This is one of the longest and most profitable relationships in sports. Nearly three decades after football’s global governing body licensed its name to a California video game maker to expand its offerings, the FIFA series that was born out of that partnership has become a sport not as much of a cultural phenomenon. .
For millions of people around the world, FIFA no longer represents real soccer, but is a term shorthand for the hugely popular video game series that became a fixture in the lives of players as diverse as Premier League pros, casual fans and the like. Is. Even gamers who have no other connection to the game.
Sales of the game, which releases an updated version every year, have exceeded $20 billion for the California-based manufacturer, Electronic Arts, over the past two decades. But FIFA has also cashed in: its licensing agreement has become the organization’s most valuable commercial agreement, now worth about $150 million a year.
And now all that money is in danger.
At least two years of talks about renewing the contract, which allows Electronic Arts to use the organization’s name through its EA Sports division, have come to the wall, according to several people close to the talks. The possibility of a permanent break after next year’s World Cup in Qatar – when the current 10-year agreement expires – was clarified last week in a letter issued by EA Sports executive chairman and general manager Cam Weber.
— EA Sports FIFA (@EASPORTSFIFA) October 9, 2021
In it, Weber raised the unthinkable: FIFA without FIFA.
“As we look ahead,” wrote Weber discussing the future of the series, “we are also exploring the idea of renaming our global EA Sports football games.”
The root of the dispute is economic. According to people familiar with the conversation, FIFA is currently seeking more than double what it receives from EA Sports, a figure that sees its payouts from the series rise to more than $1 billion for each four-year World Cup cycle. Will give
However, the controversy is not just about money. Negotiations have also stalled because FIFA and EA cannot agree on what should be included in the exclusive rights of gamers.
FIFA would prefer to limit EA’s exclusivity to the narrow standards surrounding use in a soccer game, possibly in an effort to seek new revenue streams for the rights. In the meantime, EA Sports argues that the company should be allowed to explore other ventures within its FIFA video game ecosystem, including digital products such as real games, Arena video game tournaments, and non-device tokens.
A decision is likely to be made by the end of the year, but EA officials are already planning a post-Fifa future. Earlier this month, the company registered two trademarks for the phrase EA Sports FC, one in the European Union and the other in the UK.
Both FIFA and EA Sports declined to comment publicly on the talks. But the controversy has puzzled industry watchers, including Peter Moore, who held senior roles at Electronic Arts for a decade before leaving in 2017 to become chief executive of Premier League team Liverpool. Moore is now a senior executive at Unity Technologies, a video game software company.
“I don’t remember he ever made a statement saying that we were negotiating a renewal of the license,” Moore said in a telephone interview. “It’s clearly sending a little signal.”
Part of EA’s calculation is that — even if it’s forced to rebrand one of the most popular video franchises of all time — it’s unlikely a competitor can challenge its market dominance. EA’s position has risen to almost complete control over the football gaming industry, thanks to over 300 other similar licensing agreements with organizations such as UEFA, which runs the Champions League and domestic leagues and competitions around the world. Those deals allow EA to use the names and likenesses of players, world-renowned club teams, and major leagues in their games. (On Tuesday, EA renewed one such deal with the global player association, FIFPro.)
Since its license with FIFA grants EA Sports only the use of the organization’s name and logo and the rights to the World Cup, a one-month championship held every four years, it appears that the game maker has concluded that the relationship Won’t Lose Another hugely popular sports franchise Madden NFL could face if it lost its license.
Still, any breakdown will have consequences. The FIFA franchise is extremely profitable, said Gareth Sutcliffe, a senior analyst specializing in the video game sector at Anders Analysis, because EA Sports has been able to make little more than cosmetic changes to its games for most years and still generate millions of sales with releases. enjoys. of each new version.
For FIFA, a break with EA Sports, and the loss of its nine-digit licensing payments, could threaten some of the innovations proposed by FIFA President Gianni Infantino. For example, he is trying to raise up to $2 billion for clubs to finance a newly expanded World Cup. At the same time, he is trying to persuade members to support his plan to increase the frequency of the World Cup to every two years.
To find those new revenues, FIFA officials have studied the possibility of selling licenses to video games and digital products that are not related to football. For example, a partnership with another company such as Epic Games, the maker of the hit Fortnite franchise, would broaden FIFA’s reach, but reduce the exclusivity for which EA pays a premium. According to former gaming industry insiders like Moore, this may be the reason why his former company is considering moving away.
“I’m going to say, ‘Wait a second: We spent literally hundreds of millions of dollars making this, and you’re telling me that Epic Games could come and license the name that we created and we put front and center and he is synonymous with the game?'” said Moore. “Then, yes, I’m negotiating, and I’m fighting him.”
This article originally appeared in The New York Times.