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Economist Claims EA Overcharged Madden Consumers By Up To 66 Percent

In a monopoly case surrounding Electronic Arts' exclusive NFL deal for the Madden games, an economist alleges that without competition, EA overcharged consumers by as much as 66 percent.
Electronic Arts is embroiled in a class-action suit that alleges its exclusive licensing deal with the NFL for Madden games squeezes competitors -- most notably Take-Two's NFL 2K series -- out of the running. Now, documents unearthed by website GamePolitics reveal estimates from University of Michigan economist Dr. Jeffrey MacKie-Mason, brought in as an expert witness, of how much EA may have profited from the alleged lack of competition. MacKie-Mason's estimates were used to support the allegation that EA, having cornered the football video game, was able to overcharge for Madden -- to the tune of $701 million to $926 million between August 2005 and 2009, or an overcharge rate of 50 to 66 percent. As part of his court statement, MacKie-Mason noted that when Take-Two "was able to compete unhindered," the price for a Madden NFL title ranged $19.95 to $29.95, reflecting price cuts from the initial $49.95 price cuts apparently in response to the launch of 2K's title alongside Madden in 2005. "I assume for this exercise that these would have been Madden's prices but for the alleged [monopolistic] acts," said the economist, pointing out that Madden 2006 released at $49.95 with subsequent iterations priced at $59.95. The economist said he modeled his statistics based on the assumption that game prices naturally decline after launch, but apparently makes little concession to the natural trend toward higher average introductory price points for all video games in general in the current console cycle. The Madden series saw a $10 price hike once it hit Xbox 360 and PlayStation 3, along with nearly every other game from major publishers on those systems. Versions of those Madden years for older consoles, as well as the current Wii, maintained their lower price points. MacKie-Mason called his calculations "a reliable benchmark in a but-for world." The plaintiffs' lawyers have asked for additional data from EA going back to 2001. According to GamePolitics' report, EA is cooperating to the best of its ability with the data provision -- but says the economist's example is "fundamentally flawed on multiple levels." "Indeed, Dr. MacKie-Mason's estimated magnitude of damages is nothing more than pure fiction -- it has no basis in fact or law," said EA in its court statements.

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