EBM Assignment: Final Draft EA Sports Madden Franchise Joshua McKenzie 02/08/2020 Carol Wonsavage, Entertainment Business Models Why I chose this Company/Franchise It was a simple choice for me to select the Madden franchise. I have played every Madden game since its first release on Playstation in 1997. I am also an avid football fan, more specifically the NFL. Another reason for my choice is the interest I have to join the gaming industry. I want to gain much-needed knowledge on how the studios and the industry operate. One day I want to become the head of a studio or start a development studio of my own. Background Information The parent company and publisher of the Madden franchise are EA (Electronic Arts) based out of Redwood City, California. The Madden franchise is one of the flagship sports games in the console/mobile market for EA. EA is a developer and publisher of a multitude of gaming genres which include Madden, Battlefield, and Star Wars: Jedi Fallen Order. Madden, along with other sports titles, is developed by Florida based studio EA Tiburon. Since 1988, the Madden franchise has sold upwards of 130 million units. In 2019 alone, Madden 20 managed to earn over 762 dollars in just one month. The estimated valuation of the franchise is believed to be around $4 billion. Other product lines developed by EA Tiburon include FIFA, NHL Hockey, and NBA Live. The first Madden video game released in 1988 for MS-Dos and apple computers. The first copy of Madden to feature licensed NFL teams was released in 1993. In 2005, EA purchased the exclusive rights to NFL games. Since then, EA and Madden have been on top of the NFL gaming hill. Customer Segments: § Males 18-35: The main target group for the Madden franchise are American males between the ages of 18 to 35 that watch the football. From data gathered by Global Web Index, 65% of adult males would consider themselves NFL fans. (Global Web Index, 2015). The age group with the highest average of gaming related purchases is the 18-24 range. (Pairitz Morris, 2018). The rate of gaming related purchases by consumers is consistent across all age groups and income levels. The average gamer spends an estimated $216 per year on video games. (Game Shift, n.d.) § NFL and Nike: As the exclusive producer of NFL licensed video games, EA provides brand awareness for the NFL. Nearly all players, coaches, stadiums, and NFL related product are included into the games. Advertising for new Madden releases also provide additional marketing and reach for the NFL and exclusive partners. Nike is the primary provider of NFL gear and equipment shown throughout the game. Value Proposition: § Exclusive Rights: In 2005 the NFL sold the exclusive rights to the league along with the NFL Players Association to EA. (Good, 2013). This agreement gave EA sole access to all NFL team names, uniforms, and logos. It also allowed EA to use all players associated with the teams and NFLPA. (Good, 2013). No other developer or publisher can use any likeness of players, coaches, uniforms, or logos. § Ratings Adjusters: What makes Madden different is the use of ratings adjusters. These adjusters observe and scout all players to determine attribute ratings for the game. At the beginning of training camp through to the final games, ratings adjusters tweak player stats accordingly. § Ultimate Team: The Madden Ultimate Team is a unique in-game system that is an interactive card trading side game. Gamers can play and earn new cards with special attributes and then use those players to create their own teams. § Roleplaying: Fans of the NFL can play several roles within the league from superstar to team owner. These different game modes allow fans to live out their own professional football dreams. Channels of Distribution: § Retail Stores: Disc copies of the yearly released Madden games can be purchased in most major retailers and specialty stores. There are now online retailers that offer purchase of disc versions of the games as well. Madden NFL has averaged 2 million copies sold each week from retail stores and online. (Smith, 2020) § Console Marketplaces: Both Playstation and Xbox offer digital download versions of the Madden games for the same price as the disc version. § EA Store: All games produced and published by EA are offered on their own digital Store. Madden NFL is no exception to this, even the previous year’s game is offered for purchase. § Mobile Stores: With the increasing popularity of smart devices, Madden NFL can now be downloaded from mobile stores. While these are not the same as the console and PC versions, they are still part of the Madden Franchise. Madden NFL has received nearly 73 million downloads. (Smith, 2020). Customer Relations: § Online Communities: EA offers several online communities for gamers and developers to interact. Each has specific experiences for everyone to be included in discussions and ask questions. § Social Media: The Madden franchise has a strong social media presence. EA and Madden have established a Facebook page along with an Instagram and Twitter account. This is another avenue for fans and developers to connect and discuss Madden topics. § Championship Series: EA has created a tournament series for the more series players. These tournaments bring together some of the best players regionally, nationally, and worldwide to compete. § Community Outreach Programs: In an effort to give back, EA has organized several community outreach programs. These programs range from child education programs to charity work and also include donations to other charitable organizations. Key Activities: § Programming: This is one of single most important activities that the studio has. Programmers are one of the highest paid members of the studio at an average of $108,065. (PayScal, n.d.). They are responsible creating the code that runs and controls the physics of the game. Reprogramming and editing the games code enhances how the game will operate and improve the consumer experience. § Game Design: While each variation of Madden NFL builds on the previous year’s game, game design is still important. The game design team each year will reassess the game and determine what features remain or removed. They also find and use new technology to add more realism or improved player models. (Kogod, 2014). § Sponsor Partnerships: This is also a very important part of what makes Madden NFL a successful video game. Building these sponsorship relations has allowed EA to operate the Madden NFL 20 Club Championship. (Noah, 2019). This is a tournament with multiple locations where players compete against each other. Key Resources § NFL License: To ensure that EA can continue producing games with the NFL logos and player likenesses, EA must maintain a licensing agreement. Without this deal EA would have to use generic team names, logos, player models, and player names for all future titles. (Good, 2013). § Development Equipment: In order to develop Madden NFL games, equipment is a must have. Computers are the first things that come to mind, but game engines, coding software, and art design software. (Campana, 2019). § Tournaments: One important element of EAs resources are the use of Madden NFL tournaments. These tournaments allow for millions of people to tune in and watch players compete one another. (Press, 2018). This promotes the game and it also generates revenue from viewers. The current tournament began August 30th in Arlington Texas and was last in Redwood City California for qualifying. (EA, n.d.). § Staff: Without the staff at a studio nothing gets made and there will be no new game. Everyone from the head of the studio to the game testers are important to the entire game development process. Top tier talent is a must have to produce the best possible game, this is especially true when it’s a yearly release. Key Partners § NFL & NFLPA: In order for EA to use the NFL teams and logos along with stadiums and player likenesses, EA must partner with the NFL and NFLPA. Currently EA has an exclusive deal with both the NFL and NFLPA that makes them the sole gaming studio allowed to produce NFL games. (Good, 2013). § Snickers and Pizza Hut: The Madden NFL tournaments have become a big part of the studio and gaming franchise. Snickers and Pizza Hut have stepped up to become major sponsors for tournaments events after the release of Madden 20. (BusinessWire.com, 2019). The qualifier tournament in Arlington Texas was sponsored by Starbucks. (EA.com, n.d.). § John Madden: Since the 1980’s, John Madden has been associated with Madden NFL. His name has been on the cover of every copy of Madden NFL since the early 1990’s. He has even appeared on the cover of the game as well. (Gallagher, 2019). Cost Structure § Staff Cost: A highly talented game development staff is not cheap. There are many departments that contribute to each and every game. Most positions in a game studio have salaries that range from $46,000 to 108,000. (PayScale, n.d.). When you consider that there are multiple positions that work within EA Tiburon the salary costs alone become high. § Madden License Fee: EA must pay a fee to John Madden for the use of his name for the game. John Madden earns roughly $2 million dollars a year from EA to use his name. (Gaudiosi, 2013). § NFL & NFLPA License Fee: For the exclusive rights to produce NFL and NFLPA licensed games, EA has paid $50 million dollars. (Gaudiosi, 2013). While this is a limited time exclusivity agreement, it is highly likely it will be renewed going forward. § Software & Equipment Costs: The software used to create video games can vary it cost and complexity.