Electronic Arts (
recently announced that it is canceling its 2015 college football
game. The game developer cited uncertainty about the future of
the franchise due to the ongoing legal dispute between the
National Collegiate Athletic Association (NCAA) and student
The dispute between NCAA and students started when the latter
asked for a share of NCAA revenues for the use of their images
and likenesses. Student athletes also sued NCAA's business
partner EA for illegally using their likenesses in its popular
video game. Reportedly, EA and student athletes have entered into
a settlement agreement, which is subject to court approval.
Traditionally, EA develops a NCAA-branded game each year and
NCAA Football 14
in Jul 2013. The practice is more or less similar to the games
made under other popular banners such as the National Football
League and FIFA.
EA's move suggests the growing risk faced by game developers
in trying to profit from the likeness of the student athletes
with that of video game characters. We believe that the
NCAA Football 2015
will have significant effect on EA's top-line over the long
However, EA has a strong product pipeline that includes the
. Moreover, the recently released
are also doing well. We believe that the strong revenue
contribution from these games will offset the loss of
in the near term.
We believe that traditional gaming companies, such as EA and
have substantial growth opportunities due to the upcoming launch
of new consoles by
) and strong spending expected in the holiday season.
However, EA continues to hold a competitive edge due to strong
digital distribution and leadership position in free-to-play
Currently, EA has a Zacks Rank #3 (Hold).
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