Friday January 18, 2019

Take-Two Interactive to Pay NBA up to $1.1 Billion in Licensing Fees

Take-Two Interactive Software Inc has agreed to pay the NBA licensing fees that could cost $1.1 billion over seven years according to the Wall Street Journal. This is the cost that video game licensing incurs in today's market. The deal will allow 2K Studio, a subsidiary of Take-Two Interactive Inc, to continue to create NBA branded games including smartphone apps. The 20 year old NBA 2K franchise has sold 86 million units worldwide and sales of the most recent iteration of the game, NBA 2K18 reached 10 million units worldwide.

Game publishers traditionally pay licensing fees to the major sports leagues ranging from 10% to 15% of a game's revenue, analysts say. Take-Two, which also makes the Grand Theft Auto and Red Dead Redemption series, doesn't disclose revenue for individual games. But based on analysts' estimates for the NBA 2K series, it appears the company is paying a licensing fee at the top end of that spectrum or higher.