Electronic Arts Inc. agreed to settle a lawsuit by student athletes over use of their images in video games, and canceled its college football title for next year, saying the accord doesn’t resolve all legal issues.
The second-largest U.S. video-game publisher is evaluating “the future of the franchise” after the National Collegiate Athletic Association and some regional athletic conferences withdrew their support for the game, the Redwood City, California-based company said today in a statement.
A settlement between Electronic Arts and former players in the NCAA announced today doesn’t resolve litigation between the college association and ex-players, according to the company. Some regional conferences have declined to be part of the game, complicating Electronic Arts’ ability to publish a title.
“The ongoing legal issues, combined with increased questions surrounding schools and conferences have left us in a difficult position, one that challenges our ability to deliver an authentic sports experience,” said Cam Weber, general manager of American football for the company’s EA Sports unit.
Terms of the proposed settlement are confidential until they are filed in court, said Michael Lehmann, an attorney for the plaintiffs.
The agreement must be approved by the presiding judge, Lehmann said. The accord resolves claims against Electronic Arts and Collegiate Licensing Co., and doesn’t affect those against the NCAA, according to a court filing today.
Former NCAA basketball player Ed O’Bannon sued the group and its licensing company almost four years ago, alleging in a complaint that they blocked him and other former athletes from being paid for their likenesses after they left college. The case was combined with a lawsuit by former NCAA athlete Sam Keller, who sued both the NCAA and Electronic Arts.
Stacey Osburn, an NCAA spokeswoman, said the organization would have no comment on the decision to cancel the game by Electronic Arts.
Electronic Arts was little changed in extended trading after the announcement. The stock fell 1.7 percent to $26.15 at the close in New York and has have risen 80 percent this year.
Former college players and the NCAA are at odds over association regulations that ban student athletes from receiving any form of compensation other than education for their participation in college sports, even if their likenesses are used after they graduate.
Electronic Arts’ current college football game, “NCAA Football 14,” went on sale in July. The NCAA announced that same month it wouldn’t renew a contract expiring in 2014 with the video-game manufacturer, and Electronic Arts said the series probably would continue under a different name and without NCAA logos and symbols.
John Reseburg, a company spokesman, declined to comment beyond the settlement.
Electronic Arts this month named EA Sports head Andrew Wilson to replace John Riccitiello as chief executive officer. Wilson won credit for growing sales in the core sports unit.
Electronic Arts is in the middle of a transition from a maker of console games sold mostly at retail stores to one that plans to generate the bulk of its revenue from digital downloads within the next five years. Online sales in its fiscal first quarter rose 17 percent to $378 million.
The case is Keller v. Electronic Arts Inc., 09-01967, U.S. District Court, Northern District of California (Oakland).
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