NFL, Take-Two Are Betting Gamers Want More Football - The Wall Street Journal

Take-Two’s new deal would build its portfolio of sports games, which already includes the NBA 2K and WWE franchises.

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By

Sarah E. Needleman

Sarah E. Needleman
The Wall Street Journal
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March 10, 2020 11:20 am ET

After a more than 15-year hiatus from making football games, Take-Two Interactive Software Inc. has reached a new agreement with the National Football League to produce multiple videogames.

But instead of competing directly with rival Electronic Arts Inc. and its Madden NFL franchise, Take-Two’s 2K studio said Tuesday its new deal allows it to create games that use league imagery and team names without replicating action from a typical NFL game. An example might be a three-on-three matchup set in a schoolyard only with NFL marks and logos, according to a person familiar with the matter.

Industry analysts say Take-Two’s renewed interest in football and the NFL’s willingness to engage with other game publishers shows that EA may face competition when its current deal with the league ends in March 2022.

Take-Two’s NFL projects are early in development, the company said, and the first game under the new partnership could launch next year. Financial terms weren’t disclosed.

“At this time, all we can confirm is that we’re working on non-simulation football videogames that are authentic, fun, accessible and social, and we’ll have more to share at a later date,” said a Take-Two spokesman.

Shares of Take-Two gained about 1.8% in Tuesday trading, while EA shares traded down 3%.

Take-Two’s new deal would build its portfolio of sports games, which already includes the NBA 2K and WWE franchises. The company has partnerships with the National Basketball Association and World Wrestling Entertainment enabling them to simulate actual NBA and WWE competitions for those series, respectively.

The 2K studio produced the NFL 2K franchise of games released between 1999 and 2004. The year after the series came to an end, the NFL and NFLPA signed an exclusive deal with EA for simulation games. That deal has since been renewed several times and it next expires in March 2022.

“Expanding the NFL’s presence in the world of gaming has become a focus for the league as we look to grow the next generation of our fan base and reviving our partnership with 2K was a natural step in that effort,” said Joe Ruggiero, senior vice president of consumer products at the NFL.

Take-Two’s new games are also expected to have players’ names and numbers though that will require a separate deal with the NFL Players Association, according to a person familiar with the matter. A Take-Two spokesman declined to comment on whether such negotiations were under way.

Electronic Arts’ exclusive deal with the NFL and NFLPA is set to expire in March 2022.

Photo: Gerald Herbert/Associated Press

EA said in 2018 it had sold more than 130 million units under the Madden NFL series world-wide since the 1980s. Madden NFL is typically one of the top-selling console videogames in the U.S. each year.

In a statement Tuesday, EA said its “commitment to NFL fans, which spans almost 30 years, has never been stronger” and that “Madden NFL 20 is the most successful game ever in the franchise.”

Wedbush Securities analyst Michael Pachter estimates that EA pays about $50 million annually to each the NFL and the NFLPA for the rights to make Madden NFL. An EA spokesman declined to comment, adding that the company doesn’t disclose such terms.

While the NFL has an exclusive deal to make simulation games, other leagues have taken a different approach. Major League Baseball and the National Basketball Association have nonexclusive deals with multiple videogame developers for games that simulate their respective sports.

“Take-Two encroaching further onto EA’s sports golden goose is a risk for investors to watch out for,” said Stephens analyst Jeff Cohen in a note to investors.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

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