by Adam Benjamin | September 27, 2013 10:59 am
In a widely expected move, Electronic Arts (EA) announced yesterday that it was canceling plans for a college football video game in 2014, and had decided to reevaluate the future of its college football franchise.
Back in July, Kyle Woodley wrote that this year’s NCAA Football 14 would likely be the last title to carry the NCAA moniker, thanks to legal disputes over the use of player likenesses.
Well, now it looks like NCAA Football 14 might be the EA’s last college football game, full-stop.
EA will be missing out on an easy revenue boost for the summer months — NCAA Football 14 was the top-selling game when it was released in July. Games like NCAA don’t require radical innovation between installments the way that, say, the Final Fantasy games do. The setting, the premise and basic mechanics are the same year-to-year. EA updates a mechanic or two, sure, but most of the framework is already there — it’s just a matter of updating the details.
Electronic Arts obviously is big enough to absorb that hit, even if it never publishes another college football game again. Brean Capital LLC analyst Todd Mitchell “estimated NCAA Football accounts for only about 5 percent of EA Sports’ revenue, or about $125 million,” according to Sports Illustrated.
Meanwhile, Madden 25 still sold a million copies in its first week, despite being at the end of a console generation, and that number should jump considerably when the PS4 and Xbox One are released next month. Plus, it’s likely that some NCAA sales will pour over into future Madden titles, as consumers look to get some sort of football fix.
Also, it’s worth noting that sales of FIFA 14 — more of a worldwide phenomenon — are expected to triple Madden’s numbers.
So while the death of the NCAA franchise certainly isn’t a good thing for Electronic Arts, it’s far from catastrophic. With EA shares down just fractionally this morning, it appears investors initially agree.
Adam Benjamin is an Assistant Editor of InvestorPlace. As of this writing, he did not hold a position in any of the aforementioned securities.
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