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Sunday, October 17, 2021

EA Sports Is Planning for a FIFA Without FIFA

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It is one of the longest and most profitable relationships in sports. Nearly three decades after soccer’s global governing body licensed its name to a California video game maker looking to expand its offerings, the FIFA series that was born out of that partnership has become not so much a game as a cultural phenomenon.

To millions of people around the world, the letters FIFA now represent not actual soccer but instead a one-word shorthand for the hugely popular video game series that has become a fixture in the lives of players as diverse as Premier League pros, casual fans and even gamers with no other relationship to the sport.

Sales of the game, which releases an updated edition every year, have surpassed $20 billion over the past two decades for its California-based maker, Electronic Arts. But FIFA has cashed in as well: Its licensing agreement has grown to become the organization’s single-most valuable commercial agreement, now worth about $150 million per year.

And now all of that money is at risk.

At least two years of talks about renewing the contract that allows Electronic Arts, through its EA Sports division, to use the organization’s name have hit the wall, according to multiple people close to the negotiations. The possibility of a permanent break after next year’s World Cup in Qatar — when the current 10-year agreement ends — was made explicit in a letter released last week by Cam Weber, executive president and general manager of EA Sports.

In it, Weber raised the unthinkable: FIFA without FIFA.

“As we look ahead,” Weber wrote in discussing the future of the series, “we’re also exploring the idea of renaming our global EA Sports football games.”

The core of the dispute is financial. FIFA is seeking more than double what it currently receives from EA Sports, according to people with knowledge of the talks, a figure that would increase its payout from the series to more than $1 billion for each four-year World Cup cycle.

The dispute is not just about money, though. The talks have also stalled because FIFA and EA cannot agree what the gamer’s exclusive rights should include.

FIFA would prefer to limit EA’s exclusivity to the narrow parameters around use in a soccer game, most likely in an effort to seek new revenue streams for the rights it would retain. EA Sports, meanwhile, contends the company should be allowed to explore other ventures within its FIFA video game ecosystem, including highlights of actual games, arena video game tournaments and digital products like nonfungible tokens.

A decision is likely by the end of the year, but EA officials are already planning for a post-FIFA future. Earlier this month, the company registered two trademarks, one in the European Union and the other in Britain, for the phrase EA Sports FC.

Both FIFA and EA Sports declined to comment publicly on the talks. But the dispute has surprised industry watchers, including Peter Moore, who held senior roles at Electronic Arts for a decade before leaving in 2017 to become the chief executive of Premier League team Liverpool. Moore is now a senior executive at Unity Technologies, a video game software company.

“I don’t recall them ever putting out a statement saying we’re in negotiations on a renewal of the license,” Moore said in a telephone interview. “That’s clearly sending a little bit of a signal.”

Part of EA’s calculation is that — even if it is forced to rebrand one of the most popular video franchises of all time — it is unlikely any competitor can challenge its market dominance. EA’s position has grown to almost complete control over the soccer gaming industry thanks to more than 300 other similar licensing agreements with organizations like UEFA, which runs the Champions League, and domestic leagues and competitions around the world. Those deals allow EA to use the names and likeness of players, world-famous club teams and prominent leagues in its game. (On Tuesday, EA renewed one such deal with FIFPro, the global players union.)

Both FIFA and EA Sports declined to comment publicly on the talks. (File)

Because 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 monthlong championship that takes place every four years, the game maker appears to have concluded that losing the relationship would not be the kind of existential threat that it might face if it were to lose the licenses to another hugely popular sports franchise, Madden NFL.

Still, any rupture would have consequences. The FIFA franchise is immensely profitable, said Gareth Sutcliffe, a senior analyst specializing in the video games sector at Enders Analysis, because EA Sports is able to make little more than cosmetic changes to its game most years and still enjoy millions of sales with the release of each new edition.

For FIFA, a break with EA Sports, and the loss of its nine-figure licensing payments, could threaten some of the innovations proposed by FIFA’s president, Gianni Infantino. He is seeking to raise as much as $2 billion, for example, to finance a new expanded World Cup for clubs. At the same time, he is trying to persuade members to back 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 soccer-related. A partnership with another company like Epic Games, the maker of the hit Fortnite franchise, for example, would broaden FIFA’s reach but dilute the exclusivity for which EA pays a premium. That, according to former gaming industry insiders like Moore, could be why his former company is considering walking away.

“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 center and that has become synonymous with games?’” Moore said. “Then, yeah, I’m negotiating, and I’m fighting that.”

This article originally appeared in The New York Times.





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