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EA explains ESPN DEAL
Q&A: EA marketing boss Frank Gibeau on the ESPN deal
Marketing VP talks up the 15-year marriage with ESPN, discusses the future of Madden, and why the ESPN deal fits in well with EA's overall plan to win in the game world.
With stats that point to more than fifty percent of marriages failing, why would one made in the boardroom--the one announced yesterday by Electronic Arts and ESPN, for example--be any different than one made in the bedroom?
Electronic Arts marketing veep Frank Gibeau seems to think some marriages are made to last--though there are different opinions. A number of analysts who commented in the press on the deal thought 15 years was a mighty long contractual period and, reading between the lines, spoke skeptically of the deal.
IDC analyst Schelley Olhava told the San Francisco Chronicle's Matthew Li that a 15-year span of time can present many unforeseen obstacles. "In that amount of time, we've seen powers rise and powers fall," she said.
What's the view from inside the boardroom? We asked one of EA's key players on the ESPN deal-making team, Frank Gibeau.
GameSpot: How big of a win is this for EA?
Frank Gibeau: We're really excited about this.
GS: Now that the ink is dry, what's Plan A look like?
FG: When you think about what we need to do in the next generation, and over the term of this deal, we need to figure out how to grow the sports category and bring new franchises online--which is a lot easier said than done.
GS: ESPN brings what to the table?
FG: We found a partner who is going to be able to help us expand the category by bringing on new franchises. Who is going to be able to help us innovate in the next generation [of technology]. When everything is online, we're going to be able to have live feeds…there's a lot of sports information content from ESPN that's really going to expand what EA Sports already does.
GS: To whose benefit?
FG: This is something that is just a sports fan's dream. The best brand in sports gaming together with the best brand in sports innovation news information coming together is going to be really cool to work on.
My teams have been working with the ESPN guys back East a little bit already--this deal is only a few weeks old in terms of its negotiation--but the stuff that we're able to already collaborate on and come up with is pretty exciting.
GS: Can you mention any of what that stuff might be?
FG: Not yet, but I think that you can start to think about some of the core technology capabilities that are going to come online in the next few years with portability, wireless…and you can think about the live feeds that can start to come in from ESPN inside of the games. Being able to set rosters based on that night's rosters, brought to you by ESPN [for example]. We're really excited about being able to grow the business in places like poker, and the extreme sports category with the X-Games. Those are just a few [areas] that I can talk about right now, but we're pretty fired up about it.
GS: Of all current ESPN programming, what content is most attractive to you, and where will you move first?
FG: We don't have anything to announce in terms of first. Again, it's pretty early. But just an aside on poker, we actually have Pogo, which has some pretty amazing parlor games systems set up in terms of the AIs in the system. There's some experience with those types of products before.
But on the sports information side, you look at things like College Game Day, you look at some of ESPN's banner shows like NFL Tonight, things like that, wherein broadcast integration of our assets into their broadcast is an opportunity.
So this goes upstream as well as downstream. Being able to use our technology to help illustrate games and analysis, being able to use some of their franchises with our games as programming opportunities becomes part of this deal. So if you said, “What could I do with these two companies together if I had a blank slate?" You can come up with some pretty cool stuff.
GS: Will you need to hire staff in order to properly take advantage of all the new possibilities?
FG: We have a lot of people already focused in on EA Sports, so we're probably going to need to expand some of the staff in areas of publishing as well as in the studio--to start to think these things through and start to innovate.
We've also been putting a lot of expansion against next-generation technology already. Now, being able to supercharge that with ESPN content…you know, they have a lot of really innovative and creative people at the network, back in Bristol.
GS: How do the two corporate cultures play off each other?
FG: At our core, we're both very much sports fans. When we sit down and realize that, when we talk to our customers, when they talk to their customers, their fans are watching SportsCenter, and playing games, and that was about it. And it was the same thing for us, you know, you go watch a live sporting event, you watch SportsCenter and then you play your Madden. Being able to add a partner like them to complete that relationship is pretty cool.
GS: How does the deal with ESPN impact negotiations with John Madden himself? Does the ESPN deal signal the end of the relationship with Sir John?
FG: I'm not sure where those stories are coming from. I think the simple fact is, we've had a long-term great relationship with John Madden. And he's in our games next year. And we're talking about the future with him. And by the way, he works for ESPN.
If you think about the deal, it's not an inevitability that he goes away. I'm not even sure where that's coming from.
We look at John Madden and see him as a great partner--he's a partner and a part of ESPN, and on a go-forward basis, we're obviously thinking about the future and talking to him about it.
GS: Not to be crass, but if Madden is aligned with ESPN, and you have access to ESPN content, programming, and personalities, doesn't it give you certain rights to use the Madden moniker going forward, regardless of how you and John Madden end the current negotiations?
FG: I can't get into the level of detail that's required to answer that question with regards to the deal. Suffice it to say that the assumption isn't correct. It's more complicated…deals don't work that way.
John is his own man.
GS: Can you elaborate on what that means and what happens when those first rights are refused? Can others bid on them?
FG: Well, yeah. I'll answer the question straight up. I think the first thing that's important though is to set a context. And the context is that this is a 15-year deal. What 15 years means is that there's a huge commitment between the two companies to do this right, and to grow the business together. So in terms of a lot of the scenario [and] how this thing evolves and develops and what first right of refusal means, you have to operate within that spirit and that context.
When you sit down with the ESPN guys, and you have us in the room at the same time, it's a pretty amazing relationship, and it's going to be pretty productive, we believe, over the long term.
With regards to the first right of refusal, all it means is that if ESPN has a program that we're not interested in making a video game about, they have the opportunity to be able to go and figure out how to produce it, without our participation. The likelihood of that occurring is very low. I don't even want to get into hypotheticals.
I think you can imagine if they came to us with a sport that was really popular, and EA couldn't figure out how to make a game out of it, I'm not sure--
GS: Maybe it shouldn't be allowed to be a sport.
FG: Exactly.
GS: Option to terminate after 10 years--fairly strong language. I don't know. Help me understand why that's there.
FG: Actually that language is fairly innocuous for these types of deals. All it says is that after 10 years, which is two platforms, it's Xbox 4, at that point the parties can come together and evaluate. But the spirit of the deal is it's a 15-year deal with a breath. It's not an opportunity for anybody to hold each other hostage. It's really pretty straightforward. You could say, “OK, so how's it gone over the last decade?" And: "How do we both feel about it?" And really, that's about it. Think about the game business 10 years ago. Would you have been able to forecast where we are today versus 10 years ago?
GS: Well, the answer is no.
FG: Exactly.
GS: So where did 15 come from?
FG: The term is really a signal and a commitment level between the two partners. It's like saying we're going to get married without a prenup. When you look at our relative position in the business, and their relative position in the business, this wasn't a deal that we both had to do. This is a deal we wanted to do. And this was a deal that we wanted to do because we've always wanted to grow the business. We believe that we're both innovators. And we think that it works most importantly on a customer level.
So when we talked about the term, it really was an opportunity to communicate and to establish a level of commitment that both parties could feel very good about.
If you look at the amount of capital that's going to be required to make a game going forward, the days of five guys in a garage are long gone, and as much as I liked those days--the problem is, you think about hardware transition, the amount of technology that you need to invest in, and how you build that out, it's in ESPN's best interest to have the terms as long as possible, and ours, so that we can maximize those capital investments and that we can grow the business together--without having to worry about, "Oh, well, the deal comes up in two years, so I'm not going to work that hard on it because I might get held hostage." Or, "I don't want to give up any leverage." The term is so long, and the deal is so far reaching that it really allows you to remove any potential tension or competitiveness within the relationship between us and ESPN in terms of how you go forward.
GS: Right. You didn't talk about terms of the deal.
FG: When we have these types of deals and these relationships we do not disclose terms.
GS: I guess it gives you a lot to work with right now, Frank, right?
FG: It's pretty exciting. Everybody around here watches ESPN, we've got TVs on all over the place, and SportsCenter is constantly running. Being able to work with them is just awesome, we're very excited about it.
GS: The first time correct?
FG: I think we've had conversations off and on over the years, but in the last few weeks, it became serious, it became an opportunity for us to get together, and it was driven by ESPN, because they needed to figure out what they were going to do next. And it just came together.
GS: Good luck.
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01-19-2005, 10:26 AM
