Madden NFL 11 News Post

Judge Certifies Class-Action Football Game Pricing Lawsuit Against EA

10:48 PM - December 22, 2010 by Steve_OS

Gamasutra has some new info on the lawsuit.

Quote:


	"A U.S. district judge has certified a class-action anti-trust lawsuit against Electronic Arts that alleges the company illegally inflated prices for its football titles after attaining exclusive rights to league licenses. In a 67-page complaint [PDF], the legal team specifically cites the 2004 pricing battle between Sega and Take-Two's NFL2K5, which retailed for just $19.95, and EA's Madden NFL 2005, which was lowered from a $49.95 asking price to $29.95 in November of that year. A month after this price decrease, EA signed its exclusive licensing deal with the NFL, following with similar deals for the NCAA and Arena Football leagues in later months. The next year's Madden NFL 2006 faced no competition in the football game market at its usual $49.95 price point."

Gamespot chimes in as well.

Quote:


	"We believe EA forced consumers to pay an artificial premium on Madden NFL video games" Berman continued. "We intend to prove that EA could inflate prices on their sports titles because these exclusive licenses restrained trade and competition for interactive sports software."

What do you think happens, out of all this?

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Member Comments

# 81 spankdatazz22 @ 12/25/10 12:06 PM

Quote:

Originally Posted by ODogg


	This would carry much more weight if 2K Sports sold NBA 2K11 and all of their other sports games for $19.99 since NFL2K5 was out but we all know that's not the case.

Not sure if anyone responded to your post, but ALL of 2K's sports titles were priced at $19.99 that year - I remember buying the college basketball game for a couple people as "thanks" for a favor they did. And EA lowered the price only on the sports titles that had a 2K Sports counterpart. FIFA, the golf game, etc. all remained at their release price

# 82 King_B_Mack @ 12/25/10 02:05 PM

Quote:

Originally Posted by SmashMan


	I don't think so, AT ALL, but I left it open-ended because we'll never know. As I also said though, there seems to be very little argument here against EA if even 2K was going to (and it seems they were) raise their prices the following year.

I could be very wrong, but I'm pretty sure NFL was 2Ks best selling game. Offering the games for the price they were offering them had to be a significant financial hit for them. Gaining ground on Madden and making a splash in market share of NFL football was worth the hit. Having lost the NFL game, exactly why would they continue taking the financial hit of those price points without they're best selling game in there to make the costs worth it?

# 83 SmashMan @ 12/25/10 02:40 PM

Quote:

Originally Posted by King_B_Mack


	I could be very wrong, but I'm pretty sure NFL was 2Ks best selling game. Offering the games for the price they were offering them had to be a significant financial hit for them. Gaining ground on Madden and making a splash in market share of NFL football was worth the hit. Having lost the NFL game, exactly why would they continue taking the financial hit of those price points without they're best selling game in there to make the costs worth it?

A fair point, but we can't forget that while it was a big seller for 2K, it still didn't come close to toppling Madden. As I said in an earlier post, I doubt they would've went to the standard $50 price tag; but I don't know that they could've sustained the budget price for very long.

I obviously don't know anything about their finances; it just doesn't seem like the smartest business move. The smart move would be what they did: Price your product cheaper than competitor to get people's attention and grab some impulse buys.

Of course the debate of whether or not it (the budget price) is a sustainable business model is an entirely different debate.

# 84 Kaanyr Vhok @ 12/25/10 09:14 PM

Quote:

Originally Posted by SmashMan


	A fair point, but we can't forget that while it was a big seller for 2K, it still didn't come close to toppling Madden. As I said in an earlier post, I doubt they would've went to the standard $50 price tag; but I don't know that they could've sustained the budget price for very long. Of course the debate of whether or not it (the budget price) is a sustainable business model is an entirely different debate.

Quote:

Originally Posted by ODogg


	Seriously? No way to know if it was the start of a trend? Does anyone, even the most anti-EA fan, really think that football games were going to be $20 from here on out if not for the exclusive deal????

For the life of me I cant find the sales data on NFL 2k4 but I suspect it was down from 2k3 which sold about 1.5 million. 2k5 sold 3.5 million. Maybe it wouldn't have been 20 bucks. I doubt 2k6 would have been 20 bucks and I also doubt it would have been 50. Its more than reasonable to assume that NFL 2k and Madden would have been in a price war that would have kept the cost of both games under standard.

Quote:

Originally Posted by TracerBullet


	But the key point here is that the NFL turned them down. They then offered the license to everyone during the bidding process.

Quote:

Originally Posted by DivotMaker


	No they didn't. An "EA Rep" is not Peter Moore. I spoke with him about this when I met him at Tiburon earlier this year and he told me that the NFL approached both 2K and EA at the same time.

http://sports.ign.com/articles/572/572886p1.html

When the NFL made their move they knew who was going to pay. A simple analogy would be if I went to you and asked to buy your prize motorcycle and you turned me down twice. By putting it up to bid I would know how much you are going to pay and that I can probably get you to pay more. Exact same thing happened with EA and the NFL.

They knew EA was going to pay a ridiculous sum far more than Sega could afford and believe me if Sony or Microsoft would have made a move they would have made a one year big payout deal because Madden was too popular. It would have been a PR hit to Sony, MS and the NFL. This was an NFL EA deal from the start to finish. Offering it to bid was more of formality than anything. It was half a billion dollars. EA then went to secure college football and even arena football. If you think anyone else had a chance you are beyond naive. I got a sky scrapper sized statue of the Stay Puft Marshmallow Man for 20 grand on craigslist.

# 85 Critical Kills @ 12/27/10 11:43 AM

The wealthiest company typically does win a bidding war, yes that's unfair, not illegal..oh yeah and that's business.. With that being said if anyone really thinks if the exclusive agreement hadn't happened that 2K would have kept charging $19.99 each year for their football game then they are the naive ones. That was just a way to get the game out there to get people to try it, it was not a new pricing standard for football games.

# 86 Critical Kills @ 12/27/10 01:00 PM

Again, when a competitor lowers a price you often do so to match, that does not mean that's the new price from there on out nor does it mean that you've "exposed" yourself to being able to sell it at a lower price. EA lowered the price simply because they had to in order to compete. That may mean they were making very little to no money on Madden but had to lower the price to retain customers. This is no different than Amazon lowering the price on their video games to compete when Best Buy has a sale in order not to lose customers.

The real crux of the argument is that the price went back up after the competition was eliminated. However EA did not eliminate the competition, they had no way to do so on their own, the NFL eliminated it. And it makes perfect business sense to raise the price to the industry accepted standard once there was no reason to keep the price artificially low, since there was not a direct reason to keep it low. EA did not raise it above the industry accepted standard.

There simply is no blame here to be had on EA's part, they used sound business principles in how they lowered and raised their prices. Sure one can argue that theres an appearance here of some sort of impropriety but an analysis of the situation shows that the NFL simply chose to go with an exclusive agreement and thus the entire "competition eliminated directly relates to the price change" is not a valid argument.

# 87 roadman @ 12/27/10 01:23 PM

Quote:

Originally Posted by tlc12576


	ODogg, 2k keeping the price at $19.99 or not really doesn't matter that much. What is important is that whatever 2k would have set the price at EA would probably follow a similar path to compete. Since EA already demonstrated the price of NFL 2k effected their selling price for Madden, it is a compelling argument. Even if NFL 2k6 would have been priced at $52.99 on 360 and PS3, that's potentially $7 per game EA might of loss and consumers saved, from lowering Madden to compete. Probably the biggest argument being made is, since EA could afford to sell Madden for such a low price in 2004, that now even without competition, $59.99 is too high a price point. The other games that are being sold are not relevant because there is not a similar instance of price being lowered and than raised back after competition was eliminated. I even go as far to say that how or why the competition was eliminated isn't central to this case either. Look at NBA 2k and NBA Live, if last year, NBA Live 10 would have sold for $29.99 and NBA 2k 10 lowered their price to compete. Then, after EA announced they were not releasing a NBA game this year, NBA 2k 11 was priced back up, I think the same claim could be made in that situation. By lowering the price of Madden so drastically due to competition, EA might have unintentionally showed that its' suggested retail price is not fair market value. So even though it makes sense that NFL 2k wouldn't have stayed that cheap, the bigger point being made in this case is, what actually is fair market value for a NFL game.

Do you mean fair market value for a NFL game that paid handsomely for the license? If EA lowers the price, that is less dollars for R&D and stockholders jumping ship because of lower profits.

It doesn't become a question of fair market value when your dealing with stockholders.

# 88 Critical Kills @ 12/27/10 01:51 PM

Not to mention that once EA signed the exclusive deal they then had a massive amount of money to pay which would be a very legitimate justification for raising the price of their game, to recoup those moneys.

# 89 illwill10 @ 12/27/10 01:59 PM

^^
exactly . if they continued to sell at $30 with the exclusive deal, They would not gain alot of profit. We would get many excuses where "we could not add "X" feature or cant afford more staff because we dont have alot of money or resources"

# 90 Critical Kills @ 12/27/10 04:13 PM

They're not just setting the price to whatever they like, they've set the price to the commonly accepted industry standard which is $59. If they were charging $89.95 then the case you speak of, that they're setting the price to whatever they desire, would have some validity. It really doesn't make any sense whatsoever. And yes companies can do whatever they want so long as they aren't breaking any laws, that includes setting the price to whatever they want and if it doesn't sell then they'd be forced to lower it. That's how capitalism works, companies set a price they believe the market will bear and then adjust it as is necessary. In this case EA has not only not price gouged the market on their exclusive product when, truth be told, they probably could set the price higher and it would not be breaking any laws and would still sell well.

# 91 khaliib @ 12/27/10 06:02 PM

I just don't get it.
Why try the legal route, when there's another way.

A developer makes a football game with full customization (combo of NBA 2k11/Backbreaker) and they don't have to shell out money for a license or player likeness.

The first thing people do when they get a game is editing. Whether ratings, sliders or uniforms, it all depends on what editing features are open to them to use.

"Focus on the engine (gameplay), provied the body (presentation/franchise/online), give us some paints (full customization) and the gaming community will color it how they like it."

If I want NFL, I'll make it.
If I want College, I'll do it.
Maybe Juco or Highschool, it's on the gamer.

The point to this rant, is that there is an easier way around Exclusive Licenses w/out all the drama.

# 92 spankdatazz22 @ 12/27/10 06:11 PM

Quote:

Originally Posted by ODogg


	There simply is no blame here to be had on EA's part, they used sound business principles in how they lowered and raised their prices. Sure one can argue that theres an appearance here of some sort of impropriety but an analysis of the situation shows that the NFL simply chose to go with an exclusive agreement and thus the entire "competition eliminated directly relates to the price change" is not a valid argument.

I don't know the particulars of this case, but I would agree it isn't that cut and dry that EA is guilty of anything illegal when considering this individual case. But I don't think anyone could convince me it was strictly a coincidence that the NFL, NCAA, ESPN, and Arena league licenses all went exclusive to EA within the span of a couple months between January and March of 2005 if I'm not mistaken. With MLB following a few months after that, and rumblings that the NBA would go exclusive (and fortunately didn't). I'm guessing they didn't do anything that can be ruled illegal, but it was pretty obvious what they were trying to do when the situation is taken as a whole imo.

# 93 spankdatazz22 @ 12/27/10 06:16 PM

Quote:

Originally Posted by khaliib


	If I want NFL, I'll make it. If I want College, I'll do it. Maybe Juco or Highschool, it's on the gamer. The point to this rant, is that there is an easier way around Exclusive Licenses w/out all the drama.

I think it's safe to say that most people wouldn't make that effort though. So it wouldn't be practical for a developer to tie the success of a game to what the user community creates.

# 94 MoutonDocile @ 12/27/10 06:44 PM

Quote:

Originally Posted by khaliib


	I just don't get it. Why try the legal route, when there's another way. A developer makes a football game with full customization (combo of NBA 2k11/Backbreaker) and they don't have to shell out money for a license or player likeness. The first thing people do when they get a game is editing. Whether ratings, sliders or uniforms, it all depends on what editing features are open to them to use. "Focus on the engine (gameplay), provied the body (presentation/franchise/online), give us some paints (full customization) and the gaming community will color it how they like it." If I want NFL, I'll make it. If I want College, I'll do it. Maybe Juco or Highschool, it's on the gamer. The point to this rant, is that there is an easier way around Exclusive Licenses w/out all the drama.

The goal of any devs to make money...which means sell LOTS of games. Every single non-licensed football games that came out the past couple of years were commercial failures. Some of them were really good and (for some) better than the licensed stuff, but it didn't matter. People want to buy the "real" thing.

While it's true that you can still buy a great football game without the NFL license, the majority just don't care if it's not licensed.

# 95 Critical Kills @ 12/27/10 07:16 PM

spankdatazz22 - I agree that EA did what they wanted to do all along but as I've stated many times, the license was the NFL's and various other entities to sell. That's where any sort of legal challenge should be focused, if at all. But again even then it'd make no sense to do that because they own their own product and can sell it to one dev or 20 devs, there is no "monopoly" issue on them and how they manage it since it's a private copyright of a non-public item.

# 96 khaliib @ 12/27/10 07:30 PM

Quote:

Originally Posted by spankdatazz22


	I think it's safe to say that most people wouldn't make that effort though. So it wouldn't be practical for a developer to tie the success of a game to what the user community creates.

I would defer your answer to any of the hundreds of roster/slider threads on various forums along with the thousands of team creations from backbreaker and the NCAA online editor.

Take a look at the usage of 3rd party apps like Finn's 2k/Backbreaker editors and Pocketscout's NCAA app for football alone.
The numbers are there that show the willingness/want for full customization.

I would also say that Finn's 2k editors had a role in encouraging what we see in NBA 2k11. Many are saying NBA 2k11 is the standard for future Sports games editing functions.

Also, I would take a look at Ian Cummings thread asking the community for their thought on the idea for future Madden releases.

They really don't have to go this route, but this case is bigger and goes far beyond video games.

# 97 ryan36 @ 12/27/10 07:36 PM

Khaliib-
Those numbers are huge because of the people who come here, and to other sites.

General public= not us
General public= real teams out of the box
Non licensed = not a great seller

Yes, those things have users and an audience, but nowhere near the scale to justify an independent video game development.

# 98 Hollywoods_Finest @ 12/27/10 07:57 PM

Quote:

Originally Posted by illwill10


	^^ exactly . if they continued to sell at $30 with the exclusive deal, They would not gain alot of profit. We would get many excuses where "we could not add "X" feature or cant afford more staff because we dont have alot of money or resources"

LOL! the company is charging 59.99$ and there still saying "we could not add X"

# 99 illwill10 @ 12/27/10 08:00 PM

Quote:

Originally Posted by Hollywoods_Finest


	LOL! the company is charging 59.99$ and there still saying "we could not add X"

exactly

# 100 khaliib @ 12/27/10 08:13 PM

Quote:

Originally Posted by MoutonDocile


	The goal of any devs to make money...which means sell LOTS of games. Every single non-licensed football games that came out the past couple of years were commercial failures. Some of them were really good and (for some) better than the licensed stuff, but it didn't matter. People want to buy the "real" thing. While it's true that you can still buy a great football game without the NFL license, the majority just don't care if it's not licensed.

If you look at why those games really didn't do well, it's because they were too gimmicky and strayed away from football fundamentals and authentic gameplay. All lacked in the authentic football experience in one way or another and the biggest gripe seemed to center around the horrible Franchise mode of the games.
All failed in this area along with lack of full customization for gamers to tweak.

You won't hear complaints about an NFL package on Backbreaker, because gamers were able to create NFL teams with the editor. It wasn't a lack of NFL brand on their game, it was the gimmicky presentation and the various gameplay issues that plagued the game.

All-Pro 2k8 suffered because there was no Franchise and editing features were very limited. Gamers got what the Dev's put out and that was it. Gameplay wise, they were on the right road. Again, the Legends path was gimmicky and had no replay value from the beginning, plain and simple.
It was a quick play mode sold as the full game.

I would say this argument holds true for Casual gamers, not the Hardcore base that's on these forums months after the release testing/tweaking and exchanging ideas daily to improve the game's football experience.
**I would say more time is spent tweaking than actually playing the game!!!

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