EA Settles Price Fixing Lawsuit For $27 Million; NFL Monopoly Left Intact

Legal Issues

from the there's-no-'innovate'-in-'exclusive-contract' dept

EA Games has agreed to a $27 million settlement for charges of price-fixing related to its NFL, NCAA and (lawl) Arena Football League games. While this may come as somewhat a relief to purchasers of EA games, it's highly unlikely that this will result in EA changing its core strategy. It certainly doesn't seem to have had any affect on EA's exclusive license with the NFL (which continues through 2013), a deal that was the impetus for this lawsuit.

First off, the settlement sounds super-big, but in reality, it breaks down to couch change for those people who were “fortunate” enough to make a “recent” purchase of one of the named EA Sports titles.

Those who bought games for a PlayStation 2, original Xbox or Nintendo GameCube could receive up to $6.79 per title. Games purchased for the PlayStation 3, Xbox 360 and Nintendo Wii will garner a $1.95 refund, reports USA Today.

The named platforms call to question the term “recent,” which is used in the original USA Today article on the subject.

In a statement, law firm Hagens Berman says EA will create a $27 million fund for players who purchased a recent copy of any Madden NFL, NCAA Football or Arena Football title.

The larger payout for older platforms is likely due to the event that led to EA locking down an exclusive deal to publish Madden Roster Update as the sole representative of the National Football League.

Way back in 2004, 2K Sports released ESPN NFL 2K5 at the extremely friendly price point of $19.99, or under half the price of EA's game, which debuted at the normal $50. Not only did it beat Madden in the price war (and force EA to drop Madden's price to $29.99), but in many critics' estimation, it was a superior game, especially in terms of presentation.

EA felt threatened by this move and responded the way any corporation that would go on to hold the title of “Worst Company in America” would: by throwing its considerable weight around and locking down an exclusive deal with the NFL. No doubt the NFL was also worried, having momentarily been associated with a budget-priced game. Hence, nothing but Madden until 2013 and this lawsuit, which was filed in 2010.

The NFL's vice president of consumer products, Gene Goldberg, said at the time that he wasn't concerned that EA's monopoly would result in stagnation, stating that there is “a lot of self-imposed pressure to make [Madden] stand out in a robust and diverse marketplace.” Maybe so, but I would imagine that EA's flagship football game would have improved much more dramatically with a high-quality competitor constantly breathing down its (overpriced) neck. 2K Sports' product was so far ahead of Madden at the time that gamers still find it to be a better experience than Madden 11.

This isn't EA's only NFL-related lawsuit, either. U.S. District Judge Richard Seeborg just gave the go-ahead for former NFL players to seek class-action status in their lawsuit against EA for using their likenesses in Madden NFL games. EA had hoped to avoid this sort of situation by stripping names and shuffling jersey numbers, but the retired players pointed out that their digital alter egos were accurate in terms of skills and physical appearance.

EA played the “stats are facts” card, quoting an earlier decision that saw Major League Baseball being told that player names and statistics are facts, and therefore cannot be copyrighted. Seeborg's ruling dismissed this claim, stating that current publicity rights laws and pointing out that Madden games show the retired players “in their conventional role as football players” and is the “digital equivalent” of “using the players' pictures to sell T-shirts.” 

Speaking of “couch change,” the proposed settlement pales in comparison to the damages originally sought in the price-fixing lawsuit, which alleged that without the exclusive NFL deal, Madden would have been forced to price its games at a more reasonable $29.99, rather than the $50-60 we're all kind of tired of paying. This difference resulted in gamers paying an extra $701-926 million for EA sports games between 2005 and 2010.

But $27 million it is. Gamers shouldn't start counting that incoming couch change just yet though. This settlement still needs to be approved by the court, a move which could take months. While this might be of some consolation to the gamers who filed the suit, it feels more like a gesture of hands-folded-politely compliance, as if to show that EA is a “Good Corporate Citizen” and, as such, is worthy of its continued NFL-granted monopoly. And despite its exclusive client currently “entertaining” two lawsuits, the NFL doesn't seem to be interested in shopping around for new suitors, leading one to believe that it really doesn't care much for non-exclusive deals… or for its former players.

Filed Under: class action, football, monopoly, price fixing, video games
Companies: ea, nfl