Entertainment

NCAA Legal Controversy Leads to a Slow Summer for Video Games


NCAA Football 14

Courtesy EA Sports

NCAA Football 14

It’s getting to be that time of year when it feels like football weather outside, but something is missing. For the first time in two decades, video gamers are suffering through a summer devoid of a new college football video game from Electronic Arts (EA). At this point, the nonexistence of an “NCAA Football 2015” game has been the most tangible result of lawsuits filed by former college athletes challenging their status as unpaid participants in the NCAA sports empire.

When measured against the potential impact of the litigation, the lack of a single video game is relatively minor. A judge’s recent ruling in Ed O’Bannon’s lawsuit could set us on the road to the destruction of the myth of amateur collegiate athletics, for better or worse. But that’s the future. The impact on video games is happening now. According to research firm NPD, industrywide revenue from new video game software was down 15 percent in July, to $178 million, compared with a year earlier. Sales of newly launched games were down almost 70 percent, which was almost entirely the result of the lack of a new version of NCAA Football, according to NPD.

Video games have always been at the center of the NCAA amateurism controversy. O’Bannon, who played basketball at UCLA, filed his suit after seeing a digital version of himself in a game and noticing that he wasn’t receiving any royalty checks. Still, the only money players have seen so far has come from gaming. Electronic Arts reached a $40 million settlement with players last fall in a related lawsuit, while also saying it would cancel its college football game. The NCAA later agreed to pay $20 million to some athletes who appeared in those games.

Electronic Arts began making college football games in 1993 but didn’t use the actual names of players and teams. It later signed licensing deals with the NCAA. For years, EA has technically violated those deals by including the likenesses of specific players, but it’s done so with the implicit approval of the association, according to the judge’s decision. The NCAA then let the licensing deal expire altogether and began arguing that there’s no such thing as a market for licensing players’ likenesses in video games. This wasn’t overly convincing, given that an EA executive testified that the company was interested in paying for those rights in the future.

Could new agreements be reached if the current decision sticks? Yep. In professional sports leagues, EA negotiates deals with the leagues to use its logos and team names, and another with the players’ unions to use their names and likenesses. (Let’s just set aside the intellectual-property controversy concerning video games and athletes’ tattoos for now.) For college athletes, Judge Claudia Wilken suggests that the NCAA could negotiate contracts with gaming companies and agree to hold some portion of the proceeds to be split among players who appear in the games, paying them “limited and equal shares” of licensing revenue. The players could receive this money after they graduated, and the NCAA could cap each athlete’s total compensation.

Michael Hausfeld, O’Bannon’s lawyer, says players would likely support a new deal between EA and the NCAA, so long as it acknowledged athletes’ right to get paid. He says the decision gives the athletes the right to negotiate the terms of that deal, but that it’s unclear whether the NCAA or EA would be across the table in those talks.

In other words, don’t hold your breath. As it stands, the future of EA’s college sports games remains very much in question. There could be appeals from one or both sides of the suit, creating legal uncertainty that is bound to discourage dealmaking.

“My sense is they’ll be cautious for a while, but we’ll see,” says Michael McCann, director of the Sports and Entertainment Law Institute at the University of New Hampshire. “They may perceive there’s strong market demand for this kind of video game and move forward.”

EA isn’t exactly oozing urgency at this point. The company said last summer that it could make a version of the game without direct involvement of the NCAA but gave that up after several athletic conferences decided not to cooperate. In July, EA told investors that it expects the new version of the Sims to replace any revenue it loses from NCAA College Football. And the new version of Madden NFL comes out in less than two weeks.

Brustein is a writer for Businessweek.com in New York.

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