One Longtime Exclusive Partner With NFL Considers Dumping Their License
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Last week an NFLPA representative shed some light on how the exclusive league license for video games is viewed. They consider their relationship with EA Sports strong and ultimately the job of the Player’s Association is to protect the members and bring in as much money for them as possible. Considering the established history with EA, and the amount of control the NFL likes to exert regarding image, it displayed the picture of how the licensing is viewed as a whole. The NFL (not just NFLPA) wants exclusivity because it brings in more money and they can more directly help to shape the way they are perceived through their partners.
Recently we’ve seen the effects of what happens when a league plays hardball, literally, on the business side. MLB had lost representation on the dominant console until caving on licensing costs with 2K Sports late in 2012. By going exclusive in the past they eliminated the competition that would have provided them an alternative for 2013. Instead MLB 2K13 ended up with a shameless rip-off of 2K12 that both MLB and 2K deserve plenty of scorn for by pushing on consumers as a legitimate product.
Coincidentally news hit yesterday that DirecTV, which has carried NFL Sunday Ticket exclusively since 1994, is considering dropping it or sharing it with others due to the high costs and reduced returns over the years when the current deal expires following the 2014-15 season. The emergence of RedZone channel and NFL Network Thursday night games through cable providers has eaten away at the value of the package.
This is an interesting development because it syncs up with what EA is likely thinking right now as well. The terms of the original video game license signed in 2004, extended in 2008, and then again in 2011 (with concessions from the NFL) no longer makes fiscal sense given the current marketplace. That’s why it took the NFL giving up a $30 million credit due to the impending possibility of a lockout at the time to get EA to agree to the year extension. EA wouldn’t have otherwise. Now they’re completely in the driver’s seat as far as negotiations go unlike in 2004 when they had to bid (even though they weren’t the highest bidder) and ended up paying over $60 million a year for the rights.
The difference here of course is that the NFL would have alternatives to turn to for exclusivity when it comes to Sunday Ticket. Whether that be the cable companies or DISH Network they have options. With video games all options have disintegrated and that places EA in a better bargaining position. Just as MLB eventually came to the realization they had no choice if they wanted a game out, the NFL surely knows that no other company could jump right in and represent their brand within a year or even two when starting from scratch and having to develop for multiple platforms. They aren’t going to let this generation of consoles, and the next generation which is right around the corner now, go without NFL football for any length of time.