Electronic Arts: The Evolving Sports Gaming Landscape

By George Foster, Victoria Chang
2005 | Case No. SPM26 | Length 22 pgs.

In 2005, Electronic Arts (EA) led the interactive entertainment sports category of the electronic gaming industry, developing games for multiple hardware platforms. Sports-related games accounted for more than one-third of EA’s revenue. EA’s Madden NFL Football game was a fan favorite, accounting for nearly 10 percent of revenue.

Price wars with Sega/Take-Two in 2004 prompted EA to drop the price of its Madden football game from $49.99 to $19.99. Seeking to secure its dominant position in the global sports gaming market, EA signed an exclusive deal with the National Football League, creating a sudden monopoly in the video game industry. EA also signed a 15-year licensing deal with ESPN, giving EA access to ESPN’s content, including televised poker tournaments and X-Games extreme sports competitions. By early 2005, EA held exclusive licensing contracts with the NFL, NASCAR, the PGA Tour, FIFA Soccer, the AFL, and ESPN.

EA competitor Take-Two secured its own deal with Major League Baseball Properties. The NBA, NCAA, wrestling, and fantasy sports games were other areas that EA hoped to dominate. This case study explores the interactive gaming industry, and whether EA’s licensing strategies and sports rights deals would ensure the company the dominant market position it sought.

Learning Objective

Students will learn the history and strategies of EA, an industry leader in electronic and online games, and then discuss the optimal strategic, tactical, and financial decisions relating to the exclusive licensing deals and other deals to cement a market leader’s dominant position.
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