EA pays out for Madden monopoly but can keep NFL exclusivity

Electronics Art looks set to lose its exclusive right to produce NCAA  football games as part of a settlement with disgruntled consumers. But while it may pay Madden buyers compensation, it will be allowed to continue striking exclusive NFL deals.

The proposed settlement comes in a class action suit bought by and on behalf of games buyers. The people bringing the suit, first filed in 2008, claimed that EA making exclusive deals gave them an unfair monopoly. In turn, the suit claimed, EA was able to charge higher prices for the licensed games because other companies couldn’t produce a rival game.

Had the case gone to trial, the key would have been the value and important to players of having the official licenses. There’s nothing to stop a rival games company making its own football games using fictional teams and tournaments (and of course, creatures.) On the other hand, with American-style football utterly dominated not only by one country but by one league, a rival video game would struggle: a pro football game that didn’t have the option to play the Super Bowl would be something of a disappointment.

On the face of it, predicting an outcome would be a tough call, but EA appears to have decided there was enough risk of losing to negotiate a settlement that isn’t too painful to live with.

Under the settlement, EA will set up a $27 million fund to compensate football game buyers for the “overcharging.” In practice that will mean a maximum payout of just $1.95 per game on the Wii, Xbox 360 and PS3; curiously the payout for games on older consoles is higher at $6.79. Given the usual administrative hassles that come with such claims, chances are many buyers won’t bother chasing this up.

The settlement — which will need to be confirmed by the court handling the case — would also mean that EA can’t sign an exclusive deal with the Arena Football League in the next five years. The existing NCAA deal would continue until 2014, but any renewal would have to be non-exclusive until 2019.

While the settlement would mean EA admitting practically (though not legally) that its NFL monopoly allows it to charge higher prices, it would be allowed to continue making exclusive licensing deals with NFL and player unions.

This settlement and case has no connection with another ongoing lawsuit which claims NCAA players are unfairly excluded for receiving payments for the use of their names and image in EA’s games.