FIFA and EA heading towards a split

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FIFA and Electronic Arts Inc. (NASDAQ:EA)?are expected to bring their decades-long partnership to an acrimonious end.


Football’s global governing body and the leading games developer have been partnered in the highly popular FIFA game franchise since 1993. FIFA 22, released earlier this month, is the latest and likely final game under the FIFA brand.


Thus far, the tie-up has been highly profitable for both parties, with sales of the game, which is updated yearly, surpassing US$20bn.


Alongside the Madden franchise for American football, FIFA is a core earner in Electronic Arts’ in-game transactions model, which last year generated some US$1.6bn of bookings.


FIFA has benefitted greatly from the licensing agreement, indeed, according to industry commentators it generates the most income of all FIFA’s commercial partnerships, at approximately US$150mln per year.


The partnership allowed the video games firm rights to use certain real-world likenesses for tournaments and in its eSports business, though much of the other licensing around player image likenesses and names are tied in via a separate deal with the FIFpro players union, along with deals with the Premier League, other league organisations and governing bodies.


Some commentators have argued that EA has been better at building the FIFA brand than the organisation itself.


Neither side have officially confirmed the end of this deal, but statements released by both within the last two weeks suggest that the current package, which ends after the 2022 World Cup in Qatar, will not be renewed.


The points of conflict are speculated to be around the monetisation of the game in eSports and also who gets to control potential ventures involving NFTs and future ‘play-to-earn’ gaming.


In a statement released on the 7 October, EA said, “As we look ahead, we’re also exploring the idea of renaming our global EA SPORTS football games.”


“This means we’re reviewing our naming rights agreement with FIFA, which is separate from all our other official partnerships and licenses across the football world.”


It later became known that EA had filed video game software trademark for ‘EA Sports FC’ with the UK’s Intellectual Property Office and the European Union Property Office a week prior.


In response, FIFA released its own statement late last week, saying that gaming and eSports of football “needs to be a space that is occupied by more than one party controlling all rights.”


“Technology and mobile companies are now actively competing to be associated with FIFA, its platforms, and global tournaments.”


“Consequently, FIFA is engaging with various industry players, including developers, investors and analysts, to build out a long-term view of the gaming, eSports and interactive entertainment sector.”


“The outcome will ensure that FIFA has a range of suitable parties with specialist capabilities to actively shape the best possible experiences and offerings for fans and consumers.”


The cause of this high-profile fallout is largely financial according to recent reports.


The New York Times wrote that FIFA is seeking currently more than double what it receives from EA for its licensing agreement, which would take it to more than $1bn for each four-year World Cup cycle.


There also exists some wrangling over EA’s rights.


FIFA wish to keep the current deal, which limits EA to simply the parameters of the game, such as rights over player names, stadium names etc.


EA, however, is looking to expand within the video game.


They would like to include highlights of actual games, video game tournaments and digital products like non-fungible tokens (NFTs), tipped to be a hugely lucrative spin-off from football in the future.


Electronic Arts Inc. (NASDAQ:EA) share price as of Tuesday afternoon is US$134.94, up 0.17%


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