EA Sports: College Football Returns

EA Sports announced the return of their college football video game, but what about NIL rules?

Friends,

Before their earnings call yesterday, Electronic Arts announced they would be releasing a new college football video game after an eight-year drought.

Fans were enthusiastic, to say the least, but given they haven’t produced a game in eight years due to athletes suing for control of their name, image, and likeness, the real question becomes:

What changed?

Today, we’ll run through it.

First, some history.

Due to the unauthorized use of players’ likenesses, EA Sports, the Collegiate Licensing Company (CLC), and the NCAA settled a class-action claim brought by former NCAA athletes for $60 million in 2014.

Here are the details of the settlement (Source):

  • The total settlement was $60 million, with EA and CLC contributing $40M and the NCAA contributing $20M.

  • Lawyers received 30 percent of the $60M settlement, leaving the players to divide the remaining ~$40M.

  • With almost 25,000 players found to have valid claims, each student-athlete was paid out an average of $1,600.

  • The amount each player actually received varied widely, as some ways in which their likenesses were used are considered more valuable than others. 

Now, given that their ability to use real players, images, and likenesses is still likely to be insurmountable financially, Electronic Arts appears to be taking a different approach.

Here’s what I mean…

EA Sports has partnered with collegiate licensing company CLC to “accurately depict FBS schools, traditions, uniforms, playbooks, and more,” but the game will be produced without real players.

In simple terms, you’ll be able to play with Ohio State and Clemson, but don’t expect to see Justin Fields or Trevor Lawrence on the field.

While it’s true that past versions of the game have allowed bootleg roster updates, something EA Sports appeared to allow, you shouldn’t expect that ability in the future.

They haven’t confirmed this, but given they are financially liable, I highly doubt EA Sports will allow the customization of players/jerseys going forward.

If the rules & regulations around NIL change universally, perhaps EA Sports adapts, but for now, the game is happening regardless.

Even more interesting?

The game will no longer be called “NCAA Football” along with the year — think “NCAA Football 14” as an example.

Instead, EA plans to call the game “EA Sports College Football.”

Why?

I assume they are protecting themselves should the NCAA fail to exist in the future.

Outside of that, the biggest question remaining is the financial impact.

Here’s some back-of-the-envelope math I did yesterday.

Yes, I know the revenue model of modern video games isn’t necessarily dependent on retail sales, but this should be a good starting point.

When you start to take into account microtransactions, etc., you’re looking at a much higher revenue number over time.

Regardless, the number is high.

Check this out…

Following the announcement, EA’s stock hit an all-time high yesterday.

Sure, perhaps teenage nostalgia played a part, but the projected revenue numbers certainly don’t hurt either.

The stock fell after-hours on their earnings announcement, but you get the point.

For me, the most interesting part now becomes how EA Sports adapts to potential NIL changes over time.

Here’s a potential example Darren Rovell pointed out:

EA could strike deals with star players and release them at profitable terms to the game company in update packages. Since EA’s last game, online games like Fornite and Roblox have exploded and people are used to paying for special things. Plus, NBA2K updates have always existed.

It’s very easy to see how a company like Opendorse could help EA scale the offers based on skill and popularity. A player could click that they would like to be included in the NCAA game at an agreed upon price and an update package could include them.

Not only does it open the door for increased microtransactions — think updated rosters comingled with fees — but it also allows a unique way for future players to be adequately compensated for their involvement in the game.

Scaling it would be the biggest challenge, but that’s where Opendorse comes in.

Ultimately, the release of “EA Sports College Football” is still more than a year away.

A lot of things can happen, but that doesn’t mean we shouldn’t get excited.

Have a great day, and we’ll talk tomorrow.


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