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Does anybody agree with this statement from business week online.

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Old 08-30-2005, 12:44 PM   #1
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Does anybody agree with this statement from business week online.

5. The Best Madden '06 Stories Have Yet to be Told

EA popped open Pandora's Box when it purchased the exclusive NFL license. Consider this, EA will use a significant portion of Madden's earnings to pay off massive licensing fees, and the NFL certainly isn't going to be cheaper next time around. In one quick move, EA has turned one of the most profitable genres in all of videogames into a potentially money losing venture.

Just look at the TV networks. Despite the NFL's enormous ratings, broadcasters rarely make a profit on these games. In fact, the nets regularly lose large chunks of money on the NFL each year. The advantage for these networks is higher visibility, better overall ratings and bonus marketing for their upcoming programs.

For videogame companies, this almost certainly can't work. After all, if EA Sports simply becomes an expensive advertising platform for EA's non-sports games, this would be a monumentally disastrous move.

At some point, it would be intriguing to see a full analysis of how many Madden games EA must sell each year just to pay off the NFL license. Unless the market for video games explodes in the next few years (and judging by first week sales, the market is strong, but not explosive), we may still be looking at Madden '06 as the first game in a frightening new era for our industry. http://www.businessweek.com/innovate...829_918560.htm
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Old 08-30-2005, 12:52 PM   #2
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Re: Does anybody agree with this statement from business week online.

I agree with the article. Paying over 50 mil for the NFL = to a ton of Madden football that need to be sold just to cover cost.
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Old 08-30-2005, 01:33 PM   #3
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Re: Does anybody agree with this statement from business week online.

No, not entirely. I don't believe that only sales of Madden are going to payoff the NFL License. EA as an entire corporation will be paying off the license. So sales of their entire product line would pay off that license (although maybe sales of Madden pay a higher %).

I look at it this way. Corporations have highly skilled accountants who looked 5-10 years down the road with every move they make. IMO they wouldn't have done this if the numbers didn't work out in EA's favor.
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Old 08-30-2005, 02:51 PM   #4
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Re: Does anybody agree with this statement from business week online.

It's an interesting article, and I'd say I agree with the #5 statement. His first point about Madden trending downward in terms of reviews I didn't agree with. Madden has benefited from overly fluffy reviews of the past - I think that coupled with what 2K did last year and the issue of exclusivity has this year's game is suffering some backlash. Many reviewers just aren't giving it the free pass they have in the past. It'll be interesting to see how Madden 360 turns out and how it's received critically.
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