After almost three decades, one of the most successful commercial relationships in sports is over.
Months of tense negotiations between the video-game maker Electronic Arts and FIFA, soccer’s global governing body, ended without a partnership that was created not so much a wildly popular game as a cultural phenomenon.
The current deal, which was to end this year’s World Cup in Qatar, has been adjusted to run through the Women’s World Cup next summer. But once that tournament is over, company officials confirmed, 150 million FIFA video game players will have to get used to a new name for the series: EA Sports FC.
The game itself will not change much. Most of the world famous clubs and stars will still be playable because of separate licensing deals 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 doesn’t alter the seismic nature of the rebranding.
To millions of people around the world, the letters represent FIFA not an actual soccer but rather a one-word shorthand for a video-game series that provides 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 came to know its stars and its teams through their digital doppelgängers.
That sort of broad use created 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 has been on the wall for a split for months. While the dispute was undoubtedly rooted in part to differing financial expectations – FIFA was seeking at least double the $ 150 million it gets annually from EA Sports, its biggest commercial partner – it also quickly became clear there were different expectations of what should be included. new agreement.
The more recent deal was signed 10 years ago, but the intervening years were marked by not only great technological change but arguably even greater upheaval at FIFA, which almost 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, chief executive of the Electronic Arts, failed to yield a breakthrough, the sides agreed to an amicable separation, Wilson said.
“It was really about how we can do more for the players, more for the fans, how can we offer them more modalities to play, how can we bring more partners into the game, how we can expand beyond the traditional game Wilson, whose personal association as an engineer of the game dates back two decades, said in a telephone interview.
In addition to doubling its licensing fee, FIFA also sought the ability to attach its brand to other digital products, including other video games, according to people familiar with the deal. That proved to be a step too far for EA Sports, which now must have persuade legions of devoted fans to get used to another name.
For FIFA, there is now a chance to seek out new opportunities. But replicating EA’s game won’t be easy.
“If you are breaking a relationship that goes back 20 years there will be consequences,” said Gareth Sutcliffe, a senior analyst specializing in the video games sector at Enders Analysis. “EA will continue to motor: they’ve got all the technological smarts, the creative implementation of an absolutely fantastic football game – and it’s really fantastic. But what do FIFA have? Their name. And then what? “
Part of the separation of EA Sports’ calculation into FIFA, the organization, from the game that bore its name to a generation that will steep hurdles any challenger will face in testing EA’s dominance in the video game market. Its position has grown to almost complete control over the soccer gaming industry thanks to more than 300 other similar licensing agreements with organizations like UEFA, which runs the Champions League, and domestic leagues and competitions around the world. Those deals allow EA to use not only players but also world-famous clubs and major leagues and competitions in its game.
As FIFA sees a new partner, many of those licenses will limit what it can do. For example, the two biggest club competitions in the world – England’s Premier League and European Soccer’s Elite Champions League – will be available only to players of EA Sports FC.
“EA Sports is a long-term and valued partner of the Premier League, and we look forward to continuing to work together in the new era,” Richard Masters, chief executive of the Premier League, said in announcing EA’s statement from its break. FIFA. The statement also includes comments from officials representing the governing bodies of Europe and South America as well as heads of the German and Spanish leagues.
Perhaps pointing to potential commercial opportunities, the statement also includes a comment from Nike. Under its current agreement with FIFA, EA Sports has been limited in commercial activities because of FIFA’s sensitivity to its slate’s commercial partners. Now free of that restriction, Wilson made it clear that EA Sports will look to partner with more companies and brands, creating the potential for direct-to-consumer sales team jerseys and other products.
The FIFA game’s commercial success has largely been built on EA’s ability to leverage soccer’s seasonality; Often the company has made little more than cosmetic changes to its offering – a well-known player in his new team’s jersey, for example, or a club promoted from a lower division – while presenting it on a brand-new product on an annual basis.
“If it is not 1, It is 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 on the front and it’s pretty much under the hood. “
Part of the negotiations between FIFA and EA Sports found on the evolution of how the digital world is changing. Newer products and games like Fortnite and Roblox are seen in digital worlds as much as games, something that FIFA has been tapping into licensing its name in other products.
EA Sports told FIFA it wouldn’t be prepared to share a name that made it globally famous within the video game market.
“I’m going to say, ‘Wait a second: we’ve literally spent hundreds of millions of dollars building this and you’re telling me that Epic Games can come in and get a license that we have built and that we have. Put front and center and that has become synonymous with games? ‘”Peter Moore, a former head of EA’s sports division, told The New York Times when the news first emerged that EA and FIFA could be part company.
EA’s financial strategy for FIFA has also evolved over the years, with profitability growing on the back of innovations like player packs, similar to trading cards, that require users to spend money within the game as they seek to build the best rosters. One analytics company estimated the in-game feature known as the Ultimate Team was worth as much as $ 1.2 billion to EA Sports last year.
For FIFA, a break with EA Sports, and its loss of nine-figure licensing payments, represents a risk for Infantino, who announced last month that he would run for a third term as president and after he has promised ever larger handouts to the 211 soccer federations that vote in the election. Complicating matters, too, has been the churn in FIFA’s commercial department. Kay Madati, hired with much fanfare last summer, departed Last month after less than a year in the post, becoming the third head of commerce to leave since Infantino was elected president in 2016.
For now, FIFA’s focus is on the Qatar World Cup. The same is true at EA Sports, with Wilson promising the last release of FIFA – the game – in September will be its biggest yet. He also said he hoped it would not be the FIFA could still be made with a separate deal insisting on an EA sports-produced game in the last World Cup.
“We’d love to continue to represent the World Cup through the game,” he said.