After almost three decades, one of the most successful trade relationships in sport has come to an end.
Months of tense negotiations between video game maker Electronic Arts and FIFA, football’s global governing body, ended with no agreement to extend a partnership that had produced less of a hugely popular game and more of a cultural phenomenon.
The current contract, which was due to end after this year’s World Cup in Qatar, has been adjusted to last until next summer’s Women’s World Cup. With the conclusion of this tournament, 150 million FIFA video game players will have to adjust to a new name for the series: EA Sports FC.
Not much will change in the game itself. Most of the world famous clubs and stars will continue to be playable due to separate licensing deals with their teams and leagues, even though the World Cup itself and other FIFA controlled events will no longer be included. However, continuing the game doesn’t change the seismic nature of the rebrand.
For millions of people around the world, the letters FIFA don’t stand for real football, but for a one-word video game series that sets the backdrop to the lives of players as diverse as Premier League professionals and casual fans. Even gamers who otherwise have nothing to do with the sport got to know its stars and teams through their digital doppelgangers.
This kind of wide usage has created a lucrative partnership for both EA Sports and FIFA: the game has generated more than $20 billion in revenue over the past two decades.
But the writing had been on the wall for months. While the dispute was undoubtedly due in part to differing financial expectations – FIFA was aiming to at least double the $150 million it receives annually from EA Sports, its largest trading partner – it also quickly became clear that there were differing expectations what should be included in a new agreement.
The more recent deal was signed 10 years ago, but the intervening years have not only been marked by major technological changes but arguably even greater upheaval at FIFA, which almost collapsed after a major corruption scandal in 2015. New FIFA boss Gianni Infantino has tried – and often failed – to find new revenue streams.
When even direct talks between Infantino and Andrew Wilson, Electronic Arts’ chief executive officer, failed to materialize, the sides agreed to an amicable split, Wilson said.
“It was really about how we can do more for the players, more for the fans, how we can offer them more modalities of play, how we can bring more partners into the game, how we can expand beyond the boundaries of the traditional game,” said Wilson, whose personal connection as the game’s developer goes back two decades, in a phone interview.
In addition to doubling the royalty, FIFA also requested the ability to tie 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 must now convince legions of loyal fans to adjust to a different name.
FIFA now has a chance to look for new opportunities. But replicating EA’s game won’t be easy.
“If you break off a relationship that goes back 20+ years, there will be consequences,” said Gareth Sutcliffe, a senior analyst specializing in the video game sector at Enders Analysis. “EA will continue to push: they have all the technological capability, the creative execution of an absolutely amazing football game – and it really is amazing. But what did FIFA do? your name And then what?”
Part of EA Sports’ calculus to separate FIFA, the organization, from the game that has borne its name for a generation, was the lofty hurdle any challenger must face to test EA’s dominance in the market . His position has evolved into almost total control of the football gaming industry thanks to more than 300 other similar licensing deals with organizations such as UEFA, which hosts the Champions League, and national leagues and competitions around the world.
These agreements allow EA to use the names and likenesses of not only players but also world-renowned clubs and prominent leagues and competitions in its game. The company was quick to capitalize on its connections on Tuesday; Moments after the change of direction was announced, a number of them went live that World largest teams – and some of the the smallest – made it clear that they sided with EA Sports when it came to FIFA.
As FIFA seeks a new partner, many of these licenses will limit their options. For example, the two biggest club competitions in the world – the English Premier League and European football elite Champions League – will only be accessible to EA Sports FC players.
“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,” Premier League chief executive Richard Masters said in EA’s statement announcing his split with FIFA . The statement also included comments from representatives of the governing bodies of Europe and South America, as well as the heads of the German and Spanish leagues.
The statement, which may hint at potential commercial opportunities, also included a comment from Nike. Under the current agreement with FIFA, EA Sports has been restricted in commercial activities due to FIFA’s sensitivity to its number of commercial partners. Now free of this constraint, Wilson made it clear that EA Sports will be looking to partner with more companies and brands to create the potential for direct-to-consumer sales of team jerseys and other products.
The commercial success of the FIFA game is largely based on EA’s ability to capitalize on football’s seasonality. Often the company has made little more than cosmetic changes to its offering – for example a well-known player in the jersey of his new team or a club that has been promoted from a lower division – while presenting it as a brand new product on an annual basis.
“While it’s not #1, it’s certainly in the top three gaming franchises of all time,” said gaming analyst Sutcliffe. “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 under the hood it’s pretty much the same.”
Part of the negotiations between FIFA and EA Sports broke down over how the digital world was changing. Newer products and games like Fortnite and Roblox are seen as digital worlds as well as games, something FIFA is keen to capitalize on by licensing their name in other products.
EA Sports informed FIFA that it is not willing to share a name that has made it famous worldwide related to the video game market.
“I’m going to say, ‘Wait a minute: we spent literally hundreds of millions of dollars building this and you’re telling me that Epic Games can come in and license the name that we’ve built and that we have and that’s become synonymous with games?’” Peter Moore, EA’s former head of esports, told the New York Times when it was first announced that EA and FIFA could part ways.
EA’s financial strategy for FIFA has also evolved over the years, with profitability growing due to innovations such as player packs, similar to trading cards, where users must spend money within the game to build the best squads. An analytics firm estimated that the in-game feature known as Ultimate Team was worth up to $1.2 billion for EA Sports last year.
For FIFA, a break with EA Sports and the loss of its nine-figure royalties payments poses a risk for Infantino, who announced last month he would run for a third term as president after promising handouts to the 211 ever-larger football associations, who take part in the election. The migration in the commercial department of FIFA also made matters worse. Kay Madati, who was hired with much fanfare last summer, left took office last month after less than a year, becoming the third chief of commerce to leave the company since Infantino was elected president in 2016.
At the moment FIFA is concentrating on the World Cup in Qatar. Ditto for EA Sports, where Wilson promises that September’s final release of FIFA – the game – will be its biggest yet. He also said he hoped it wouldn’t be the last World Cup in an EA Sports-produced game and offered an olive branch, insisting a separate deal could yet be struck with FIFA.
“We would like to continue to represent the World Cup through the game,” he said.