FIFA and EA Sports end their two-decade partnership

After almost three decades, one of the most successful business relationships in sports has come to an end.

Months of tense negotiations between video game maker Electronic Arts and soccer’s world governing body FIFA ended without an agreement to extend a partnership that had created less a wildly popular game than a cultural phenomenon.

The current deal, which was due to end after this year’s World Cup in Qatar, has been adjusted to run until the Women’s World Cup next summer. Once that tournament is over, according to the company, 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, although the World Cup itself and other FIFA-controlled events will no longer be included. Still, continuing the game doesn’t alter the seismic nature of the rebranding.

For millions around the world, the letters FIFA do not represent actual football, but rather a one-word shorthand for a series of video games that have grown to provide the backdrop to the lives of gamers as diverse as Premier League pros and casual fans. Even players with no other connection to the sport have come to know its stars and teams through their digital look-alikes.

This kind of large-scale usage has created a lucrative partnership for EA Sports and FIFA: the game has generated more than $20 billion in sales over the past two decades.

But the writing had been on the wall for months. While the dispute is no doubt partly rooted in differing financial expectations – FIFA was seeking at least double the $150 million it receives each year from EA Sports, its largest commercial partner – it is also quickly became clear that there were different expectations as to what should be included in a new agreement.

The most recent agreement was signed 10 years ago, but the years that followed were marked not only by great changes in technology, but also by even greater upheavals at FIFA, which almost collapsed after a major corruption scandal in 2015. FIFA’s new leader, Gianni Infantino, tried – and often failed – to unlock new sources of revenue.

When even direct talks between Infantino and Electronic Arts chief executive Andrew Wilson failed to yield a breakthrough, the parties agreed to an amicable parting, Wilson said.

“It was really about how can we do more for the players, more for the fans, how can we offer them more game modalities, how can we bring more partners into the game, how can we’re expanding beyond the confines of traditional gaming,” Wilson, whose personal association as a game engineer dates back two decades, said in a phone interview.

In addition to a doubling of its licensing fees, FIFA has also demanded the ability to attach its brand to other digital products, including other video games, according to people familiar with the talks. It turned out to be a step too far for EA Sports, who now have to persuade legions of dedicated fans to get used to another name.

For FIFA, it is now possible to seek new opportunities. But replicating EA’s game won’t be easy.

“If you sever a relationship that goes back more than 20 years, there will be consequences,” said Gareth Sutcliffe, senior video game industry analyst at Enders Analysis. “EA will continue to push forward: they have all the technological knowledge, the creative implementation of an absolutely fantastic football game – and it really is fantastic. But what does FIFA have? Their name. And now what?”

Part of EA Sports’ calculation to separate FIFA, the organization, from the game that bore its name for a generation was the steep hurdles any challenger will face in testing EA’s market dominance. Its position has become almost total control over the football gaming industry thanks to more than 300 other similar licensing agreements with organizations like UEFA, which manages the Champions League, and domestic leagues and competitions across the world.

These agreements allow EA to use the names and likenesses of not only players, but also world famous clubs and top leagues and competitions in its game. tuesday; moments after the announcement of his leadership change went live, some the of the world the biggest teams — and some of the smallest – have made it clear that they side with EA Sports rather than FIFA.

As FIFA seeks a new partner, many of these licenses will limit what it can do. For example, the two biggest club competitions in the world – the English Premier League and European football’s elite Champions League – will only be available to EA Sports FC players.

“EA Sports has been a long-standing 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 break with FIFA. The statement also included comments from officials representing governing bodies in Europe and South America as well as leaders from the German and Spanish leagues.

Credit…Nick Adams/Reuters

Perhaps highlighting potential business opportunities, the statement also included a comment from Nike. Under its current agreement with FIFA, EA Sports has been restricted in its commercial activities due to FIFA’s sensitivity to its list of commercial partners. Now freed from this restriction, Wilson has made it clear that EA Sports will seek to partner with more companies and brands, creating potential for direct-to-consumer sales of team jerseys and other products.

The commercial success of the FIFA game relies heavily on EA’s ability to take advantage of football’s seasonality. often the company only made cosmetic changes to its offer – a well-known player in the shirt of his new team, for example, or a club promoted from a lower division – while presenting him as a brand new produced on an annual basis.

“If it’s not No. 1, it’s definitely in the top three game franchises of all time,” said games analyst Sutcliffe. “And the reason for that is that there are so many versions. Every year they change the number on the box, put a new player up front and it’s pretty much the same under the hood.

Part of the negotiations between FIFA and EA Sports broke down over how the digital world is changing. New products and games like Fortnite and Roblox are seen as digital worlds as much as games, which FIFA has been keen to exploit by attributing its name to other products.

EA Sports told FIFA that it would not be willing to share a name it made world famous in the context of the video game market.

“I’m going to say, ‘Wait a second: we literally spent hundreds of millions of dollars building this and you’re telling me that Epic Games can come in and license the name that we built and put to use. foreground and which has become synonymous with games?’ Peter Moore, former head of EA’s sports division, told The New York Times when news first emerged that EA and FIFA could go their separate ways.

EA’s financial strategy for FIFA has also evolved over the years, with profitability increasing through innovations such as player packs, similar to trading cards, which require users to spend money in-game. as they seek to create the best listings. An analytics firm estimated the gaming feature known as Ultimate Team was worth up to $1.2 billion for EA Sports last year.

For FIFA, a rift with 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 pledging grants ever more important to the 211 football associations that vote in the elections. FIFA’s commercial department has also complicated matters. Kay Madati, hired with great fanfare last summer, deceased last month after less than a year in the role, having become the third business executive to leave since Infantino was elected president in 2016.

For now, FIFA is focusing on the Qatar World Cup. The same is true at EA Sports, with Wilson promising FIFA’s latest release – the game – in September will be his biggest yet. He also said he hoped it wouldn’t be the last World Cup of a game produced by EA Sports, offering an olive branch by insisting a separate deal with FIFA could still be struck. .

“We would like to continue representing the World Cup through the game,” he said.

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