EA to settle NFL lawsuit? [Updated]

UPDATE: This post had initially conjectured that the lawsuit Electronic Arts Inc. had set aside $27 million for a potential settlement was one involving former National Football League players who sued the company for allegedly using their likenesses in its Madden NFL video games without their permission. Among the plaintiffs of that lawsuit are Vince Ferragamo, former quarterback for the Los Angeles Rams (pictured above). That lawsuit is not part of the settlement, the Times has learned.

Electronic Arts Inc. on Monday disclosed that it had set aside $27 million for a "potential settlement of an ongoing" lawsuit. 

EA declined to identify the suit, stating that it had no final settlement to announce.

The most likely case involves a class-action lawsuit filed in 2008 alleging that EA had stifled its competitors when it signed licensing deals with the NFL and the National Collegiate Athletic Assn. for the exclusive rights to use the likenesses of the groups' football players.

The case filed in federal court by Geoffrey Pecover and Jeffrey Lawrence, two consumers who purchased EA's Madden NFL games, accused EA of freezing out other game companies from making a viable football game when it won the exclusive right to use NFL and NCAA players in its games. They argued that EA violated antitrust regulatons by raising the price of Madden games by 72% in 2005, the year after it signed the exclusive licenses. The case was granted class-action status in December 2010.

The Redwood City, Calif., game publisher denied the allegations in a statement filed in the U.S. District Court of Northern California, saying it did nothing to violate antitrust laws by pursuing exclusive licenses with the football organizations.

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-- Alex Pham

Photo: Vince Ferragamo, No. 15, former quarterback for the Los Angeles Rams, gets ready to throw during the 1980 Super Bowl game. Credit: Associated Press and Los Angeles Times.

The force isn't with EA as it announces fourth quarter earnings

A drop in the number of subscribers for Star Wars: The Old Republic triggered a 10% slide in shares of Electronic Arts Inc. Monday, overshadowing news of a better-than-expected fourth quarter for the Bay Area game publisher. 

EA, which in February said it had 1.7 million active subscribers to The Old Republic, on Monday reported that the figure fell to 1.3 million at the end of April. Though the term "active subscribers" doesn't translate exactly to paying subscribers, it is a good gauge for how many people have bought the title and are actively playing the online game.

The Old Republic, whose development and marketing budget tipped well over $150 million, is the most expensive title ever produced by EA, and is certainly among the costliest games of all time to make. EA had projected that the game would "approach break-even" on an operating basis at 1 million paying subscribers.

Shares in EA plummeted nearly 10%, or $1.49, to $13.64, immediately after the company released its fourth-quarter report. It had gained a penny to close at $15.13 prior to the announcement.

For its fourth fiscal quarter, EA posted $400 million in net income, or $1.20 a share, on $1.37 billion in revenue. A year earlier, it recorded $151 million in profit, or 45 cents a share, from $1.1 billion in sales.

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-- Alex Pham

Photo: Screen shot of Star Wars: The Old Republic. Credit: Bioware and Electronic Arts Inc.

Games publisher King.com topples EA, Wooga on Facebook, for now

On Facebook, the competition for attention among game publishers from the social network's 800 million-plus users is as fast-paced and fierce as any hard-core shooter.

Tuesday's victor (of sorts) is King.com, the small British publisher of Bubble Witch Saga and other arcade titles, which toppled Wooga as the No. 2 game publisher on Facebook, according to AppData.com, a site that tracks traffic on Facebook.

Although King.com was founded eight years ago, it is a relative newcomer to Facebook, publishing its first game, Bubble Saga, on the social network a year ago. It continues to operate more than 150 games on its own site.

Now King.com has 11 games on Facebook that together racked up nearly 10 million daily players as of mid-afternoon Tuesday, with Bubble Witch Saga accounting for about two-thirds of that traffic. By comparison, No. 3-ranked Wooga garnered 9.9 million daily players, while Electronic Arts Inc. came in fourth place at 9.1 million. All three are still leagues away from Zynga Inc., which clocked 65.3 million daily players. 

Since launching Bubble Witch Saga in September, King.com has seen a 143% increase in players who check in at least once a month and a 312% increase in players who log in daily, according to AppData.com.

Why the sudden popularity?

"King.com's games are easy to learn, difficult to master," said A.J. Glasser, managing editor of Inside Network, research group focused on Facebook social games. In addition, its games aren't overly aggressive in urging players to spend money on virtual "potions" that help them advance faster in the games, she said.

King.com should relish its popularity, because it may not last, Glasser warned: "It'll take more than that to widen its daily lead on Wooga and EA."

In fact, when traffic from the last 30 days are taken into account, King.com is No. 4 with 39.1 million monthly players, behind Zynga's 285.9 million, EA's 46.1 million and Wooga's 44.8 million. It was just seven months ago when EA's Sims Social game toppled Zynga's FarmVille as the second most popular game on Facebook. On Tuesday, Sims Social was No. 26 on the charts.

When it comes to making money, though, King.com is an old hand. The company has been profitable since 2005, according to co-founder and Chief Executive Riccardo Zacconi (right). It's so profitable that it hasn't bothered to touch a cent of the $46 million in venture financing it has raised over the years and is preparing for a possible initial public offering in the U.S. next year, Zacconi said.

Much of King.com's revenue comes from its main site, where it hosts more than 2.5 billion game sessions a month. Its audience, 70% of whom are women, range between 35 and 45 years old.

Aside from the usual mix of advertising and virtual goods sales, King.com also generates revenue from hosting competitive, skill-based tournaments on its main site (it does not offer tournaments on Facebook).

Here's how it works. Four players each pay a 50-cent entry fee to compete for a $1.50 cash prize. (Online competitions based purely on skill are perfectly legal; only when the element of chance enters the equation do things get legally dicey.) The house, however, wins every time, with King.com collecting 50 cents from each game.

In an environment in which developers brazenly release nearly identical games, how can King.com avoid being squashed by rivals with more resources or being outdone by nimbler start-ups?

"You can't avoid that, really," Zacconi said. "But you can try to be faster, more focused."

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Image: courtesy of King.com.



Judge denies EA plea to dismiss NFL players' lawsuit

A federal judge Friday denied a motion from Electronic Arts Inc. to dismiss a lawsuit filed by former National Football League players alleging that the video game company misappropriated their likenesses in its Madden NFL titles.

The ruling, by Judge Richard Seeborg of the U.S. District Court for the Northern District of California, means that the case will proceed with its quest to obtain class-action status in representing more than 6,000 former NFL players. 

The named plaintiffs include Tony Davis, former running back for the Tampa Bay Buccaneers; Vince Ferragamo, former quarterback for the Los Angeles Rams (pictured above); and Billy Joe DuPree, former tight end for the Dallas Cowboys.

Davis and others allege that EA, based in Redwood City, Calif., used their likenesses in Madden games without compensating them. EA in the past has argued that it has the right to do so under the 1st Amendment.

An EA spokesman said the company "respectfully disagrees" with the ruling and is "confident we will prevail." 

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-- Alex Pham

Photo:  Vince Ferragamo, No. 15, former quarterback for the Los Angeles Rams, gets ready to throw during the 1980 Super Bowl game. Credit: Associated Press and Los Angeles Times

Electronic Arts to bring SimCity back in 2013

Move over, CityVille. SimCity is coming back to town. 

The game franchise that first defined the city-building genre in 1989 will be re-released next year as a multi-player online computer game, developed by Maxis and published by Electronic Arts Inc. 

This time, however, SimCity has an environmental theme, a la “An Inconvenient Truth," the 2006 documentary about Al Gore's campaign to educate the public about global warming. In SimCity, a fetish for coal burning plants in one city can spread smog and sickness in adjacent cities run by other players, for example.  

This could prompt players to ask, “What would Al Gore do?” But because it’s a game, Maxis developers know players often prefer to be mischievous. Every toddler who builds towers of wooden blocks knows it’s more fun to knock them down, Godzilla-style.

And so it will be with SimCity. 

“For the first time in SimCity, players’ decisions will have consequences that will extend beyond their city limits,” said Lucy Bradshaw, senior vice president of Maxis. “It’s up to the players to decide whether to compete or collaborate to shape the world of tomorrow -- for better or for worse.”

To announce the title, Electronic Arts tapped documentary filmmaker Davis Guggenheim for a fireside chat at its news conference Monday night at the Game Developers Conference in San Francisco. Guggenheim, who directed "An Inconvenient Truth" and "Waiting for Superman," professed a love of the SimCity franchise as a player.

Guggenheim said documentaries, as with games, are still entertainment -- not a high school science lecture.

Bradshaw, who heads up the Maxis studio in Emeryville, Calif., concurred, promising plenty of fun when the game comes out sometime in 2013.

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Credit: Courtesy of Maxis / Electronic Arts

Star Wars: The Old Republic snags 1.7 million subscribers

Star Wars: The Old Republic, an ambitious and costly online game, has sold 2 million copies since the title launched in mid-December and amassed 1.7 million "active subscribers," according to the game's publisher, Electronic Arts Inc.

The subscriber figure includes players who are still within their 30-day free trial period and haven't yet started to pay the $15-a-month subscription fee but have entered their credit card information and authorized EA to begin charging them when their trial period ends. 

The early performance suggests that the game, which cost an estimated $200 million to make and took more than five years to develop, is at least off to a healthy start, said Michael Pachter, an analyst with Wedbush Securities.

"The numbers are very good," said Pachter, who estimates that at least 1.2 million of the active subscribers have already started to pay the monthly fees.

EA has said that the game approaches break-even with just 500,000 paying subscribers, but only to cover its ongoing costs to operate the game, not nearly enough to earn back what the company invested to create the game.

The title will begin to be meaningfully profitable above 1 million subscribers EA said. At 2 million paying customers, analyst Doug Creutz at Cowen & Co. predicted, EA could make $156 million a year in operating profit.

It will be at least several months, however, before investors will know for sure whether EA's big bet on Star Wars will pay off. That's because a portion of the "active subscribers" haven't yet hit the point where they must pay to continue playing the game online.

In addition, EA is relying on Star Wars: The Old Republic to captivate players for years to come, not just a few months. Its biggest rival, Activision Blizzard Inc.'s World of Warcraft, has operated for more than seven years, peaking in October 2010 with 12 million active subscribers.

However, even Warcraft - -the dominant subscription-based online game -- is beginning to wane in popularity, with the number of subscribers dipping to 10.3 million last October. That creates an opportunity for The Old Republic to scoop up players who are tired of Warcraft, as well as pick up players who are drawn to the Star Wars universe.

In the short term, strong sales of The Old Republic, which retails for about $60 a copy, helped boost EA's December quarter results. The Redwood City, Calif., company posted $1.1 billion in revenue its third quarter ended Dec. 31, roughly flat with a year ago. Net loss narrowed to $205 million, or 62 cents a share, down from a $322-million loss, or 97 cents a share, a year ago.

The flat revenue and losses disguise EA's actual sales because the company has chosen to delay the revenue of games that can be played online over a six-month period. As a result, much of EA's profits from the holiday quarter typically won't hit the company's bottom line until the March and June quarters.

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Star Wars The Old Republic: The story behind the galactic gamble

-- Alex Pham

Screenshot of Star Wars: The Old Republic courtesy of BioWare / Electronic Arts.

 

 

 

Star Wars: The Old Republic -- the costliest game of all time?

With a price tag approaching $200 million, Star Wars: The Old Republic is likely to be the most expensive game of all time to produce -- and a colossal gamble for the game's publisher, Electronic Arts Inc.

BioWare, the EA studio responsible for the online game, had spent close to six years on the title, hiring hundreds of programmers, writers and artists, as well as a legion of contract workers. The hope is that The Old Republic will attract millions of players, each willing to spend $60 to buy the game and $15 or so a month to play out their fantasies of being Jedi knights or Sith warriors.

But creating an online universe that can satisfy the demands of both hard-core "Star Wars" fans and players of multiplayer online role-playing games is an epic undertaking, as our story in the Times describes.   

"It's the single largest bet of J.R.'s career," said P.J. McNealy, a game analyst with Digital World Research in Boston,  referring to EA's chief executive, John Riccitiello, who plunked down $860 million in 2007 to buy BioWare and Pandemic, a Los Angeles game studio that EA shut down in 2009.

Zynga snatches Barry Cottle from Electronic Arts

There is a hunting game being waged in the Bay Area gaming community, and Zynga Inc. is racking up quite a score.

The San Francisco game company on Thursday announced it has hired Barry Cottle as executive vice president of business and corporate development. Cottle, 50, had headed up Electronic Arts Inc.'s rapidly growing mobile and social games business, where he spearheaded a number of major acquisitions, including PopCap Games, Firemint and Chillingo. Prior to joining EA, Cottle was chief operating officer of Palm Computing Inc. and worked as a senior vice president of marketing at the Walt Disney Co.

Cottle is the latest in a series of senior EA executives to have joined Zynga. Other big EA names now at Zynga include John Schappert, former EA chief operating officer, who currently holds the same title at Zynga. Cottle will report to Schappert, just as he did when both were at EA.

Zynga's president of games, Steven Chiang, was previously head of EA's sports game development studio in Florida. Mark Skaggs, Zynga's senior vice president and the developer behind FarmVille and CityVille, had been a game producer at EA. Bing Gordon, a Zynga board member, was once EA's chief creative officer.

Zynga's announcement came as EA announced its own management shuffle. The Redwood City, Calif., game publisher dissolved its EA Interactive division, once led by Cottle, according to an internal company memo from EA Chief Executive John Riccitiello. The division had focused on games served up digitally, either as mobile downloads or as social games on Facebook. Instead, those efforts will be absorbed into existing divisions, including EA Sports, EA Games, BioWare and Maxis.

The reorganization "reflects our new reality: everyone and everything is digital," wrote Riccitiello, who noted that EA racked up $1 billion in sales in 2011 from downloads, subscriptions and sales of virtual goods — in other words, everything except games served up on discs and cartridges.

When asked about Zynga's raids on the company's stable of executives and developers, EA spokesman Jeff Brown said, "We’re flattered by the recognition of EA's bench, but doesn’t Zynga have any confidence in their own bench strength?"

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— Alex Pham

https://twitter.com/alexpham

Image: Getty Images

Star Wars: The Old Republic sells more than 1 million copies

The Force, it seems, was with Electronic Arts Inc. this week when the company launched its most ambitious game ever, Star Wars: The Old Republic.

The Redwood City, Calif., game publisher said Friday that more than 1 million players have bought the game and jumped online to play since its release to a small group of customers Dec. 13 and to the wider public last Tuesday. Each player spent an average of five hours a day playing the game, according to EA.

So many players piled into the online game that the company's computers at times became overloaded, with people complaining about long waits to be able to play. The game's Twitter feed has been a stream of apologies to players who had technical problems or delays.

But people still logged 28 million hours in total playing time in the last 10 days, exploring the far, far away galaxy and creating avatars, including Sith lords and Jedi knights. (Sith lords, in case you're curious, are slightly more popular among players, outnumbering their goody-two-shoes counterparts 550,000 to 510,000.)

Although the early signs are good, EA knows that if its colossal investment in the game is to pay off, it needs to keep longer-term goals in focus. Buyers have spent $60 to $140 for each copy of the game, but they have 30 days of free online access before they must decide whether it's worth the $15 monthly subscription fee to continue playing.

In other words, no one playing Star Wars has yet sprung for the monthly subscription that makes this type of game -- dubbed massively multiplayer online games, or MMOs -- massively profitable.

In addition, EA has been deliberately throttling the number of copies of the game it sells, gradually doling out more to retailers, in order to minimize an onslaught on its computer servers that could cause more epic technical problems.

It could be months before the game's performance can be adequately measured.

Still, EA said in a statement that it managed to pull off "the fastest-growing subscription MMO in the history of our industry."

To which we offer the same advice Luke Skywalker and his fellow Y-Wing pilots received as they sought to blow up the Death Star: Stay on target.

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Photo: Screen shot of Star Wars: The Old Republic. Credit: Electronic Arts / BioWare

Rumble game start-up scores $15 million in funding

Rumble, a newly formed online gaming company with a roster of industry veterans, has shaken $15 million in funding from two of Silicon Valley's bigger money trees -- Google Ventures and Khosla Ventures.

What Google and Khosla seem to be betting on is not Rumble's games; the company hasn't published any. Instead, they're putting their money on Rumble's business strategy and its high-wattage management team.

First, the strategy: Rumble aims to become a publisher for the next generation of online games -- titles that are easy to jump into, have high-quality graphics and are free to play, but supported by sales of virtual goods or enhanced game features. Although the Redwood City, Calif., company will develop some of its own titles, its primary goal is to help independent publishers bring their games to market.

That's been a good recipe for Chillingo and Ngmoco, two companies that publish mobile games and were sold a year ago for generous sums. Ngmoco, known for the games Godfinger and We Rule, went to Japanese social networking company DeNA for $400 million in October 2010. That same month, Chillingo, which publishes Angry Birds and Cut the Rope, was snapped up by Electronic Arts Inc. for just under $20 million.

Second, the management team: Greg Richardson, Rumble's chief executive, was head of BioWare/Pandemic, a game development studio that was sold to EA for $860 million in 2007. John Yoo, Rumble's design director, worked on a long list of online games, including CityVille, World of Warcraft, City of Heroes and Star Trek Online. Rumble's general manager of games, Mark Spenner, hails from EA, where he was vice president of social games. And Rumble co-founder David O'Connor was EA's chief technology officer.

The proof in Rumble's pudding will presumably reveal itself next year, when it plans to release its first title, an online game targeted at men 18 to 35. Richardson declined to reveal further details of the game.

"In the entertainment industry, quality is the only business plan that matters in the long run," Richardson said. "That embodies who we are."

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Photo: Greg Richardson is chief executive and co-founder of Rumble. Credit: Rumble.