EA Sports
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Here’s what you need to know today…
ELECTRONIC ARTS OPENS REGISTRATION TO MADDEN NFL CLUB CHAMPIONSHIP; WINNERS TO REPRESENT FAVORITE TEAM AT SUPER BOWL
Electronic Arts (EA) has introduced the Madden NFL Club Championship, a new esports football competition that will enable players to compete on behalf of their favorite team. Through live and online elimination events, winners will qualify to represent each of the 32 NFL franchises in the finals during Super Bowl week in Minneapolis. EA is actively seeking corporate sponsors and broadcast TV partners for the event, while the NFL is funding the competition’s $400,000 prize pool. Registration is now open.
Howie Long-Short: EA stock is up 500% over the last 5 years, but it has nothing to do with the success of the Madden or FIFA franchises. The transition from the physical sale of game discs to digital distribution has sent gross margins from 61.4% in 2012 to an expected 72.1% in 2017.
Fan Marino: The big innovation in Madden ’18 is “longshot” story mode, which places a college QB into a reality show with the end goal of making the NFL. The trailer looks intriguing enough to get me to buy the game for the 25th year in a row.
NEW APPLE WATCH TO WORK WITHOUT PHONE, SUPPORT WIDE RANGE OF WORKOUTS; FITBIT ROLLS OUT SMARTWATCH
Rumors indicate that Apple Inc.’s (AAPL) next Apple Watch will include its own cellular modem chip. Benchmark analysts believe that providing the smartwatch with the ability to connect directly to cellular networks, without the use of a smartphone, is the key to consumer adoption and that the change could push the smartwatch market to reach 100 million units sold by 2021 (up from 30 million this year). The new Apple Watch will run on watchOS 4 (scheduled to be released in September), and support workouts ranging from common fitness activities to sailing and fishing. While AAPL is the current smartwatch leader with an estimated 50% market share, FitBit (FIT), the leader in the less capable fitness tracker space, has just introduced its newest fitness watch, the Ionic.
Howie Long-Short: So FIT launched their first smartwatch using hardware and software built in-house, right after APPL announced it is introducing a cellular version of its Apple Watch. FIT execs must feel like they are walking in quicksand…which would seem like a good workout.
Fan Marino: While the Ionic can’t beat the new Apple Watch from a technology standpoint, FIT is doing what it can to ensure the watch competes from a marketing one. The company has announced it is teaming with Adidas to provide a branded version of the Ionic in 2018.
NIELSEN’S OUT-OF-HOME REPORTING SERVICE PICKING UP STEAM; ABC THE LATEST NETWORK TO SUBSCRIBE
ABC is the latest television network to subscribe to Nielsen’s (NLSN) out-of-home reporting service. As cord cutting increases, networks are looking to bars, restaurants and gyms (among many other places) for an audience lift. The incremental boost derived from out-of-home viewership helps networks during the media buying process, as it gives them more precise audience guarantees. ESPN (DIS), Fox Sports (FOXA), CNN and Turner (TWX) are already subscribers to the service and have seen a spike in viewership, with news programming and live sports the biggest beneficiaries.
Howie Long-Short: Early reports from NLSN shows that OOH figures could potentially increase total viewership numbers by as much as 20% for news and sports. So all those stories about the end of TV as we know it; yeah, they were all based on incomplete data.
Fan Marino: NLSN is just figuring out they should count bars & restaurants in their viewership numbers? Is it safe to assume execs haven’t left their house on a fall Sunday in 30 years?
TWITTER TO LIVE STREAM ALL 10 NASCAR CUP SERIES RACES USING IN-CAR CAMERAS
Twitter (TWTR) has announced a deal with NASCAR that will enable the online news and social networking service to live stream in-car race video of its 10 cup series races to its 300 million+ users. On the same screen, the micro blogging application will also show curated tweets reflecting the ongoing discussion about each race. While terms of the deal have not been released, TWTR has announced that Toyota (TM) will sponsor the race video content. NASCAR’s first live stream on TWTR will take place on September 17th.
Howie Long-Short: Twitter increased their live video viewership by 22% in Q2, so it’s no surprise they continue to add high-quality content providers. But what does this do for revenues & profits? Despite all the video content added, advertising revenues are down 8% YOY and the company has no user growth.
Fan Marino: This is where TWTR shines. Sports fanatics can sit on their couch, watch the event and feel like they are surrounded by millions of their closest friends.
GLOBE LIFE INSURANCE TO MAINTAIN NAMING RIGHTS ON NEW TEXAS RANGERS BALLPARK
The Texas Rangers have signed a naming rights deal with Globe Life Insurance, a subsidiary of Torchmark Corporate (TMK), for their new retractable-roof ballpark opening in 2020. The 25-year contract valued at $11 million annually, becomes the second largest naming-rights agreement in MLB (Citi Field) and will replace the existing 10 year $50 million agreement that was signed for the current stadium in 2014. Branding on the retractable roof and its location adjacent to an entertainment district that includes a new hotel and amphitheater, are among the reasons for the escalating value of the sponsorship.
Howie Long-Short: Most MLB naming rights deals fall between $1-$7 million/year. While the Mets get an absurd $21 million/year from Citibank, the Astros earn just $7.4 million/year from Minute Maid, as #2 on the list. The Rangers did not hold talks with any other potential partners. Why did Globe Life negotiate it themselves?
Fan Marino: The city of Arlington agreed to pay $500 million towards the new stadium with the expectation that the team plays in the ballpark through the 2052 season. Anyone taking bets they don’t play 30+ seasons in the new ballpark?
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