After nearly three decades, one of the most successful business relationships in the sport has ended.
Months of tense negotiations between video game maker Electronic Arts and FIFA, soccer’s world governing body, ended without a deal to extend a partnership that had created not so much a wildly popular game as 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 next summer’s Women’s World Cup. 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 will not 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, the continuation of the game doesn’t alter the seismic nature of the rebranding.
To millions of people around the world, the letters FIFA do not represent actual football, but rather a one-word abbreviation for a series of video games that grew to provide the backdrop to the lives of players as diverse as the professionals in the Premier League. Y casual fans. Even players with no other connection to the sport got to know their stars and their teams through their digital doppelgängers.
That kind of wide 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 had been on the wall for a split for months. While the dispute was no doubt due in part to differing financial expectations (FIFA was seeking at least double the $150 million it receives annually from EA Sports, its largest business partner), it also quickly became apparent that there were differing financial expectations. expectations about what should be included in a new agreement
The most recent deal was signed 10 years ago, but the intervening years were marked not only by major technological change, but possibly even greater turmoil at FIFA, which nearly collapsed after a major corruption scandal in 2015. The new FIFA leader Gianni Infantino has tried, and often failed, to unlock new sources of revenue.
When even direct talks between Infantino and Andrew Wilson, the chief executive of Electronic Arts, failed to make a breakthrough, the sides agreed to an amicable separation, Wilson said.
“It was really about how can we do more for the players, more for the fans, how can we give them more ways to play, how can we bring more partners into the game, how can we expand beyond the boundaries of traditional gaming. Wilson, whose personal association as an engineer with the game goes back two decades, said in a phone interview.
In addition to doubling its license fee, FIFA has also required the ability to link its brand to other digital products, including other video games, according to people familiar with the talks. That turned out to be a step too far for EA Sports, which must now persuade legions of devoted fans to get used to another name.
For FIFA, there is now an opportunity to look for new opportunities. But replicating EA’s game won’t be easy.
“If you’re breaking up a relationship that goes back more than 20 years, there will be consequences,” said Gareth Sutcliffe, senior analyst specializing in the video game sector at Enders Analysis. “EA will continue to push forward – they have all the technological intelligence, the creative implementation of an absolutely fantastic football game, and it really is fantastic. But what does FIFA have? Your name. Then what?”
Part of EA Sports’ calculation in separating FIFA, the organization, from the game that bore its name for a generation was the sheer obstacles any challenger will face in proving EA’s dominance in the marketplace. His position has grown to almost total control over the football game industry thanks to over 300 other similar license agreements with organizations such as UEFA, which manages the Champions League, and national leagues and competitions around the world.
Those agreements allow EA to use the names and likenesses of not only players, but also world-famous clubs and prominent leagues and competitions in its game. The company was quick to tap into its connections on Tuesday; Moments after the announcement of his address change went live, some of the of the world larger teams — and some of the tiny — made it clear that they were siding with EA Sports on FIFA.
As FIFA looks 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 Europe’s elite Champions League, will be available only 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,” Richard Masters, chief executive of the Premier League, said in EA’s statement announcing its break 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.
Perhaps pointing to potential business opportunities, the statement also included a comment from Nike. Under its current agreement with FIFA, EA Sports has been limited in its 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 be looking to partner with more companies and brands, creating the potential for direct-to-consumer sales of team jerseys and other merchandise.
The commercial success of the FIFA game has been largely based on EA’s ability to take advantage of the seasonality of football; 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 as an entirely new product each year. .
“If it’s not No. 1, it’s certainly in the top three game franchises of all time,” said Sutcliffe, a game 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 up front and it’s pretty much the same under the hood.”
Part of the negotiations between FIFA and EA Sports failed in the evolution of how the digital world is changing. Newer products and games, such as Fortnite and Roblox, are considered both digital worlds and games, something FIFA has wanted to take advantage of by licensing its name on other products.
EA Sports told FIFA that it would not be prepared to share a name that it made world famous in the context of 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 under the name that we’ve built and have.” put front and center and that has become synonymous with gaming?’” Peter Moore, a former head of EA’s esports division, told The New York Times when news broke that EA and FIFA could part ways.
EA’s financial strategy for FIFA has also evolved over the years, with profitability growing thanks to innovations such as player packs, similar to trading cards, which require users to spend money in the game as they seek to create the best lists. An analytics firm estimated that the game feature known as Ultimate Team was worth up to $1.2 billion to EA Sports last year.
For FIFA, a break with EA Sports and the loss of its nine-figure license fees poses a risk to Infantino, who last month announced he would run for a third term as president and after promising ever-increasing handouts to the 211 football federations that vote in the elections. To complicate matters, there has also been the turmoil in FIFA’s commercial department. kay madatihired with great fanfare last summer, stepped out last month after less than a year in the role, having become the third business chief to leave since Infantino was elected president in 2016.
For now, FIFA’s focus is on the World Cup in Qatar. The same is true at EA Sports, with Wilson promising that FIFA’s latest release, the game, in September will be its biggest yet. He also said he hoped it would not be the last World Cup in a game produced by EA Sports, and offered an olive branch by insisting a separate deal with FIFA could still be reached.
“We would love to continue to represent the World Cup through the game,” he said.
Reference-www.nytimes.com