Byline: Cynthia L. Webb

Electronic Arts may have scored a knockout punch in the competitive video game arena with news that it is entering a 15-year deal with ESPN to incorporate the sports network's brand, content and personalities into its line of sports video games.

The ESPN deal comes a month after EA struck an exclusive five-year partnership with the National Football League and weeks after it acquired a nearly 20 percent stake in French game maker UbiSoft Entertainment .

According to the San Jose Mercury News, the alliance "cements" EA's "dominance of sports video games and raises fears among rivals that EA is becoming a virtual monopoly in virtual sports." CNET's News.com offered up a telling analogy: "A huge software maker uses its dominant market position and mammoth cash reserves to lock out some competitors and buy up others. Sound familiar? Except this time it's not Microsoft or Oracle that's sparking the charges. It's a company whose specialties include James Bond games and 'The Sims.' Electronic Arts, the world's leading publisher of video games, has riled the industry in recent months with a series of unusually aggressive business moves that could hamper rivals and close off competition in some areas of the computer game industry." * The San Jose Mercury News: Sports Powerhouse EA Wins ESPN Logo Rights (Registration required) * CNET's News.com: Electronic Arts Plays Hardball

The agreement , which won't go into effect until 2006 when ESPN ends its existing video game licensing arrangement, gives the Redwood City, Calif.-based company exclusive access to ESPN programming and personalities for its gaming consoles and handheld, PC and wireless games. The deal covers a number of sports, including Nascar and football, the Wall Street Journal noted. * The Wall Street Journal: Electronic Arts Reaches ESPN Deal (Subscription required)

Former Champion Reclaims the Title

The ESPN partnership comes as EA hopes "to shore up its eroding dominance in the sports video game market," the New York Times said, estimating that the company will shell out some $850 million for the exclusive rights to use the ESPN brand and content in its games and for commercials on the network. EA was mum on the cost of the deal; the Times pegged the deal's value at between $750 million to $850 million, while today's Wall Street Journal said EA would pay "a minimum of $850 million in cash and advertising commitments over the 15-year course of the pact."

"Beyond the deal's length, which is substantial by industry standards, it comes at a significant juncture in the video game business. In the last year, Electronic Arts' long-dominant position selling sports games has come under assault amid heavy price competition. The challenge came from Take-Two Interactive Software , which teamed up with Sega to sell sports titles at cut-rate prices, forcing Electronic Arts to lower its prices as much as 50 percent. The games from Take-Two and Sega were built around the ESPN brand name. But when the three-year relationship between ESPN and Sega ends in 2006, the rights to the use the sports network's brands will go to Electronic Arts," The New York Times said. More on this them from the Journal: "Analysts said the new deal with ESPN is a blow to Take-Two, which is trying to diversify beyond its hit Grand Theft Auto line of games. 'Certainly this is in no way-shape-or-form good news for Take-Two,' said P.J. McNealy , an analyst at American Technology Research . 'This is EA showing its brute strength.'" * The New York Times: Electronic Arts and ESPN Sign 15-Year Deal TO Sell Games (Registration required)

The Journal gave more details of the deal with Walt Disney-owned ESPN: " Larry Probst , Electronic Arts' chief executive officer, said the agreement calls for the game publisher to use ESPN sportscasters and other assets within sports games, though he said he expected that Electronic Arts will continue to publish titles that use popular sports personalities, such as commentator John Madden and golfer Tiger Woods . Sports is a key category in the game business, accounting for more than $1 billion, or 18%, of $5.8 billion in total U.S. console game sales for 2003. Sports games represent more than a quarter of Electronic Arts' revenue." More from Reuters: "EA games will not necessarily be branded with the ESPN name, [Probst] said, although they will potentially include ESPN data, graphics and sportscasters . Executives at Bristol, Conn.-based ESPN said they had a good relationship with Sega and Take-Two but felt the time was right to move on to a larger partner." * Reuters via the Los Angeles Times: Electronic Arts, ESPN In Deal (Registration required)

The Mercury News pointed out what ESPN gains from the deal: "Just as EA dominates sports games with more than half the market for titles such as 'Madden NFL 2005,' ESPN dominates sports TV with seven networks covering a wide range of sports. An EA spokesman said the company hopes the ESPN deal will attract more non-gamer sports fans to EA video games." EA's NFL deal from last month might have helped sweeten the pot: " John Skipper , executive vice president at ESPN, said EA's NFL deal wasn't behind ESPN's decision to end its partnership with Sega in favor of EA. However, he did say, 'we're happy to be in partnership with the company that has the NFL rights,'" the New York Post reported. * The New York Post: Electronic Arts Reaches 15-Year Deal With ESPN

EA's competitors are already showing a sour-grapes attitude: "Representatives for EA rivals Midway Games and Take-Two Interactive said their games will focus on quality game play, rather than licensed content," the Mercury News said. "Midway, for instance, will include events and stories in its 'Blitz: Playmakers' games that the NFL wouldn't allow, such as the consequences of players being busted for substance abuse. Steve Allison , chief marketing officer at Midway in Chicago, said in a statement that EA runs the risk of running up its costs 'just to secure a deal and shut out a competitor.'"

Expect hard feelings to intensify as EA continues to eye more deals. " Wedbush Morgan Securities analyst [Michael] Pachter expects EA to continue to make aggressive moves to expand, possibly into the burgeoning Asian market for online games, where EA has minimal presence now. The company is also in the midst of a bid to take over Swedish development studio Digital Illusions , which has worked on EA-published games such as the 'Battlefield 1942' series. Pachter expects EA to continue working on acquisitions and other business maneuvers to ensure the company remains No. 1 with the next generation of game machines," CNET reported.

A Worm in Bad Taste

Criminals just couldn't pass up the opportunity to cash in on a massive disaster. A "plea for aid to help the victims of last month's Asian tsunami disaster is actually a vehicle for spreading a computer virus, Web security firm Sophos said Monday. The worm appears with the subject line: 'Tsunami donation! Please help!' and invites recipients to open an attachment called "tsunami.exe" -- which, if opened, will forward the virus to other Internet users," Reuters reported. The worm is not widespread, Reuters noted. However, it's still a reminder to keep your virus-protection up-to-date on your PC and to avoid opening e-mails from unknown senders. * Reuters: Computer Worm Exploits Tsunami To Spread Virus

Yahoo's Broadband Dreams

Yahoo already has a lucrative partnership with SBC Communications for broadband-based services. Now the Internet services company has linked up with Verizon Communications . Yahoo will work with Verizon "to introduce a portal for its high-speed Internet service," the New York Times reported. "The venture comes as competition for broadband customers between telephone and cable companies continues to heat up. Yahoo is also looking for ways to attract visitors to its Web sites and reduce its reliance on advertising revenue. In the multiyear deal, Verizon's 3.3 million broadband customers will be able to use the co-branded portal at no additional charge. Yahoo will receive an undisclosed share of Verizon's broadband subscription fees, and Verizon will get a share of the advertising revenue generated by the portal," the paper said. Verizon, for its part, has a similar deal with Microsoft-run (and Yahoo rival) MSN , the article noted. The Financial Times picked up the announcement too . * The New York Times: Verizon and Yahoo Team Up To Offer Broadband Service (Registration required)

Is Google Considering a Fiber Diet Too?

Google has potential broadband ambitions too, CNET reported. "Is Google Inc. planning to build a global fiber-optic network from scratch? And, if so, why? The question has cropped up in light of a recent job posting on the search engine giant's Web site seeking experts in the field," the article said. "A Google spokesman declined to elaborate on the job posting. Still, it raises some tantalizing thoughts, including the long-shot chance that the Mountain View company is laying the groundwork to jump into the telecommunications business. The posting was reported by Light Reading, a Web site that tracks the optical networking industry." Read the Light Reading posting here . * CNET's News.com: Google Wants 'Dark Fiber'

Filter In Review: The Rise of Google

When Filter launched in Aug. 2002, the hangover from the dot-com crash was still lingering and the prospects for a blockbuster tech IPO seemed a long way off. Few believed a Silicon Valley Internet company called Google , hatched by two Stanford graduate students, was going to change tech's course so mightily.

Google was not a major topic in my columns in 2002 and 2003, but that all changed in 2004 in the run-up to the company's highly anticipated IPO in August -- a successful offering that proved that Wall Street and average investors alike were hungry (and brave enough) to gamble on technology stocks again.

The quirky company almost blew the IPO, thanks to a Playboy interview with Google's boy-wonder co-founders that nearly ran up against securities rules governing what companies can say in the period just before a stock offering. But in the end, the Securities and Exchange Commission decided to overlook the whole matter .

Google's auction-style IPO beat expectations, raising $1.67 billion and spurring a handful of other tech IPOs in the last months of 2004. Google's stock soared well above its initial $85 offering price, and the company is investing its IPO windfall in its continuing quest to dominate the search-engine space.

The IPO intensified an already simmering search-engine war with rivals Microsoft and Yahoo . In 2004, the three companies rolled out new search tools at a clip that would make Seabiscuit blush. Why should we care as consumers? The competition may lead to better search tools and better ways to deal with information overload in the Information Age.

But the growing power of search systems could create problems, such as the danger that consumer privacy concerns will be overshadowed by the race to pony up speedy and nifty search functions. My hope is that Google and its search technology brethren will honor the sacredness of information privacy, while still working towards advances in sifting for data.

For its part, when Google launched its desktop software, it made clear that using it does not make a computer's content accessible to Google or others. Let's hope it stays that way.

Google's entry into the e-mail space last spring with the test launch of its Gmail also raised privacy concerns, since the service matches ads with the content of incoming e-mails. I think there is reason to be cautious, as I noted last April when Gmail first appeared, but Google is upfront about its privacy policy . I don't mind the ads as long as it's just Google's machines -- not its employees -- who are reading my e-mails and attaching contextual ads. I also like how easy it is to organize e-mails and nix spam using Gmail.

Gmail, of course, was a brilliant move on two fronts: The invite-only policy for the service marketed to bloggers and other techie types (which is still in place, by the way) created a lot of free buzz. And the 1-gigabyte of free e-mail storage move also forced Yahoo and Microsoft to substantially increase the storage on their own e-mail services.

And that's how it is with Google. When it makes a move, everyone else has to follow. Take desktop search. The company was out of the box first with its desktop search tool , and Microsoft and Yahoo quickly followed ( with Microsoft's effort getting lukewarm reviews ). Smaller players like AskJeeves and HotBot have offered their own versions.

Though Google continues to set the pace, the company can't afford to rest on its laurels. Microsoft and Yahoo want the search-engine crown for themselves and there are signs that they're catching up . After all, Microsoft is the largest software company in the world and it has a history of winning out in the end, even if it's late to recognize what consumers want.

But I will keep my bet on Google for now. Just look at how the company is positioning itself with its recent acquisition of a digital mapping company and the launch of an ambitious digital library project last month.

See my first Filter review piece on blogs, which ran on the second page of last Friday's column .

Filter launched in Aug. 2002. The column is ending its run on Jan. 21. Send feedback, praise and darts alike to cindyDOTwebbATwashingtonpost.com. (Spammers still love to blast my e-mail address.)

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