On July 17, the National Collegiate Athletic Association decided against renewing its contract with Electronic Arts
(NASDAQ:EA), meaning the contract will expire in June 2014. NCAA Football 14
, released July 9, will be the last game in EA's college football series that can feature ‘NCAA’ in its title or the NCAA logo in game.
Within hours of the announcement, however, EA Sports Executive Vice President Andrew Wilson posted the following on EA’s website:
This is simple: EA SPORTS will continue to develop and publish college football games, but we will no longer include the NCAA names and marks. Our relationship with the Collegiate Licensing Company is strong and we are already working on a new game for next generation consoles which will launch next year and feature the college teams, conferences and all the innovation fans expect from EA SPORTS.
The reasons NCAA opted out of the deal appear to be related to its own legal issues, not as a result of poor practices on EA’s part.
NCAA athletes are considered amateurs; therefore, they can’t be compensated for the use of their likeness in a game. For that reason, the NCAA Football
and the now-defunct NCAA Basketball
series refer to players only by position and number, rather than by name. In order to offer an accurate reality simulator, however, the nameless virtual athletes can still look and perform like their real-world counterparts.
Ed O’Bannon, a former UCLA Bruins basketball player who saw his likeness represented in NCAA Basketball 08
, is currently suing
the NCAA, arguing that student athletes should be able to share in the revenue colleges receive for allowing their doppelgangers to be featured in EA’s products. As the case progresses, it doesn't come as a surprise that the NCAA cut ties with EA to avoid further ensnaring itself in this issue.
All is not lost for EA, however. As Wilson mentioned in his website posting, the company's relationship with the Collegiate Licensing Company (CLC) enables EA to artfully sidestep the impediments put in place by losing its deal with the NCAA.
The CLC can sell EA rights to use the branding of almost 200 top colleges and universities. One deal covering 200 schools would prevent EA from having to reach out and negotiate with schools individually. And it's the school branding that matters most. While the removal of the NCAA logo from future games is a minor enough change to make, for a game that’s all about playing as one's favorite college t
eam, not having big-name schools among the players would have been a devastating blow.
On Gaming Screens, College Sports Sell
Compared to its Madden
, and NHL
series, EA’s NCAA
games underperform, but still do fairly well in the scheme of things. Looking at last year’s iterations
, Madden NFL 13
topped the sales charts in September 2012, FIFA 13
was third, NHL 13
was sixth, and NCAA Football 13
Why are EA’s sports series so present at the top of sales charts every year?
Trades, breakout seasons, injuries, and more mean that team rosters, player skills, and even jerseys and stadiums don’t look the same from season to season. Sports games on newer consoles can now receive online updates to rosters and players based on daily, or weekly, performances and trades, but these updates generally stop after the season comes to an end. For consumers looking to play the most realistic sports games on the market, buying the newest release annually is really the only option, even if updates from one version to the next are minimal.
(NASDAQ:AMZN), Best Buy
(NYSE:BBY), and GameStop
(NYSE:GME) already selling out of pre-orders for Microsoft’s
(NASDAQ:MSFT) Xbox One and Sony’s
(NYSE:SNE) PlayStation 4, EA would miss out on easy sales had it not found a way to save its NCAA games.
No positions in stocks mentioned.