JULY 20, 2012 • Electronic Arts has reached a proposed settlement in a case where its EA Sports division was accused of violating antitrust and consumer protection laws in the overcharging of consumers for Madden NFL, NCAA and Arena Football League games. In each case EA had secured exclusive licenses to produce and market “official” third-party titles for the two professional leagues, and college football teams. The claim against EA Sports was that these league exclusives permitted the publisher to drive competitors out of the market and to charge consumers substantial premium prices for its own football games. If the proposed settlement is approved by the court, a $27 million fund for consumers who purchased Madden NFL, NCAA Football or AFL games published by EA will be established. Consumers who purchased these games for the PS2, Xbox and GameCube could receive up to $6.79 per title. For the Wii, Xbox 360 and PS3, up to $1.95 per game purchased is available. In addition, EA Sports will not sign an exclusive license arrangement with the AFL for five years, and will not renew its current agreement with the NCAA, which expires in 2014, for at least five years.
Impact: Losing an exclusive on NCAA football or AFL games is no big deal. However, the NFL license is another story. Electronic Arts signed the exclusive with the NFL because competitors like Sega and Take-Two Interactive were launching high quality NFL games at a $19.99 price point. It is pretty clear that the exclusive arrangement with the NFL was the only way that EA could maintain a $50-plus price for its flagship football games. A $27 million traffic ticket is really not that much to pay considering how much the exclusive deal has made for EA. Even better, EA gets to keep its NFL exclusive license. In other words, the deal is basically a minor slap on the wrist.