New sports coup for EA as ESPN signs 15 year licensing deal

Leading publisher Electronic Arts has struck a further blow against competitors in the sports game market, signing an exclusive 15 year deal with sports broadcaster, and former Take Two / Sega partner, ESPN.

The deal will give EA the rights to use the network's various brands and personalities in its games and to develop games based on ESPN television properties such as the popular X Games extreme athletics competitions.

The deal is a major loss for Take Two Interactive, which last year entered into a partnership with Sega Sammy Holdings to publish Visual Concepts' range of sports titles using the ESPN brand, and won significant market share by placing the titles at a low price point.

EA's licensing of the brand means that the Visual Concepts titles will have to find a new brand for this year - which comes as a further blow after EA signed an exclusive license with the NFL late last year, preventing other companies from using official NFL players, teams or brands in their games.

Surprisingly, the ESPN deal with EA appears to afford the sports network significantly less exposure than its arrangement with Sega did - with EA CEO Larry Probst commenting that "we don't anticipating changing anything significantly from what we are currently doing" in wake of the deal.

That means that the EA games will almost certainly not be rebranded as ESPN titles, although data, graphics and personalities from the ESPN shows may well be used in this year's EA Sports games.

Explaining the reasoning behind the deal, ESPN executive vice president John Skipper said that the company had a good relationship with Sega and Take Two, but added that "if you think about who the logical partner for ESPN (is) given our position in media and where we are and EA's position in video games... it is a natural two companies to put together."

One factor, aside from the size of EA's pocketbook, which may have swung the deal is actually Take Two's aggressive pricing of the ESPN games last year - which won market share and pleased consumers, but left many in the sports licensing industry nervous that their brands were being devalued.

Take Two's plan may now have backfired spectacularly, with both NFL and ESPN moving into exclusive deals with Electronic Arts which will ensure that games using their brands continue to be sold at premium price points.

EA, meanwhile, has taken another step on the way to absolute domination of the sports game genre - and according to some analysts, may be on the verge of winning a "critical mass" of licenses which would force other leagues to fall in line with it.

"We believe that the new EA-ESPN agreement was a classic case of "if you can't beat 'em, join 'em" for ESPN," commented Banc of America Securities' Gary Cooper in a research note on the deal last night.

"Similarly, we believe the NBA, MLB, NCAA, NHL and other sports leagues face the choice of whether to lock in long-terms with EA now or potentially face a weakened bargaining position in the future when EA may be the only viable publisher of sports games," he concluded.