Class Action Lawsuit Still Little Threat to Madden or Exclusive Licenses
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Last week a judge certified a class action lawsuit against Electronic Arts with the argument being made that the company has overcharged for the Madden franchise ever since signing the exclusive license deal with the NFL in 2005. The certification as class action really isn’t much of a development though, it doesn’t mean that it has any better chance of being successful, and it doesn’t change the fact that the suit in question is faulty in its claims.
Essentially the crux of the lawsuit (originally filed in 2008) is that NFL 2K5 released for $20, and in response EA dropped the price of Madden to $30 in November of that year. Once signing the exclusive deal the next year and ever since the price of Madden at release has been the standard $50 or $60. The thought is then that the game has been overpriced because otherwise they believe the games would have stayed at a lower price point if there was competition.
Of course this isn’t true. 2K Sports released all their titles at $20 as a stunt for the one year to gain awareness and market share. All sports games drop in price months after release and Madden has traditionally dropped its price for the holidays. Hell, Madden 11 could have been had from multiple outlets for $30 during Black Friday week this year. Also there is the failure to address that then 2K Sports has committed the same “violation” by raising the price of the MLB 2K series to the standard level after signing the third party deal and that the entire 2K Sports brand has been back up ever since.
Even *if* the NFL license was opened up for multiple parties, the NFL could still demand a certain amount of money for it that could price many if not all competing companies out of the running. The NFL would also make part of any agreement that all games have to release at the price they deem standard. If the license was opened up and multiple companies did sign agreements there would be no price wars taking place. This is the way things are handled now and why, for example, the NBA and MLB games always release on the same days and at the same price.
Add to that price-gouging is also an incorrect term to use here as video games are not necessities. Things like gas, electricity, hotel rooms in a crisis situation, those are regulated against price-gouging. Having multiple options for an NFL video game is not a life necessity. The NFL has the right to sell their license as they please just like any other IP. It is handled the same as other single licensees which are common in video games with a couple examples being Harry Potter, Spider-Man, or why The Beatles can be exclusive to one music game. There can be competing products in the genre, as there are in football games (All-Pro Football 2K8, Backbreaker, Tecmo Bowl, Blitz: The League) but there is no right to being able to make a licensed game.
The NFL certainly isn’t scared off from the idea of exclusive deals as they just recently signed new ones dealing with on-field apparel. There are lawsuits however currently making their way through the system that could affect the way EA does business as well as the future viability of exclusive licenses. The suits against the NCAA and EA regarding the use of player likenesses and the American Needle action centered on apparel licensing are chief among them and developments there should be monitored. However this suit in question really has no merit and isn’t going anywhere.