Electronic Arts Lands an NFL Exclusive

Updated from 5:39 p.m. EDT

Electronic Arts (ERTS Quote) announced exclusive licensing deals with the National Football League and its players after the bell Monday, dealing a setback to rival game publisher Take-Two Interactive (TTWO Quote).

In after-hours trading, EA shares were recently up $3.09, or 5.4%, to $60.66; Take-Two shares were off $2.38, or 6.7%, to $33.04.

Under terms of the five-year deals, EA will have the exclusive right to create video games using NFL stadiums, teams and players' likenesses. The license extends to PC, console and handheld games.

"I think it's a real big deal," said Norm Conley, a portfolio manager for JAG Advisors and a contributor to TheStreet.com's sister site, RealMoney.com. "The NFL is America's sport. It's the crown jewel for anybody that's able to lock [that license] up." (Conley is long shares of EA, but has no position in Take-Two.)

The deals postdate what has been one of the most competitive seasons the sports-game space has seen in years, as Take-Two has cut into EA's market dominance by selling its critically acclaimed ESPN titles at cut-rate prices.

Although Take-Two has produced hockey, college and professional basketball games that compete with those by EA, its NFL football title has been its best-selling sports game.

The increased competition has forced EA to cut its own prices, hurting its bottom line. Because Take-Two is offering the ESPN games at discount prices, the games haven't done much for the company's own bottom line. But some analysts were already expecting the games to start adding to Take-Two's earnings next year.

The agreements with the NFL and its players had more to do with what the league and the players were looking for than did competition from Take-Two, said EA spokeswoman Trudy Muller. Earlier this year, the NFL asked for proposals from various video game publishers for its licensing rights.