FIFA and EA Sports end their two-year partnership

After nearly three decades, one of the most successful business relationships in sport has ended.

Months of tense negotiations between video game maker Electronic Arts and FIFA, football’s global governing body, ended without a deal to extend a partnership that had created not so much a hugely popular game as a cultural phenomenon.

The current deal, which was supposed to end after this year’s World Cup in Qatar, has been adapted to make it to the Women’s World Cup next summer. But once the 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 won’t change much. Most of the world’s most 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. However, continuing the game does not alter the seismic nature of the rebranding.

For millions of people around the world, the FIFA letters don’t represent real football, but rather a one-word shortcut for a video game series that has grown to provide the backdrop to the lives of players as diverse as Premier League professionals Other occasional fans. Even players who have no other relationship with the sport have gotten to know its stars and teams through their digital doppelgangers.

This kind of wide use has created a profitable partnership for both EA Sports and FIFA – the game has generated over $ 20 billion in sales over the past two decades.

But the writing had been on the wall for a crack For me yes. While the controversy was undoubtedly rooted in part on different financial expectations – FIFA was looking for at least double the $ 150 million it receives annually from EA Sports, its main trading partner – it also quickly became clear that there were different expectations on what should be included in a new agreement.

The most recent deal was signed 10 years ago, but the following years were marked not only by major technological changes, but likely also by even greater upheaval at FIFA, which nearly collapsed after a major corruption scandal in 2015. new FIFA leader, Gianni Infantino, tried – and often failed – to unlock new revenue streams.

When even direct talks between Infantino and Andrew Wilson, the chief executive of Electronic Arts, did not lead to a breakthrough, the parties agreed on an amicable separation, Wilson said.

“It was really about how we can do more for the players, more for the fans, how we can offer them more game modes, how we can bring more partners into the game, how we can expand beyond the limits of traditional play,” he said. in a telephone interview with Wilson, whose personal association as a game engineer dates back two decades.

In addition to doubling the fee, FIFA has also called for the ability to link its brand to other digital products, including other video games, according to people familiar with the talks. This proved a step too far for EA Sports, which now has to persuade legions of devoted fans to get used to another name.

For FIFA, there is now a chance to look for new opportunities. But replicating EA’s game won’t be easy.

“If you’re breaking up in a relationship that goes back over 20 years, there will be consequences,” said Gareth Sutcliffe, senior video game analyst at Enders Analysis. “EA will keep moving forward: they have all the technological intelligence, the creative implementation of an absolutely fantastic football game – and it’s really fantastic. But what does FIFA have? Their name. And then what?

Part of EA Sports’ calculation in separating FIFA, the organization, from the game that bore its name for a generation has been the steep obstacles any challenger will face in testing EA’s dominance in the video game market. His position has grown to almost complete control over the football games industry thanks to more than 300 other similar license agreements with organizations such as UEFA, which manages the Champions League, and national leagues and competitions around the world. These agreements allow EA to use the names and likenesses not only of players but also of world-class clubs and major leagues and competitions in its game.

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

“EA Sports is a long-term and valued Premier League partner and we look forward to continuing to work together in the new era,” said Richard Masters, Premier League CEO, in EA’s statement announcing his 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 deal with FIFA, EA Sports has been restricted in commercial activities due to FIFA’s sensitivity to its list of trading partners. Now free from 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 products.

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 wearing his new team’s jersey, for example, or a club promoted from a lower division – presenting it as a brand new product on an annual basis.

“If it’s not # 1, it’s definitely in the top three game franchises of all time,” said Sutcliffe, the game analyst. “And the reason is that there are so many releases. Every year they change the number on the box, put a new player on the front line and it’s pretty much the same under the hood. “

Part of the talks between FIFA and EA Sports based on the evolution of how the digital world is changing. Newer products and games like Fortnite and Roblox are seen as digital worlds as much as games, something FIFA wanted to tap into by licensing their name in other products.

EA Sports told FIFA that it would not be willing to share a name it made globally 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 it and you’re telling me that Epic Games can go in and get a license for the name we built and that we have featured and that’s it. become synonymous with games? ‘”Peter Moore, former head of EA’s sports division, told the New York Times when news first surfaced that EA and FIFA may be separating.

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-game while trying to build. the best rosters. An analytics firm estimated that the gaming 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 license payments poses a risk to Infantino, who last month announced that he would be running for a third term as president and after promising more and more dispensations. big at 211 football federations that vote in the elections. The tricky things were also the difficulties in FIFA’s commercial department. Kay Madatihired with much fanfare last summer, match last month after less than a year in office, having become the third advertising chief to leave since Infantino was elected president in 2016.

For now, FIFA’s focus is on the Qatar World Cup. The same goes for EA Sports, with Wilson promising that the latest version of FIFA, the game, in September will be the biggest ever. He also said he hoped it wouldn’t be the last World Cup in a game produced by EA Sports, offering an olive branch insisting that it would still be possible to strike a separate deal with FIFA.

“We would love to continue representing the World Cup through play,” he said.