After nearly three decades, one of the most successful commercial relationships in sport is over.
Months of tense negotiations between video game maker Electronic Arts and FIFA, football’s global governing body, ended without an agreement to renew a partnership that had created not so much a wildly popular game as a cultural phenomenon.
The current deal, which would end after this year’s World Cup in Qatar, has been adjusted to run into the women’s World Cup next summer. Once that tournament is over, the company said, 150 million FIFA video game players will have to get used to a new name for the series: EA Sports FC.
The game itself won’t change much. Most of the world’s famous clubs and stars will still be playable due to separate licensing agreements with their teams and leagues, even though the World Cup itself and other FIFA-controlled events will no longer be included. Still, the continuation of the game does not change the seismic nature of the rebranding.
To millions of people around the world, the letters FIFA don’t represent actual football, but instead a one-word abbreviation for a video game series that became the backdrop to the lives of players as diverse as Premier League pros and casual fans. Even gamers with no other relationship to the sport got to know the stars and teams through their digital lookalikes.
That kind of broad usage made for a lucrative partnership for both EA Sports and FIFA: the game has generated more than $20 billion in sales over the past two decades.
But the writing had been hanging on the wall for months. While the dispute was no doubt partly rooted in differing financial expectations — FIFA wanted at least double the $150 million it gets annually from EA Sports, its largest commercial partner — it also quickly became apparent that there were differing expectations of what’s going on in the future. a new agreement.
The more recent deal was signed a decade ago, but the intervening years have been marked not only by major technological changes, but also by what is likely to be an even greater upheaval at FIFA, which nearly collapsed after a major corruption scandal in 2015. FIFA’s new leader , Gianni Infantino, has tried – and often failed – to unlock new revenue streams.
When even direct talks between Infantino and Andrew Wilson, the director of Electronic Arts, failed to produce a breakthrough, the parties agreed to an amicable separation, Wilson said.
“It was really about how we can do more for the players, more for the fans, how we can give them more modalities to play, how we can bring more partners into the game, how we can go beyond the boundaries of the traditional game. can go. ‘, Wilson, whose personal association as the game’s engineer goes back two decades, said in a telephone interview.
In addition to doubling the license fee, FIFA also demanded the ability to link its brand to other digital products, including other video games, according to people familiar with the talks. That proved a step too far for EA Sports, which now has to persuade legions of devoted fans to get used to a different name.
Now is the time for FIFA to look for new opportunities. But replicating EA’s game won’t be easy.
“Severing a relationship that goes back more than 20 years has consequences,” said Gareth Sutcliffe, senior video game industry analyst at Enders Analysis. “EA will continue: they’ve got all the tech, the creative implementation of an absolutely fantastic football game — and it’s really fantastic. But what does FIFA have? Their name. And then what?”
Part of EA Sports’ calculation in separating FIFA, the organization, from the game that bore its name for a generation was the steep hurdles any challenger will face when testing EA’s dominance in the market. His position has grown to near-complete control of the football gaming industry thanks to more than 300 other similar licensing deals with organizations such as UEFA, which administers the Champions League, and domestic leagues and leagues around the world.
Those deals allow EA to use the names and likenesses of not only players, but also world-renowned clubs and prominent leagues and leagues in its game. On Tuesday, the company was quick to loosen its connections; moments after the company announced its change of course, the world’s biggest teams – and some of the smallest — made it clear that they were siding with EA Sports over FIFA.
As FIFA is looking for a new partner, many of those licenses will limit what it can do. For example, the two biggest club competitions in the world — the English Premier League and the European elite Champions League — are only available to EA Sports FC players.
“EA Sports is a long-standing and valued partner of the Premier League, and we look forward to working together in the new era,” said Richard Masters, Premier League chief executive, in EA’s statement explaining the split. announced with Fifa. The statement also included comments from officials representing the governing bodies of Europe and South America, as well as the heads of the German and Spanish leagues.
Andrew Wilson, the CEO of EA Sports. His association with the FIFA game as an engineer dates back two decades. Credit… Nick Adams/Reuters
Perhaps pointing to potential commercial opportunities, the statement also included a comment from Nike† Under the current agreement with FIFA, EA Sports is restricted from commercial activities due to FIFA’s sensitivity to its list of commercial partners. Now free of that restriction, Wilson made it clear that EA Sports will partner with more companies and brands, creating the potential for direct consumer sales of team shirts and other products.
The commercial success of the FIFA game is largely based on EA’s ability to exploit football’s seasonality; often the company has made no more than cosmetic changes to its offering – a famous player in his new team’s jersey, for example, or a club promoted from a lower division – while presenting it on an annual basis as a brand new product.
“If it’s not #1, it’s definitely in the top three game franchises of all time,” said Sutcliffe, the gaming analyst. “And the reason for that is that there are so many releases. Every year they change the number on the box, put a new player in front and under the hood it’s pretty much the same.”
Some of the negotiations between FIFA and EA Sports have stranded on the evolution of how the digital world is changing. Newer products and games like Fortnite and Roblox are seen as games as much as digital worlds, something FIFA liked to take advantage of by licensing its name in other products.
EA Sports told FIFA it would not be willing to share a name it has made known worldwide in the context of the video game market.
“I’m going to say, ‘Wait a minute: we literally spent hundreds of millions of dollars building this and you’re telling me that Epic Games can come in and get a license for the name that we’ve built and that we have put first and that has become synonymous with games?’” Peter Moore, a former head of EA’s sports department, told DailyExpertNews when news first came out that EA and FIFA could split up.
EA’s financial strategy for FIFA has also evolved over the years, with profitability increasing thanks to innovations such as player packs, similar to trading cards, where users must spend money in-game to build the best rosters. An analytics firm estimated that the in-game feature known as Ultimate Team was worth a staggering $1.2 billion to EA Sports last year.
For FIFA, a split with EA Sports and the loss of its nine-figure license payments poses a risk to Infantino, who announced last month that he would run for a third term as president and after paying increasing amounts to the 211 football federations that vote. at the elections. Complicating matters were also the churn in FIFA’s commercial department. Kay Madati, hired with much fanfare last summer, left last month after being in the post for less than a year, having become the third head of advertising to leave since Infantino was elected president in 2016.
For now, FIFA’s focus is on the World Cup in Qatar. The same goes for EA Sports, where Wilson promises FIFA’s final release – the game – in September will be its biggest ever. He also said he hoped it wouldn’t be the last World Cup in an EA Sports-produced game, offering an olive branch by insisting a separate deal could still be struck with FIFA.
“We would like to continue to represent the World Cup through the game,” he said.