasn't always the top selling NFL game. That may be why EA would be willing to shell out big money as it's the only way they'll be able to guarantee that they'll remain on top. EA's complacency will have to end, or else they'll fall behind other companies willing to actually work hard to create a good game.

They would have to buy the license to use the NFL and it's members in the game.

Quote: Originally Posted by LiquorLogic

With multiple licenses, publishers pay the licensor a percentage of their sales, which is usually around 10 percent.

This is probably the case with exclusivity or not.

Quote: Originally Posted by LiquorLogic

Reebok is the only company allowed to make jerseys and hats, so if you want an NFL jersey or hat, you have to buy it from Reebok. That means that Reebok doesn't have to worry about competition, so prices are higher. If Nike was allowed to make Jerseys and hats simultaneously, Reebok would have to make sure their pricing was competitive.

True, if you want to get down to individual products, but that's not a proper analogy. Rebok is in charge of the "Official Apparel", but are not the only company that can stamp a Dallas Cowboys logo on a t-shirt. With video games, no other company can touch NFL properties.

Quote: Originally Posted by LiquorLogic

As for Direct TV, it's true that other companies can show NFL games, but ,as you stated before, they the only ones that offer every game from every market; so if you're a fan of a team but you don't live in that local market, you have to get Direct TV; if you want access to every single NFL game that's not on National TV, you have to purchase NFL Sunday Ticket. Exclusivity places a tremendous value of the license for Sunday Ticket. If you want it, you have to get Direct TV. For that reason, the exclusive license for Sunday Ticket is expensive. It would be a lot cheaper if Comcast, the Dish, and whatever other companies were allowed to offer Sunday Ticket.

This is about exclusivity. DirecTV would only be applicable if the NFL was to only show games through DirecTV. That is not the case. People can still enjoy their hometown teams without buying DirecTV and the NFL Sunday Ticket.

Quote: Originally Posted by LiquorLogic

The problem that the NFL may have created for themselves is that, at this point and time, EA is the only publisher that can pay for an exclusive license, and is the only company that seems interested in making a football game right now. If there's no one to freeze out, why should EA have to pay a high premium anymore to do so.

EA is not the only company that can buy an exclusive license. Activision, Microsoft, Sony, and 2K (Take-Two) are also capable of buying a license.

2K is pursuing a lawsuit against EA and the NFL for using the exclusive license to price fix. Obviously, 2K is still peeved about not being able to make NFL games.

Quote: Originally Posted by LiquorLogic

In the football video game world, there are no comasts, Dish Networks, or time warners any more; there's only Direct TV (EA).

In the video game world, there is only EA. In the TV world, there is every single cable company, plus free TV via the networks. DirecTV is the only option if you want to watch Seattle play Arizona in New Jersey, but they do not own 100% of the NFL TV market.

[LiquorLogic]

Quote: Originally Posted by SpeedyMikeWallace

They won't be guaranteed an entire market share, but they're still able to make NFL games. Sports games without the teal teams and players just do not sell anywhere near the "real thing".

They'll be able to make NFL games, but so can other companies, so they're not guaranteed to sell anything. That's the value of the exclusive license and why exclusive licenses are so expensive: the licensee is guaranteed a hundred percent of the market share. Also, you're right, non-licensed sports games don't sell anything near the " real thing" which why exclusive licenses are so expensive.

Quote: Originally Posted by SpeedyMikeWallace

You also have to consider that individual licensing opens up opportunity where none now exists. Another company, like 2K, could come around and knock Madden off the top.

Why does the NFL care about who's the top dog as far as video game sells are concerned ? They just want the most amount of revenue.

Quote: Originally Posted by SpeedyMikeWallace

Madden wasn't always the top selling NFL game. That may be why EA would be willing to shell out big money as it's the only way they'll be able to guarantee that they'll remain on top. EA's complacency will have to end, or else they'll fall behind other companies willing to actually work hard to create a good game.

As far as I can remember, unless I'm mistaken, Madden has always been the top-selling video game. Now, 2k did give them a scare and was gaining on them, but Madden 05 still outsold 2k5.

Quote: Originally Posted by SpeedyMikeWallace

This is probably the case with exclusivity or not.

It's not the case now with the deal that EA and the NFL have in place. EA gets over 70 million dollars a year if EA doesn't sell one more copy of Madden. Before exclusivity, EA paid the NFL a percentage of their sales. The whole deal has cost, or will have cost, EA nine figures in cash, and that money is guaranteed.

Quote: Originally Posted by SpeedyMikeWallace

True, if you want to get down to individual products, but that's not a proper analogy. Rebok is in charge of the "Official Apparel", but are not the only company that can stamp a Dallas Cowboys logo on a t-shirt. With video games, no other company can touch NFL properties.

Yeah, but they're the only companies that can sell jerseys and hats. So if your team gets a new free agent, and you want his jersey, you have to go to Reebok. If you want a hat, you have to get it from Reebok.

Quote: Originally Posted by SpeedyMikeWallace

This is about exclusivity. DirecTV would only be applicable if the NFL was to only show games through DirecTV. That is not the case. People can still enjoy their hometown teams without buying DirecTV and the NFL Sunday Ticket.

Unless those people don't live in their home town anymore. There are also a lot of people that want access to every single game. Those people have to choose Direct TV.

Quote: Originally Posted by SpeedyMikeWallace

EA is not the only company that can buy an exclusive license. Activision, Microsoft, Sony, and 2K (Take-Two) are also capable of buying a license.

Activision doesn't care about the sports game market, I don't know about Microsoft or Sony and 2k doesn't have the capital. Microsoft and Sony haven't been making football games in like forever. It will be an up hill battle, that will cost a lot of money, to start developing a football game.

Quote: Originally Posted by SpeedyMikeWallace

2K is pursuing a lawsuit against EA and the NFL for using the exclusive license to price fix. Obviously, 2K is still peeved about not being able to make NFL games.

We'll see how that shakes out in court. The NFL might just settle it and move on.

Quote: Originally Posted by SpeedyMikeWallace

In the video game world, there is only EA. In the TV world, there is every single cable company, plus free TV via the networks. DirecTV is the only option if you want to watch Seattle play Arizona in New Jersey, but they do not own 100% of the NFL TV market.

It's not so much about the entire NFL as it is about a particular service. Sunday Ticket allows you to watch every single game, period. You can only do that if you get Direct TV.

[SpeedyMikeWallace]

Quote: Originally Posted by LiquorLogic

They'll be able to make NFL games, but so can other companies, so they're not guaranteed to sell anything. That's the value of the exclusive license and why exclusive licenses are so expensive: the licensee is guaranteed a hundred percent of the market share. Also, you're right, non-licensed sports games don't sell anything near the " real thing" which why exclusive licenses are so expensive.

They're not guaranteed to sell anything, but they will. They'll pay $30million or $50million to use NFL properties over 5 years and then shell out another 10% of the sales because they know the game will sell. It's the NFL, and that makes all the difference.

Quote: Originally Posted by LiquorLogic

Why does the NFL care about who's the top dog as far as video game sells are concerned ? They just want the most amount of revenue.

Maybe I give the NFL too much credit, but quality control is an important part of business. If I ran a company and my customers were complaining about the quality of a product associated with my company, I'd take measures to fix it.

Quote: Originally Posted by LiquorLogic

As far as I can remember, unless I'm mistaken, Madden has always been the top-selling video game. Now, 2k did give them a scare and was gaining on them, but Madden 05 still outsold 2k5.

Madden was beaten by NFL GameDay for a run of years. For whatever reason, though, 989 Sports didn't adjust well to the PS2. When EA HAS to put out quality, they will.

Quote: Originally Posted by LiquorLogic

It's not the case now with the deal that EA and the NFL have in place. EA gets over 70 million dollars a year if EA doesn't sell one more copy of Madden. Before exclusivity, EA paid the NFL a percentage of their sales. The whole deal has cost, or will have cost, EA nine figures in cash, and that money is guaranteed.

You know for a fact that EA doesn't have to pay the NFL any kind of %? Just curious.

Quote: Originally Posted by LiquorLogic

Yeah, but they're the only companies that can sell jerseys and hats. So if your team gets a new free agent, and you want his jersey, you have to go to Reebok. If you want a hat, you have to get it from Reebok.

You're narrowing it too much. The market is NFL apparel. Reebok holds the "Official Apparel" status, but they're not the only ones with access to NFL logos, team logos, player names, etc.. That is why it's not an accurate analogy. EA is the only company in the video game market with access to those things.

Quote: Originally Posted by LiquorLogic

Unless those people don't live in their home town anymore. There are also a lot of people that want access to every single game. Those people have to choose Direct TV.

The point is, DirecTV doesn't own 100% of the NFL TV market similarly to how EA owns 100% of the VG market.

Quote: Originally Posted by LiquorLogic

Activision doesn't care about the sports game market, I don't know about Microsoft or Sony and 2k doesn't have the capital. Microsoft and Sony haven't been making football games in like forever. It will be an up hill battle, that will cost a lot of money, to start developing a football game.

I'm just saying those companies are capable of buy a license. I know Activision doesn't have it's fingers in the sports market, but could change. You never know. Anything that could weaken EA is probably on their radar.

Microsoft and Sony could start up their football studios again if they wanted. Sure, it would cost some money, but they'd make it back pretty quickly.

2K for sure would jump at it. They wouldn't be filing lawsuits 5-6 years after the fact if they didn't want their NFL game back.

Quote: Originally Posted by LiquorLogic

We'll see how that shakes out in court. The NFL might just settle it and move on.

I don't think the NFL and EA will be able to settle a price fixing lawsuit without giving up their exclusive agreement.

Quote: Originally Posted by LiquorLogic

It's not so much about the entire NFL as it is about a particular service. Sunday Ticket allows you to watch every single game, period. You can only do that if you get Direct TV.

But it is about the entire NFL within a certain market. That's what it is with Madden, the entire video game market.

[roadman]

Sorry, but I disagree.

I didn't see one SB hat made by any other company than Reebok. Sure, if you wanted a cheaper quality shirt you could purchase the cheaper shirt. If you wanted a SB hat with the Packers or Steelers on it, it had to manufactured by Reebok, period.


You do give the NFL too much credit for quality control. John Madden is a special advisor to Goodell. 5 million people that purchase the game might be happy with the game vs a few thousand on the net that didn't buy the game.

It's all about the NFL making money on their exclusive contracts.

[SpeedyMikeWallace]

It doesn't matter about individual products, it's about the market for clothing with NFL team logos and player names on them. Reebok is not the only company that has access to those, so it's not the same as EA's exclusive contract. You could say Reebok has a semi-exclusive contract, if you want.

I think there's more than the few thousand people that think Madden has gotten stale. Most people just can't break the habit of paying for the next one, or don't want to because they won't be able to play their friends online. Unless it's some 13 year old who doesn't know any better, I rarely hear anyone say Madden is a great game. It just doesn't receive the praise that The Show or FIFA gets, and it's due to the fact that the game isn't on their level.

I think the NFL would make more money from video games if they licensed out to more than a single company.

[roadman]

Quote: Originally Posted by SpeedyMikeWallace

It doesn't matter about individual products, it's about the market for clothing with NFL team logos and player names on them. Reebok is not the only company that has access to those, so it's not the same as EA's exclusive contract. You could say Reebok has a semi-exclusive contract, if you want. I think there's more than the few thousand people that think Madden has gotten stale. Most people just can't break the habit of paying for the next one, or don't want to because they won't be able to play their friends online. Unless it's some 13 year old who doesn't know any better, I rarely hear anyone say Madden is a great game. It just doesn't receive the praise that The Show or FIFA gets, and it's due to the fact that the game isn't on their level. I think the NFL would make more money from video games if they licensed out to more than a single company.

I'm not dismissing individual products. You can't, it's in the equation. If I want a SB hat, Reebok's name will be the only one on it.

Also, you can't judge people who don't peruse the internet if they like Madden or not. I have a 25 yr old nephew that loves Madden and doesn't hop online to the various forums and claims I'm trying to make Madden more difficult. All he wants to do is have bragging rights with his buddies online. I would consider him and his buddies casual happy gamers.

If the NFL thought they could make more $ from individual liscenses, they would have done it 6 yrs ago. They definately couldn't make more $ at this stage with no one stepping up to the plate with enough start up capital than EA has. If that ever happened and the NFL received a % of sales off the start-up companies, the NFL's profit vs the exclusive liscense would greatly plummet. EA would still have at least 80% of the market.

We all have a tendency to look at this situation through gamer eyes, but it's a business and it needs to be looked at through business eyes and making $. And that is what the NFL is all about.

[SpeedyMikeWallace]

Quote: Originally Posted by roadman

I'm not dismissing individual products. You can't, it's in the equation. If I want a SB hat, Reebok's name will be the only one on it. Also, you can't judge people who don't peruse the internet if they like Madden or not. I have a 25 yr old nephew that loves Madden and doesn't hop online to the various forums and claims I'm trying to make Madden more difficult. All he wants to do is have bragging rights with his buddies online. I would consider him and his buddies casual happy gamers. If the NFL thought they could make more $ from individual liscenses, they would have done it 6 yrs ago. They definately couldn't make more $ at this stage with no one stepping up to the plate with enough start up capital than EA has. If that ever happened and the NFL received a % of sales off the start-up companies, the NFL's profit vs the exclusive liscense would greatly plummet. EA would still have at least 80% of the market. We all have a tendency to look at this situation through gamer eyes, but it's a business and it needs to be looked at through business eyes and making $. And that is what the NFL is all about.

EA owns 100% of the NFL video game market. Reebok DOES NOT own 100% of the NFL apparel market. No matter how you slice it, other companies are out there printing team logos on t-shirts. It doesn't matter if Reebok has a special hat or jersey, they still do not own 100% of the clothing market.

I work retail in a store that sells video games. Needless to say, I hear hundreds of opinions daily. The only people who think Madden is a great game are teenagers and adults whose video game library consists of NCAA Football, Madden, Call of Duty, and Battlefield. Basically, it's the "Michael Bay" crowd of video gaming.

Part of business is never resting on your laurels and always maintaining the highest quality possible. EA has gotten lazy, and the NFL needs to pull a little "quality control" out on them.

[roadman]

Quote: Originally Posted by SpeedyMikeWallace

Part of business is never resting on your laurels and always maintaining the highest quality possible. EA has gotten lazy, and the NFL needs to pull a little "quality control" out on them.

Again, you are giving the NFL too much credit here.

John Madden is a special advisor to Goodell. Plus, we all know the NFL is greedy.

I'm sure the NFL feels most people be are getting a good game based on the sales of Madden alone.

They won't break the liscense because a few thousand people on the net want it that way.

Teenagers and adults are a large part of the consumers for Madden.

Does other clothing have the NFL trademark on the clothing?