Electronic Arts Cuts Sports-Game Prices

Engaged in a cutthroat pricing battle in the sports video-game arena, Electronic Arts (ERTS Quote) plans to cut prices on some of its key titles.

Beginning Tuesday, the company will reduce the suggested retail price of its Madden NFL 2005 football, NBA Live 2005 basketball and NHL 2005 hockey games to about $30 each. EA also plans to cut the suggested retail price of its NCAA Football 2005 game to about $40.

Currently, EA offers NBA Live for about $40 and the other titles for about $50.

The price reductions mark the company's latest response in its battle for market share with Take-Two Interactive(TTWO Quote) and Sega, which joined earlier this year to co-publish the ESPN line of sports games. The two companies are offering the ESPN titles, which include NFL football, NBA basketball and NHL hockey titles, for about $20 each.

The ESPN titles had drawn critical praise in the past, but until this year had never been able to make much of a dent in EA's dominance in the sports-game segment. But the price cut -- premium titles generally sell for about $40 to $50 each -- has helped boost sales of the ESPN offerings. Take-Two and Sega already have sold more than a million copies of ESPN NFL 2K5, for instance, whereas all of EA's rivals combined sold far less than that a year.

Despite the price competition, EA's sports games have generally done well. According to the company, Madden has sold 4 million copies this year, while its NBA and NCAA games have sold more than 2 million copies each. Still, Take-Two and Sega have carved out a chunk of EA's market share by finding new markets for the ESPN titles.

Although EA has trumpeted its sales, the company has clearly focused on this competitive threat. Its initial price for this year's version of NBA Live was $10 less than last year's price. And in September, the company initiated a "buy two, get one free" promotion with its sports titles.

The latest price cut comes during what's expected to be a disappointing quarter for EA. The company is not expected to have a top-tier hit this holiday season and has projected flat sales and earnings in the quarter compared with the same period last year.

EA's announcement came after the bell on Monday. In after-hours trading, the company's shares fell 81 cents, or 1.7%, to $46.59. Earlier in the day, they closed regular trading off 48.4 cents, or 1%, to $47.40.