As the videogame industry faces its toughest road ahead, we can look back at what a great year 2004 was, or in this case, wasn’t. Sure, titles like Halo 2 and Grand Theft Auto: San Andreas topped the charts, but behind the scenes one company decided it was its prime time to strike against the industry. While 2004 was winding down with the shortages of systems, Electronic Arts (EA) was beginning to overstep its boundaries.
Before we address EA’s attack on the industry, let us take a look back on 2004. Ubisoft had one of its strongest years to date with blockbuster titles such as Prince of Persia: The Warrior Within, the Ghost Recon series, and the Splinter Cell series. Sega and Take-Two finally narrowed the gap between ESPN and EA Sports with a neck-breaking $20 price tag. Activision also had an amazing year with hits such as Spiderman 2 (console versions), Rome: Total War, Doom 3, and other major titles. The videogame industry seemed like an unbreakable force until around November when the console systems decided to disappear off the face of the earth.
Widespread panic occurred when the PlayStation 2 mini, Xbox, and Nintendo DS all reported shortages. Rumors circulated about the PlayStation 2 mini overheating, to burning down a kid’s house. Yes, you heard right, the PlayStation 2 burning people’s houses down. Only one of those turned out to be true, though - the PlayStation 2 mini was overheating, causing the system to shut down. Sony discontinued production on the PlayStation 2s until the problem was worked out and a small stream of systems came two weeks before Christmas. Lack of PlayStation 2s… no problem, everyone decided to buy an Xbox and thus, creating one of the largest system shortages to date. Nintendo DSs? Who would ever think Nintendo could move 500,000 units in one month? We forgive you Nintendo - shame on the other two.
Industry analysts, though unconfirmed, say that the videogame industry took a 1 billion US dollar hit. The once unbreakable industry was shaken far and wide. And before the dust could settle, Electronic Arts went on the offensive.
Their first strike was signing an exclusive deal with the NFL and the NFL Players Association (worth $250 million), thus creating a monopoly on the professional football game industry. Starting with the 2006 season, EA Sports is the only company allowed to make a professional football game that uses the NFL teams and players. Now rest assured, you Backyard Series fans, this doesn’t affect you. Atari can still produce their games because they aren’t “professional” in the sense of Madden or Sega’s ESPN.
This may leave you wondering, what about Sega’s ESPN series? Well, a growing number of us were looking forward to ESPN NFL 2k10. Funny, when Sega announced the price tag of their 2k5 series to premier at $20, EA said that they wouldn’t care. Shortly after, EA Sports slashed their game prices to $30. Was EA Sports getting worried? Sure seemed like it, and just to make sure that Sega wouldn’t topple EA Sports, they decided to make an exclusive deal with the NFL.
Now what does that mean to the consumer? You might not be a fan of ESPN, but that doesn’t mean that the lack of the series doesn’t affect you. EA Sports has no competition with their NFL series. Which means if they produce a crap game in the coming five years, we, the consumer, are stuck with it.
Strike one against the industry from EA. Strike two: EA’s hostile takeover of Ubisoft. Yes, the Ubisoft who is pumping out the blockbuster series of Tom Clancy. EA announced they are buying roughly 19% of the company, which gives them a nice chunk of Ubisoft’s voting rights. The Guillemot family owns roughly 22% of the company which puts the whole company at risk.
EA claims they are not trying to buy over Ubisoft or conflict with the management of the company. Who are they fooling? You do not buy over one of your main rivals’ stock just to look pretty. EA also claims that this is not a hostile bid. Ubisoft and maybe soon even the French government don’t see it that way. Ubisoft is now in a position that no one industry wide would think would happen. They are defending themselves from the juggernaut of the industry.
Ubisoft now has to increase the shares of the Guillemot family or seek protection from the French government to remain independent. You know, since EA’s 25% stake in the 3rd party industry isn’t enough, they want to take out every single publisher. In strange events, Infogrames (the holding company of Atari USA and Atari Europe) has announced that they plan on helping Ubisoft if they are asked. Yes, Infogrames, Ubisoft’s main rival, has offered a lending hand. The reason is simple - Infogrames doesn’t want to see a European company taken over by anyone outside of that continent.
Think EA’s actions can’t get any crazier? How about in 2006, when EA will hold exclusive rights to the ESPN name… for fifteen years. The deal is a sweet $750 million that essentially gives a low blow to Sega and Take-Two. Quality and craftsmanship were forged with the ESPN name by Sega when they signed a three year deal with the sports network that ends this year. The ESPN series has become one of the best known sports series and even tops EA’s NBA Live. Sega’s thunder was essentially stolen by EA. ESPN’s quality and feel will completely change in the hands of EA, unless EA can duplicate everything that Sega produced… which I hate to say it, won’t happen.
What happens to Madden? Madden has yet to renew his contract, but with the current agreement with ESPN, does EA need the name? ESPN is one of the most recognizable names in the sports industry on top of being one of the most popular names in sports games (once again, thanks to Sega and Take-Two).
As recent news continues coming in, EA’s actions are being felt as Sega just announced that they sold Visual Concepts (their sports studio responsible for the ESPN series) to Take-Two. Sega threw in the towel after Visual Concepts’ main money maker, the NFL, was blocked.
So what does this mean to you, the consumer? If EA isn’t stopped, they’re going to take over the whole industry. Think it won’t happen? How does this sound: EA announced they essentially want to take over the world and they specifically have Disney in sight. I think the future of EA shows clearly that they want this world to be “EA Nation.” EA’s nation currently holds exclusive rights to the NFL, ESPN, FIFA, NASCAR, PGA, and numerous movie licenses. They’ve snatched up many small companies and single-handedly laid the final blow to Acclaim by buying out Burnout 3.
Talking about small studios, recently Digital Illusions CE (DICE), a Swedish developer responsible for the hit PC series Battlefield, was recently bought by the juggernaut.
However, main attention is still on Ubisoft and how they can fight off EA. After seeing EA devastate Take-Two’s sports line, anything can be possible. So who’s next? Who does EA plan to buy out? Activision? THQ? Namco? Capcom? Only time will tell how far EA can go and how far consumers must face the wrath of the company.
