Five Publishers Split NBA Deal

autojive writes "According to a Reuters story, 'The National Basketball Association on Tuesday signed long-term video game licensing deals with five publishers, bucking the recent trend of sports leagues making exclusive arrangements with a single company. Electronic Arts Inc., Take-Two Interactive Software Inc., Midway Games Inc., Sony Corp. and Atari Inc., all current NBA partners, signed new deals with the league.' I guess not playing favorites can get you deals worth a reported 500 million dollars total while hopefully keeping most players and publishers happy."

Comments

Game Prices going down?

[kniLnamiJ-neB]

I wonder how (long term) this will affect the story from a week or so ago where games were going to be more expensive... surely the game companies can give us po' boys a break since they're not forking over all the dough on contracts like this?

Re:Game Prices going down?

[Golgafrinchan]

According to economic theory, the price game companies charge for their games are independent of the costs. Once they've paid these costs, all the companies want to do is maximize revenue.

If they aren't constrained (i.e., they aren't forced to charge at least $X per game), they'll charge whatever price they think maximizes their revenue. That could be $19.95 (as in Sega's series) or $49.95 (as in EA's series before last year).

In other words, I don't think this deal will affect the price consumers would have paid without such a deal.

Re:Game Prices going down?

[cgenman]

You have to remember that publishers aren't the greatest at economic theory, even if it is their field. No offense to a lot of the great publishers I've worked with in the past, and I have worked with some good people, but some of them used to be toothbrush salesmen. They're not likely to see a price drop as advantageous if they just spent 100 million in licensing. The whole concept of sunk costs isn't as prevalent as it should be, and the natural instinct is to raise prices when you've invested more... in this case probably a lot more than they should have. You need to recover your cost, so you raise prices, sales curve be damned.

If this doesn't effect consumer price, it will more than likely effect quality. At 400 million dollars for 6 years at 6 companies, that's 11 million dollars per game. If these games already had 20 million dollar budgets (and here's a hint: they didn't), that leaves 9 million to actually develop them.