After nearly three decades, one of the most successful business relationships in sports ended.
months of tense negotiations Video game maker Electronic Arts and FIFA, the world soccer governing body, ended up without an agreement to expand a partnership that has not created a hugely popular game so much as a cultural phenomenon.
The current deal, which was due to expire after this year’s World Cup in Qatar, has been revised to run into the Women’s World Cup next summer. Once that tournament ends, 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 most famous clubs and stars will still be playable due to separate licensing deals with their teams and leagues, although the World Cup itself and other FIFA-controlled events will no longer be included. However, the continuation of the game does not alter the seismic nature of the rebranding.
For millions of people around the world, the letters FIFA do not represent actual football but rather a one-word acronym for a video game series that has grown to provide the backdrop to the lives of players as diverse as English Premier League professionals And Ordinary fans. Even players who have nothing else to do with the sport get to know its stars and teams through digital doppelgängers.
This kind of widespread use has 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 was on the wall to divide for months. While the dispute was undoubtedly rooted in part in differing financial expectations – FIFA was seeking at least to double the $150 million it receives annually from EA Sports, its largest trading partner – it soon became clear that there were different expectations of what should be included in an agreement. new.
The most recent agreement was signed 10 years ago, but the intervening years have not only seen major technological change but arguably the biggest turmoil in FIFA, which almost collapsed after a massive corruption scandal in 2015. The new FIFA leader, Gianni Infantino, had a try – And often failed To open new sources of income.
Wilson said that when direct talks between Infantino and Andrew Wilson, CEO of Electronic Arts, failed to make progress, the two sides agreed to an amicable separation.
“It was really about how do we deliver more to players, more to fans, how can we introduce more gameplay, how can we bring more partners into the game, how do we expand beyond the confines of the traditional game,” said Wilson, whose personal association as a game architect goes back two decades. Time, in a telephone interview.
In addition to doubling the licensing fee, FIFA has also demanded the ability to associate its brand with other digital products, including other video games, according to people familiar with the conversations. This proved to be a step too far for EA Sports, which must now persuade legions of loyal fans to get used to another name.
For FIFA, there is now an opportunity to look for new opportunities. But repeating an EA game won’t be easy.
“If you break off a relationship that goes back more than 20 years, there will be consequences,” said Gareth Sutcliffe, chief video game analyst at Enders Analysis. “EA’s going to keep going: They’ve got all the technological savvy, the creative execution of a very cool football match – which is really cool. But what does FIFA have? Their names. Then what?”
Part of EA Sports’ accounts in the FIFA chapter, the organization, for the game that bore its name for a generation, was the severe hurdles any competitor would face in testing EA’s market dominance. Its stature has grown into almost complete domination of the football game industry thanks to More than 300 other similar license agreements With organizations such as UEFA, which runs the Champions League, domestic leagues and competitions around the world.
These deals allow EA to use the names and likenesses of not only players but also world-famous clubs, leagues and competitions prominent in its game. The company was quick to capitalize on its contacts on Tuesday; Moments after announcing her change of direction, some The the world Larger difference – and some of the smaller They made it clear that they were standing with EA Sports on FIFA.
As FIFA looks for a new partner, many of these licenses will limit what it can do. For example, the world’s two largest club competitions – the Premier League and the UEFA Champions League – will only be available to EA Sports FC players.
Richard Masters, chief executive of the Premier League, said in EA’s statement to announce that it would stop playing for The Football Association. 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.
Perhaps in reference to potential business opportunities, the statement also included a comment from nike. Under its current agreement with FIFA, EA Sports has been limited in commercial activities due to FIFA’s sensitivity to its list of commercial partners. Now away from that restriction, Wilson made it clear that EA Sports will look to partner with more companies and brands, creating direct-to-consumer sales of team jerseys and other products.
FIFA’s commercial success has been built largely on EA’s ability to take advantage of football’s seasonality. The company often made more than just cosmetic changes to its offerings—a famous player in his new team jersey, for example, or a club promoted from a lower division—while introducing it as an entirely new product on an annual basis.
“If it’s not #1, it’s definitely in the top three gaming franchises of all time,” said Sutcliffe, Game Analyst. The reason for this is that there are many versions. Every year they change the number on the box, put a new player up front and is pretty much the same under the hood.”
Part of the negotiations between FIFA and EA Sports have stalled due to the evolution of how the digital world is changing. Newer products and games like Fortnite and Roblox are seen as digital as gaming, something FIFA has been keen to capitalize on by licensing its name in other products.
EA Sports has told FIFA that it will not be willing to share a name that has become world-famous in the context of the video game market.
“I’ll say, ‘Wait a minute: We spent literally hundreds of millions of dollars building this and you’re telling me that Epic Games can go in and get a license under the name we’ve created that we have,” Peter Moore, former head of EA Sports, told the New York Times when the news first surfaced. Once that EA and FIFA could part company.
EA’s financial strategy for FIFA has also evolved over the years, with profitability growing on the back of innovations such as player packs, similar to trading cards, that require users to spend in-game money as they strive to build the best rosters. An analytics company estimated that the in-game feature known as Ultimate Team was worth $1.2 billion to EA Sports last year.
For FIFA, the split from EA Sports, and the loss of its nine-figure licensing payments, is a risk for Infantino, who announced last month that he would run for a third term as president and after promising greater aid to the 211 football associations that vote in the election. Further complicating matters is the momentum in FIFA’s commercial circle. Kai MadatiHired with great fanfare last summer, the late Last month, after less than a year in office, he became the third commercial president to leave office since Infantino was elected president in 2016.
For now, FIFA’s focus is on the World Cup in Qatar. The same is true for EA Sports, with Wilson promising that the final release of FIFA – the game – in September will be its biggest release yet. He also said he hoped it wouldn’t be the last World Cup in a game produced by EA Sports, offering an olive branch by insisting that a separate deal with FIFA could still be struck.
“We would like to continue to represent the World Cup through the game,” he said.
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