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NEW YORK (CNN/Money) – Television's leading sports network and the leading maker of sports video games have signed a long-term deal that could signal the end of an era.
ESPN and Electronic Arts today announced a 15-year partnership, giving EA access to ESPN's broadcast, print and online content - as well as its stable of personalities - for all of its sports titles. The integration of the two brands will begin in 2006.
What that will mean for EA's long-standing Madden franchise remains unknown. Madden is under contract with the game publisher through this year, but has not signed beyond that. EA said negotiations are continuing.
"John Madden is under contract for the 2005-2006 season and we'll see where it goes from there," said Larry Probst, CEO of Electronic Arts. "But let's not forget that Madden is a part of the ESPN family with Monday Night Football. ... It's possible we'll continue working with John longer term."
While the marketing relationship will likely be most visible in upcoming football games, ESPN assets will appear in all of EA's sports lines, including baseball, basketball, boxing, golf and racing. The two companies are also planning to create new games based on ESPN content, such as the network's popular X-Games.
"Nothing finalized," said John Skipper, executive vice president for ESPN/Disney. "It's natural we'd think about things such as the X-games. We certainly play a lot of poker on our air, so we're thinking about that. We're also thinking about bass. We have the rights to the bass license."
(Probst, by the way, wasn't quite as excited as Skipper about a bass fishing game, so don't get your virtual rod and reel out yet.)
The deal is the latest in a series of sports coups for EA. In December, the company clinched an exclusive licensing deal with the NFL and NFL Players Association. Under the terms of that deal, no other publisher can develop or publish a video game (for any system) featuring NFL teams, players, stadiums or footage for the next five years. Last week, the company struck a similar deal with the Arena Football League.
ESPN, ironically, was EA's chief competitor in the football space (by far the most popular – and profitable – sports video games). The company had previously teamed with Sega, Take Two Interactive and developer Visual Concepts to create its own brand. Spurred by bargain pricing, "ESPN NFL 2K5" proved to be a formidable threat, cutting into EA's sales and attracting a wide audience.
With EA securing the NFL rights, though, the network said an alignment made sense. While the two companies have talked off and on about a partnership several times in the past, the heart of this deal was done after EA won the NFL rights.
"We were very happy with our relations with Sega," said Skipper. "However, if you think about who you want to be working with for the long term ... EA is the natural choice for us to be associated with."
Sports games make up roughly one-third of EA's annual revenues (which were $3.2 billion last fiscal year). While Probst would not say whether additional deals were in the works, he did say "anything we can do to solidify and make [our sports franchises] stronger, we're open to those strategic alternatives."
EA and John Madden have teamed up for football video games for the past 15 years and have become almost pseudonymous. However, speculation about whether EA would maintain the current relationship began soon after it announced the NFL deal. With the league license secured, the publisher may be reexamining ways to lower its development costs.
Despite the strength of the ESPN brand, EA (Research) does not plan to use the network's name in its game titles as it has with Madden. Should the company's relationship with Madden change, the games will likely be branded simply "EA Sports Football".
The loss of ESPN is a significant blow to Take Two (Research), which had been hoping to diversify its product line with sports games. While its relationship with Sega and Visual Concepts still stands, the companies no longer have a well-known hook with which to attract customers.
The companies have not announced specific plans for the sports market since the EA-NFL announcement, but Probst said he thinks it's unwise to assume EA will not have competition in some form.
"I think there's plenty of room for competition," said Probst. "At the end of the day its who can build the highest quality products. There's plenty of room for other third party companies - and console first-party companies - to do that. Just because EA Sports and ESPN are partnering I don't think people are going to run for the hills and not compete with us."
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