NEW YORK (CNN/Money) - Are video games a threat or an opportunity for traditional team sports? The answer is both. If you have any doubt, just watch NBA TV.
When the league-sponsored satellite and cable network was looking for a new look, it turned to Electronic Arts, the clear leader in sports-based video games, to do the design.
"We're going after the same demographic, 18 to 34 year old males," explained Greg Lassen, senior director of interactive and electronic licensing for the National Basketball Association. "In the past video games wanted to look like TV. Now TV wants to look like video games."
The truth is sport leagues have generally become a slow or negative growth industry. Their executives look at explosive growth in sports-related video games and just drool. NPD Group reports that sports video game revenues were up 34 percent last year. And then there's the licensing fees game manufacturers pay the leagues ... fees that Lassen said has doubled for his sport in last five years.
Of course you've got to wonder if sports leagues are sleeping with the enemy embracing video games. Youth participation in sports is declining, as is overall viewership of sports on cable and television by the targeted group. Sports rights fees, the mother's milk of sports profits, could be the next to show decline.
The leagues that receive licensing fees from the video game manufacturers don't want to point the finger at those partners. They instead argue the games can spur participation and viewership in the games.
"I think they translate the desire from one medium (video games) to the games on Sunday," said Gene Goldberg, vice president of consumer products for the National Football League. "In the case of the younger kids, we look to (video) games to provide introduction to the action, the players and the stadiums."
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| Is it live or a video game? NBA TV turned to Electronic Arts to give its graphics a video game feel. |
But those that depend on youth playing sports see the video games as a severe and direct threat.
"The overall electronic entertainment industry is a big competitor to the sports industry," said Mike May, spokesman for the Sporting Goods Manufacturers Association. "If it's not video games, it's a DVD or television or the Internet. We're just filled with things that amuse us and consume lots of time."
And May argues that while both playing either a sports-related video game and or the real-life sport itself build interest in the sport, real-life participation is far more effective at creating a long-term fan.
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"The experience of playing a sport will live with someone their entire life," said May. "The video game is a fleeting moment that grabbing a rebound or diving for a ball or throwing a ball is not."
The bad news for the sports leagues is despite strong growth, the fastest growing video games are not the sports-theme titles -- those games are grabbing a smaller and smaller percentage of the overall video game pie. Sports video games fell to 19.5 percent of the video game market last year, according to NPD Group, down from 24.5 percent in 2000. Meanwhile action video games climbed to 25.1 percent of the market from 20.1 percent.
Even if you argue that football or basketball video games can spur interest in those sports, it's tough to see how the non-sport video games do anything but hurt.
Erik Whiteford, director of EA's sports brands, attributes the fall in sports' title total share to the fact that the game platforms, like PlayStation2 or the X-Box, are relatively mature, and that the sports titles grab a bigger share off the bat when the new platforms come out.
"Madden NFL 2004 is slated to come in as the No. 1 title for the year or at least the top five," he said. "You can be a sports title and sell well."
But even with Madden's video game success, the league's royalties for the 7 million-plus licensed video games that sold in the 12 months ending in August pale in comparison to the $550 million ABC pays the league to have John Madden call the games on "Monday Night Football." The financial health of the league will depend much more on keeping broadcasters' ratings and rights fees up than video game's sales high.
The leagues may not have a choice but to try to embrace the video games. But the video games' popularity isn't a long-term win for the sports themselves.
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