Pachter: Economist's Claims in Madden Monopoly Case Irresponsible
Pachter: Economist's Claims in Madden Monopoly Case Irresponsible
July 15, 2009
Yesterday's GamePolitics report detailing a University of Michigan economist's estimate that EA's exclusive NFL deal cost Madden buyers as much as $926 million raised a number of eyebrows, including those attached to the forehead of Michael Pachter (left).
In an e-mail exchange with GamePolitics, the Wedbush-Morgan analyst scoffed at the monopoly theory offered by Dr. Jeffrey MacKie-Mason in a filing last week with the U.S. District Court in San Francisco. MacKie-Mason was hired as an expert witness for the plaintiffs in a class-action suit filed in 2008 by a pair of gamers who allege that EA exploited its exclusive NFL deal to jack up the price of its popular Madden series.
Here's what Pachter had to say:
What kind of fool is this U of Michigan economics professor? ...Madden (according to NPD) sold 23 million units in 2006 - 2009, not the 30 million that Dr. MacKie-Mason claims... The total retail sales were $1.034 billion, meaning that EA's cut was around $800 million (retail margin is 20%). How in the world does [MacKie-Mason] conclude that EA overcharged by more than they generated?
For the four year period, EA's average retail price was $44. For the period 1995 - 2005 (when either Sega or Take-Two provided [NFL 2K series] competition), EA generated $1.548 billion of sales on 36 million units, for an average price of $43. In other words, WITH competition, the price was $43, and WITHOUT competition, the price was $44.18...
I rarely read anything that gets me so incensed... They may have some odd estimates I'm not aware of, but based on what you printed, they should be embarrassed. You can quote me.
Here's more: Take-Two discounted [NFL 2K5] to $19.99 to gain market share, and lost their butts in the process. It's the same as a dollar menu at McDonald's that is a loss leader in order to gain share, and McDonald's hopes people buy the high-margin soft drink. There is no "right" among consumers to receive a perpetual discount just because one retailer decides to discount below cost...
It strikes me as irresponsible that the professor would focus on the NFL exclusive as if there is some god-given right for consumers to have all intellectual property available for exploitation by any business that chooses to do so in the name of competition...
The ONLY I/P that has ever been licensed to multiple video game parties is team sports. The NFL, Major League Baseball, FIFA, and NCAA Basketball have all chosen to go the exclusive route for games, similar to the contracts for all movie-based games.
GP: As GamePolitics reported yesterday, MacKie-Mason acknowledges that his analysis is based on incomplete data. In a response filing, attorneys for EA (who were similarly contemptuous of MacKie-Mason's theory) agreed to furnish available documentation dating back to 2001.
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Posted 11/07/09 at 04:27pm
ZippyDSMlee: man I got alot of junk and dup files too >< god I need orginization...and no not the knee capping media mafia kind :P
ZippyDSMlee: man I got alot of junk and dup files too >< god I need orginization...and no not the knee capping media mafia kind :P
Posted 11/07/09 at 04:26pm
ZippyDSMlee: replaced :P
ZippyDSMlee: replaced :P
Posted 11/07/09 at 04:23pm
ZippyDSMlee: beemoh:hey its like 60GB porn,400GB anime 100GB games and crap I have took from all my DVDs, I hate waiting on dvds to install stuff..... oh and 40GB of my porn was in the found.000 folder...mostly corrupted.... least I got names of wut needs to be repa
ZippyDSMlee: beemoh:hey its like 60GB porn,400GB anime 100GB games and crap I have took from all my DVDs, I hate waiting on dvds to install stuff..... oh and 40GB of my porn was in the found.000 folder...mostly corrupted.... least I got names of wut needs to be repa
Posted 11/07/09 at 04:18pm
beemoh: @Zip: ...and you'd have to spend all that time re-downloading that porn?
beemoh: @Zip: ...and you'd have to spend all that time re-downloading that porn?
Posted 11/07/09 at 03:34pm
ZippyDSMlee: ggrrrrr......vista lost one of my hard drives and I had a heart attack thinking I lost 1TB of data....
ZippyDSMlee: ggrrrrr......vista lost one of my hard drives and I had a heart attack thinking I lost 1TB of data....
Posted 11/07/09 at 10:58am
JDKJ: Which could be explained by both (a) and (b).
JDKJ: Which could be explained by both (a) and (b).
Posted 11/07/09 at 10:56am
Austin_Lewis: JDKJ: You forgot C) the fact that, for some reason, every time he did something that would suggest he shouldn't be in the military, let alone an officer, higher ups ignored it or let it slide.
Austin_Lewis: JDKJ: You forgot C) the fact that, for some reason, every time he did something that would suggest he shouldn't be in the military, let alone an officer, higher ups ignored it or let it slide.
Posted 11/07/09 at 10:51am
JDKJ: Part of the problem is, I believe, that (a) the Army had a lot of time and money already invested in him and which they were unwilling to simply write-off and (b) an increasing need for the type of skills and services he provided.
JDKJ: Part of the problem is, I believe, that (a) the Army had a lot of time and money already invested in him and which they were unwilling to simply write-off and (b) an increasing need for the type of skills and services he provided.
Posted 11/07/09 at 10:48am
JDKJ: And that even if he was begging not to get cut loose, he was apparently a real good candidate for being cut loose, anyway.
JDKJ: And that even if he was begging not to get cut loose, he was apparently a real good candidate for being cut loose, anyway.
Posted 11/07/09 at 10:11am
JDKJ: @chada: And while Kennedy once noted that there's usually more than enough blame for everyone to get a slice, the possibility that the Army was unwilling to cut loose someone who was asking to get cut loose could be a factor.
JDKJ: @chada: And while Kennedy once noted that there's usually more than enough blame for everyone to get a slice, the possibility that the Army was unwilling to cut loose someone who was asking to get cut loose could be a factor.
Posted 11/07/09 at 10:07am
ZippyDSMlee: *noms on his feet*..nomnomnomnom*droooll* ...wuuutttttt uuu looking at?
ZippyDSMlee: *noms on his feet*..nomnomnomnom*droooll* ...wuuutttttt uuu looking at?
Posted 11/07/09 at 10:05am
JDKJ: I'm no psychologist, but I'm told that crazy people have a tendency to do crazy things.
JDKJ: I'm no psychologist, but I'm told that crazy people have a tendency to do crazy things.
Posted 11/07/09 at 10:03am
chadachada321: Whoops, was out of the convo for awhile. I do wonder what type of ammo he used etc, but the real issue is WHY he did it, not HOW
chadachada321: Whoops, was out of the convo for awhile. I do wonder what type of ammo he used etc, but the real issue is WHY he did it, not HOW
Posted 11/07/09 at 09:56am
JDKJ: But if it turns out that they actually did, they'll have Hell to pay.
JDKJ: But if it turns out that they actually did, they'll have Hell to pay.
Posted 11/07/09 at 09:45am
JDKJ: And I'd tend to rule out the possibilty of FN Herstal supplying restricted ammunition to someone merely because they're ordering it from a military base.
JDKJ: And I'd tend to rule out the possibilty of FN Herstal supplying restricted ammunition to someone merely because they're ordering it from a military base.
Posted 11/07/09 at 09:37am
JDKJ: I know you don't leave your gated community and get around much in dark alleys, so you may be surprised to learn that there's this thing called "the black market" where, if you've got enough money, ain't too much of anything which can't be bought.
JDKJ: I know you don't leave your gated community and get around much in dark alleys, so you may be surprised to learn that there's this thing called "the black market" where, if you've got enough money, ain't too much of anything which can't be bought.
Posted 11/07/09 at 09:36am
Austin_Lewis: Or, maybe he or someone else at the base ordered the SS190 from FN Herstal.
Austin_Lewis: Or, maybe he or someone else at the base ordered the SS190 from FN Herstal.
Posted 11/07/09 at 09:32am
Austin_Lewis: the hands of private owners. They run about 300 dollars minimum for a box of 50, and boxes of AP 5.7 are extremely scarce, mainly residing in the hands of Class III stores or individuals who for one reason or another got a demo box of it.
Austin_Lewis: the hands of private owners. They run about 300 dollars minimum for a box of 50, and boxes of AP 5.7 are extremely scarce, mainly residing in the hands of Class III stores or individuals who for one reason or another got a demo box of it.
Posted 11/07/09 at 09:30am
Austin_Lewis: There are other firearms that fire the 5.7. However, I too would like to know where he got the ammo and what kind was used. Maybe Hasan, planning not to live through this, went out and bought one the boxes of SS190 that are floating around in
Austin_Lewis: There are other firearms that fire the 5.7. However, I too would like to know where he got the ammo and what kind was used. Maybe Hasan, planning not to live through this, went out and bought one the boxes of SS190 that are floating around in
Posted 11/07/09 at 08:44am
JDKJ: And it isn't yet clear what type of ammunition Hasan used. It's strange that he purchased a gun but didn't purchase ammunition for it at the same place and time. Especially because the calibre required is peculiar to the actual gun.
JDKJ: And it isn't yet clear what type of ammunition Hasan used. It's strange that he purchased a gun but didn't purchase ammunition for it at the same place and time. Especially because the calibre required is peculiar to the actual gun.
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Comments
Sounds like the plainiff just lost their case, by the admission of their own expert witness.
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Freedom of speech means the freedom to say ANYTHING, so long as it is the truth. This does not exclude anything that might hurt someone's feelings.
Did patcher really just try to compare licencing the names, numbers, and colors of sports to the licensing of IPs from a movie franchise (which is rarely exclusive beyond a single title anyways...)? Combine that with the fact that movie games are considered to be the bottom of the barrel in shovelware compared to the high production values of Sports simulation games, and the analogy is completely lost.
Not to mention that the single NFL license is created as the result of a joint-selling arrangement, read lawful cartel, between separate teams.
This is not the same as a creator selling the exclusive right to exploit a single IP. This is all the creators in a whole market selling all the rights across the market as a single exclusive bundle. Joint selling in most industries is simply not allowed.
Some big European sports leagues have had their joint selling perk removed because of the damaging effects on competition downstream in the market.
I'm not sure I understand what you're saying here. That individual NFL teams should have the right to license their teams out individually?
I think the movie example is a great one. It's all under the umbrella of the organization (NFL). It would be like if the Transformers were licensed out for games one by one (one for Optimus Prime, one for Bumblebee, etc).
Damaging effects of competition. In what way? Why should a rights-holder have to agree to non-exclusive licenses? It's their right as the rights-holder.
Actually, I'd consider sports bottom of shovelware barrel next to movies. At least even movies has a decent one every now and then. Football's football, and no matter how much you shine a piece of crap, it still stinks.
Kinda mixed on this one. I do believe a monopoly by EA is unconscionable, but if gamers got ripped off, it's their fault for buying it in the first place.
I notice a lot of people are dismissing movie based video games as "shovelware" as if that has any relevance to the issue at hand. This article is about the monetary effect such licenses have on the general public. Move based IP's are highly sought after by developers because even if the quality is not quite up to snuff they still sell very well. This is especially true about children's games since parents feel very safe buying a game for their kid after having seen the movie the game was based on.
Moving on from that, this article brings up another good point: It is not our "right" as gamers to have games be discounted to some arbitrary price point at some arbitrary time we decide. If we as consumers want something to change, then the only "right" we have is to respond with our wallets (as Vake Xeacons said above me). This doesn't mean bitching because there is no other licensed NFL game you can buy, it means not buying Madden. The only reason games get discounted in the first place is because a large enough number of people do exercise their right to wait to buy a game until it reaches $30 instead of buying it at the launch price of $60.
It is on the other hand the "right" of the publisher to push for an exclusive license and the "right" of the license holder to agree to an exclusive license for a compensation they deem appropriate. This is a "monopoly" only in an intellectual sense, not a legal sense. Complaining that the NFL has licensed its game exclusively to EA is the same thing as complaining that Warner Brothers is the only company that can use the Mortal Kombat characters (following their purchase of the Midway license). Intellectual Properties are owned and controlled by their creator and therefore have the right to be sold or licensed for whatever the IP holder deems appropriate.
And finally as stated in the article, the grand total price difference was a whopping $1.18 per game. Even for price conscientious gamers that's pocket change. So in closing, if you are really worried about that extra $1.18 you feel you are entitled to, then exercise your right as a gamer and don't buy the next Madden. Otherwise, stop wasting forum space by complaining how it's not fair.
I believe the courts have ruled time and again that sport leagues can, and do operate as a single entity and not just a cartel of seperate teams.
"You know what I wish? I wish all the scum of the Earth had one throat and I had my hands about it."
I think clarification of that principle is why the NFL recently asked the U.S. Supreme Court to take up a lawsuit it had actually won regarding officially licensed sportswear.
So they raised the price a buck?
Bye Bye lawsuit.
For once the guy makes a decent argument.
http://www.magicinkgaming.com/
All I have to say is: Finally, someone who actually understands economics.