After almost three decades, one of the most successful commercial relationships in sports is over.
Months of tense negotiations between the video-game maker Electronic Arts and Fifa ended without an agreement to extend a partnership that had created not so much a wildly popular game as a cultural phenomenon.
The current deal, which was to end after this year’s World Cup in Qatar, has been adjusted to run through to the Women’s World Cup next summer. 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 because of separate licensing deals with their teams and leagues, even though the World Cup itself and other Fifa-controlled events will no longer be included. Still, the continuation of the game does not alter the seismic nature of the rebranding.
To millions of people around the world, the letters Fifa represent not actual soccer but instead a one-word shorthand for a video-game series that grew to provide the backdrop to the lives of players as diverse as Premier League pros and casual fans. Even gamers with no other relationship to the sport came to know its stars and its teams through their digital doppelgängers.
Writing on the wall
That sort of broad use created a lucrative partnership for both EA Sports and Fifa: The game has generated more than $20 billion (€19 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 undoubtedly rooted in part to differing financial expectations – Fifa was seeking at least double the $150 million (€142.34 million) it gets annually from EA Sports, its biggest commercial partner – it also quickly became clear there were different expectations of what should be included in a new agreement.
The more recent deal was signed 10 years ago, but the intervening years had been marked not only by great technological change but arguably even greater upheaval at Fifa, which almost collapsed after a major corruption scandal in 2015. Fifa's new leader, Gianni Infantino, has tried – and often failed – to unlock new revenue streams.
When even direct talks between Infantino and Andrew Wilson, the Electronic Arts chief executive, failed to yield 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 offer them more modalities to play, how can we bring more partners into the game, how can we expand beyond the bounds of the traditional game,” Wilson, whose personal association as an engineer of the game dates back two decades, said in a telephone interview.
In addition to a doubling of its licensing fee, Fifa also demanded the ability to attach its brand to other digital products, including other video games, according to people familiar with the talks. That proved to be a step too far for EA Sports, which now must persuade legions of devoted fans to get used to another name.
For Fifa, there is now the chance to seek out new opportunities. But replicating EA’s game will not be easy.
"If you're breaking a relationship that goes back over 20 years there will be consequences," said Gareth Sutcliffe, a senior analyst specialising in the video games sector at Enders Analysis. "EA will continue to motor on: They have got all the technological smarts, the creative implementation of an absolutely fantastic football game – and it really is fantastic. But what do Fifa have? Their name. And then what?"
Part of EA Sports’ calculation in separating Fifa, the organisation, from the game that bore its name for a generation was the steep hurdles any challenger will face in testing EA’s dominance in the market. Its position has grown to almost complete control over the soccer gaming industry thanks to more than 300 other similar licensing agreements with organisations like Uefa.
Those deals 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 flex its connections on Tuesday; moments after the company announced its change of direction, some of the world’s biggest teams – and some of the smallest – made clear they were siding with EA Sports over Fifa.
If it is not No 1, it's certainly in the top three game franchises of all time
As Fifa seeks a new partner, many of those licenses will limit what it can do. For instance, the world’s two biggest club competitions –the Premier League and Champions League – will be available only to players of EA Sports FC.
"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, the chief executive of the Premier League, said in EA's statement announcing its break from 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 commercial opportunities, the statement also included a comment from Nike. Under its current agreement with Fifa, EA Sports has been limited in commercial activities because of Fifa’s sensitivity to its slate of commercial partners. Now free of that restriction, Wilson made clear that EA Sports will look to partner with more companies and brands, creating the potential for direct-to-consumer sales of team jerseys and other products.
The Fifa game’s commercial success has largely been built on EA’s ability to leverage soccer’s seasonality; 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 a brand new product on annual basis.
“If it is not No 1, it’s certainly in the top three game franchises of all time,” said Sutcliffe, the gaming analyst. “And the reason for that is there are so many releases. Every year they change the number on the box, put a new player on the front and it’s pretty much the same under the hood.”
Part of the negotiations between Fifa and EA Sports foundered 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 that Fifa has been keen to tap into by licensing its name in other products.
EA Sports told Fifa it would not be prepared to share a name that it made globally famous within the context of the video game market.
"I'm going say, 'Wait a second: We have literally spent hundreds of millions of dollars building this and you're telling me that Epic Games can come in and get a license to the name that we have built and that we have put front and centre and that has become synonymous with games?'" Peter Moore, a former head of EA's sports division, told The New York Times when news first emerged 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 like player packs that require users to spend money within the game as they seek to build the best squads. One analytics company estimated the in-game feature known as Ultimate Team was worth as much as $1.2 billion (€1.14 billion) to EA Sports last year.
For Fifa, a break with EA Sports, and the loss of its nine-figure licensing payments, represents a risk for Infantino, who last month announced he would run for a third term as president and after he has promised ever larger handouts to the 211 federations that vote in the election.
Olive branch
Complicating matters, too, has been the churn in Fifa's commercial department. Kay Madati, hired with much fanfare last summer, departed last month after less than a year in the post, having become the third head of commercial to leave since Infantino was elected president in 2016.
For now, Fifa’s focus is on the Qatar World Cup. The same is true at EA Sports, with Wilson promising the last release of Fifa – the game – in September will be its biggest yet. He also said he hoped it would not be the last World Cup in an EA Sports-produced game, offering an olive branch by insisting a separate deal with Fifa still could be made.
"We'd love to continue to represent the World Cup through the game," he said. – This article originally appeared in The New York Times
