ESPN, Electronic Arts Sign 15-year Game Deal

Electronic Arts and ESPN have sealed a 15-year agreement for the development and integrated marketing of EA Sports games featuring ESPN content beginning in 2006.

(The Hollywood Reporter) -- Electronic Arts and ESPN have sealed a 15-year agreement for the development and integrated marketing of EA Sports games featuring ESPN content beginning in 2006.

The relationship will include such established EA Sports franchises as "Madden NFL," "NBA Live," "MVP Baseball," "NHL Hockey," "NASCAR: Chase for the Cup," "Tiger Woods PGA Tour" and "Fight Night," which will be enhanced by ESPN telecast, print and online content. Financial terms of the agreement were not disclosed.

The deal also gives EA the ability to publish new sports games based on ESPN media properties. Frank Gibeau, EA's senior vp marketing said that the deal represents a growth strategy for EA. "We want to add new categories to the ESPN brand, including X-Games branded extreme sports games and poker games," said Gibeau.

The agreement gives EA access to ESPN programming, personalities and integrated marketing opportunities on ESPN television programming and other ESPN properties, including its magazines and Web sites. The ESPN integration will appear in EA Sports console, handheld, PC and wireless games. The deal runs for 15 years but includes an option for ESPN to terminate the pact after 10 years "under certain conditions," according to press release issued Monday by EA and ESPN.

John Skipper, ESPN's executive VP advertising sales, new media and consumer products said that this long-term deal will help broaden the appeal of the ESPN brand by teaming with the leading video game sports publisher. "We want to be everywhere the sports fans are, and sports fans play video games," said Skipper.

While ESPN and EA's discussions for integrating their various products are still in the early discussion phase, Skipper said EA sports games and technology will be integrated into television programming to enhance the experience sports fans get at ESPN. In addition, EA Sports games will be promoted across ESPN's TV and radio outlets. The pact could also open the door for extending ESPN's relationships with other advertisers to EA Sports games at a time when in-game product placements and integrated advertising deals are expanding in the video game realm.

On the video game front, Gibeau said that EA Sports already uses some ESPN talent, including John Madden, Brad Nessler, Kirk Herbstreit and Lee Corso, and that this new relationship will allow further integration of ESPN talent into EA Sports games. While Madden is signed up with EA through the upcoming 2005-2006 season, this deal could give EA long-term access to the commentator, and open the door for future NFL football games without the Madden name.

"With the next generation of consoles from Sony and Microsoft launching soon and the broadband offerings they'll provide, we'll be able to utilize ESPN news and information in new ways in EA Sports games," said Gibeau.

He mentioned several possibilities, including live news feeds via broadband of ESPN news and game scores so that gamers playing "Madden" could be kept up-to-date while playing a game online. Beyond sports information, broadband functionality could be employed to ensure that when a gamer plays "NBA Live" on a particular night, the video game teams rosters match the rosters that are playing on ESPN that night.

"Looking ahead, this is a 15-year deal, and there will be new technologies entering the market place that will allow us to further integrate sports programming and sports video games," Gibeau.

Beyond the in-game and cross-promotional opportunities of this deal, by signing an exclusive long-term deal with ESPN, EA Sports is stealing away the key component of rival sports game publisher Take-Two Interactive/Sega. Sega had previously worked with ESPN on sports games. Since EA locked up the NFL for five years in a deal announced last month, Take-Two/Sega have not specified any sports plans for this year, beyond the "ESPN MLB 2K5," which ships March 15.

Take-Two/Sega can continue to release ESPN Video games through 2005. But beginning in 2006, Take-Two/Sega will be left with no NFL license and no ESPN license for any future football games. It was the EA deal with the NFL that opened up the long-term deal with ESPN.

EA Sports is not expected to use the ESPN brand to change the name of any of its existing sports franchises, a strategy used by Take-Two/Sega and by ESPN's previous video game partner, Konami. EA has spent the past decade building sports brands like "NBA Live" and "Tiger Woods PGA Tour" and those franchises remain strong with consumers.

While sports video games account for approximately 25% of total video game sales annually, sports games accounted for about one-third of EA's $3.2 billion annual revenues last fiscal year.