Madden 2006 sold 2.5 million copies in August

Quote: Originally Posted by batzilla

The bigger they are the harder they fall. And someday EA's craptacular *business* decisions will come back to bite them on their booty. Karma applies in the biz world as well obiwan. What goes around.

LMAO. Ok. Whatever you say.

[grunt]

Quote: Originally Posted by GTheorenHobbes

Are you referring to the same multi-billion dollar company that recently had shakeups at the top (i.e. EA)? I'm not sure you have to be a psychic to figure out that not all of their business decisions were good ones. Why else would they have been let go there chief?

I didnt realize EA had a management shake up. Hmmm, wonder why? Could it be that management made their most value and money making franchise less profitable with this deal?

[batzilla]

I had a funny feeling that Madden would sell more copies this year.

Yep, thats right.

Hmmmmmm, lets see. Madden vs uh uh

ooooooh yeah! Maddens our ONLY choice. Surley that'll translate to more sales this year!!

[Paytonsplace]

Assuming that EA got to keep all revenue from Madden (clearly they don't) that would mean that they got

$50 * 2.5^6 = 12.5^7 or $125,000,000

in the month of August. subtract off whatever the retailer take was and it may
be reasonable to conclude that they made $70 to $80 Million. By the time the year is over Madden profitts may be around $100 Million.

So how much is $100 Million? Well it depends. Certainly they have prevented the loss in sales that NFL 2K6 may have delivered. As the Business Weekly article showed, NFL 2K5 did cut into their market share. So by that measure it was a good deal for EA (bad for the consumer of course as prices, unlike last year failed to decline). However if the NFL deal did cost EA 500 million over 5 years (word on the street) then the Madden NFL exclusive deal may not have been the best thing for EA. It would be real interesting to know what the cost of the non-exclusive contracts were to get a real baseline.

I suspect that EA knows the risk and that they believe they might be able to make up the difference by using Madden to sell other games (Who has not looked at the game previews ?). TV networks do this with the NFL games. The huge contracts that the TV networks pay to the NFL often result in a loss to the network. However, the networks use these football game telecasts to then sell their own shows. This makes it difficult to quantify the true value of such a contract. However with continuing fragmentation of the entertainment market one suspects that these large contracts will begin to decline in 10 years or less. Indeed, the NFL network is already moving toward telecasting their own games because they, in effect, will be cutting out the middleman who will not be as willing to pay such a hefty sum.

The TV model may be apt for the gaming industry. As several have pointed out, the market for football games is only so large and with all the entertainment options open to the consumer, a poor game will not cut it (I have a wife and child, my gaming time must be spent right so I play only the best, MVP Baseball and Winning Eleven Soccer). While I thought Madden 06 was an improvement over 2005, it was not a big improvement (and sadly, for the punting game it was a huge step backwards). It certainly does not merit a purchase of Madden 2007 (and Madden xbox 360 aint lookin' to good). If the Madden product does not keep pace with the rest of the gaming world (not only the sports genre) then it will render the exclusive deal unprofitable .

[grunt]

Quote: Originally Posted by Paytonsplace

Assuming that EA got to keep all revenue from Madden (clearly they don't) that would mean that they got $50 * 2.5^6 = 12.5^7 or $125,000,000 in the month of August. subtract off whatever the retailer take was and it may be reasonable to conclude that they made $70 to $80 Million. By the time the year is over Madden profitts may be around $100 Million. So how much is $100 Million? Well it depends. Certainly they have prevented the loss in sales that NFL 2K6 may have delivered. As the Business Weekly article showed, NFL 2K5 did cut into their market share. So by that measure it was a good deal for EA (bad for the consumer of course as prices, unlike last year failed to decline). However if the NFL deal did cost EA 500 million over 5 years (word on the street) then the Madden NFL exclusive deal may not have been the best thing for EA. It would be real interesting to know what the cost of the non-exclusive contracts were to get a real baseline. I suspect that EA knows the risk and that they believe they might be able to make up the difference by using Madden to sell other games (Who has not looked at the game previews ?). TV networks do this with the NFL games. The huge contracts that the TV networks pay to the NFL often result in a loss to the network. However, the networks use these football game telecasts to then sell their own shows. This makes it difficult to quantify the true value of such a contract. However with continuing fragmentation of the entertainment market one suspects that these large contracts will begin to decline in 10 years or less. Indeed, the NFL network is already moving toward telecasting their own games because they, in effect, will be cutting out the middleman who will not be as willing to pay such a hefty sum. The TV model may be apt for the gaming industry. As several have pointed out, the market for football games is only so large and with all the entertainment options open to the consumer, a poor game will not cut it (I have a wife and child, my gaming time must be spent right so I play only the best, MVP Baseball and Winning Eleven Soccer). While I thought Madden 06 was an improvement over 2005, it was not a big improvement (and sadly, for the punting game it was a huge step backwards). It certainly does not merit a purchase of Madden 2007 (and Madden xbox 360 aint lookin' to good). If the Madden product does not keep pace with the rest of the gaming world (not only the sports genre) then it will render the exclusive deal unprofitable .

I doubt EA make more 7 or 8 bones of profit after the game is made. Take out development cost, advertisement and distribution the pie is really small relative to true profit.

[blackceasar]

Quote: Originally Posted by grunt

I doubt EA make more 7 or 8 bones of profit after the game is made. Take out development cost, advertisement and distribution the pie is really small relative to true profit.

I dont know if Grunt is right.. BUT his $7-8 profit per title is ALOT closer to thier real profit EA is making. I worked in the videogame retail industry for 3 years. Learned alot. Videogame producers make less than 1/4 off of each title's retail price..and actually 1/4 is pretty damm good. What people dont factor in is the development costs..okay granted alot of Madden is recycled there are still dev. costs. Costs to market the game. TV time is E X P E N S I V E...and the list goes on and on and on which is why 7-8 bucks a game is more realistic and even that is on the high end a bit. This is why you read about some game companies who have had a blockbuster title and still go bankrupt or shut down thier studios a year after release.

[bassiladelph]

Quote: Originally Posted by coogrfan

Guys, the football gaming market is finite, there are only so many people who are going to buy a football title. If you added up all the console football games sold each year by the various publishers for the last 4-5 years, you would get a figure that didn't change much from year to year. Last year would probably be an exception, the price drop for 2k5 meant that a lot more football titles were sold than previous years (but since a lot of those additional sales were to Madden gamers who decided to try 2k5, the total number of football gamers probably didn't change very much). To expect EA to increase launch sales by a million or more units is unrealistic, because the number of hardcore football gamers hasn't changed.

And that's the point of the exclusive license - since EA has to answer to their shareholders, would they be making enough money in sales to warrant an exclusive license? Obviously some 2K5 people bought Madden, but like mentioned before, there were some that bought both, and I'm not sure if that was factored in (I mean, unless you're psychic, how can you?), plus you'd expect the #s to go up anyway, now that the PSP is out, and there are people willing to buy the PSP and PS2 versions, among other platforms.

You could even say that other exclusive licenses - such as the PGA and NASCAR - are helping to offset the NFL one (minimally), if you're looking at the big picture. But this deal won't show any benefit in the short term. I doubt this deal was specifically designed for making a profit this year. If Madden wants to be the premier next-gen football title, this was the way to do it.

In any event, I'm not touting the death of EA (and even if I think their move was good business, as a gamer I think it's crap). I'll wait and see the #s over a couple of years before I say anything. This is a long term investment, and any smart business move usually doesn't show great returns immediately. SO while I wait, I'll sit and play 2K5.

[jondiehl]

Quote: Originally Posted by joeboo

Maybe some of us are older and experienced in the business world? You'd be surprised how many people on OS are older (pretty easy to tell by the way in which one posts).

No doubt. Thank God there's a place for middle-aged gamers to chat and discuss sports games. I get so tired of the forums filled with kids and their complete lack of grammar and constant internet shorthand/leet speak.