Written by: Sechaba Ntsiu
In December 1993 Electronic Arts Inc (EA), via its sports division EA Sports, released FIFA International Soccer, the first ever FIFA football game to feature on a games console. Although the game wasn’t the first football game to be released, it will forever hold a significant place in history as the first football game to be released as a FIFA* licensed* product. Though other football games have come and gone since 1993, FIFA Football has stood the test of time and in 2021, it continues to be the leading football game on all games consoles, with sales reaching over $20bn over the past two decades. Despite this success, it has been reported that EA is considering ending its contractual relationship with FIFA. Although this decision might be unexpected for many gamers, commercially there are a number of reasons why the move seems like a smart play.
The Licence Fee
The name FIFA is a trade marked term which is owned by FIFA (the football governing body). Trade marking the name grants FIFA a significant level of security in ensuring that other entities are unable to use the name without FIFA’s permission. If an entity was to use the name without permission then FIFA could ask a court for assistance in remedying the infringement of FIFA’s trade mark rights, including asking for injunction to prevent a party from continuing to use the trade mark, asking for permission to destroy products exhibiting the trade mark, and asking for damages to be paid.
Beyond the above, owning the trade mark gives FIFA the commercial opportunity to monetise the name via licensing. This is where FIFA’s relationship with EA comes in. It has been reported that in agreeing to allow EA the right to use the trade mark, FIFA has charged the gaming company a licensing fee of around $150m per year as a part of a 10-year licensing agreement that is due to end after the 2022 FIFA World Cup in Qatar. It has also been reported that if a new licensing agreement is entered into by both parties, FIFA wants EA to pay a licensing fee of $1bn for each four-year World Cup cycle.
With the above being considered, it would seem to make financial sense for EA to end its relationship with FIFA based on a minimum projected saving of $150m per year in licensing payments. This is a significant sum of money that could be used for a variety of matters, including internal investment to benefit the company in other ways, such as increasing budgets in internal departments, including research and development, marketing, sales, etc.
Despite what happens with the FIFA licensing arrangement, EA plans on continuing its other licensing arrangements with other parties, including UEFA, the Premier League, and the Bundesliga, which means that named features within the game, such as player names and events, including the Champions League, will likely remain unchanged.
FIFA Football games have built up a significant cult following over many years. Nothing suggests that this cult following, which has developed because of gaming aspects as such gameplay and online features and formats, has anything to do with the game being named FIFA. In fact, I would go as far as to say that if EA decides to replace the FIFA Football name with EA Sports FC, a name which the gaming company has recently trade marked, sales of the game are unlikely to be significantly impacted, if impacted at all, so long as the product retains the gaming features which consumers value.
In terms of timing, this seems to be the perfect time for EA to rethink the FIFA licensing relationship from a competition standpoint. For many years FIFA Football’s biggest competitor has been Pro Evolution Soccer, a game produced by Japanese developer Konami. Although it has been seen as FIFA Football’s biggest competitor, Pro Evolution Soccer (PES) has struggled to keep up with the EA product for some time, with worldwide sales for PES 2019 totalling around 550,000 compared to FIFA 19’s 12.2m. These lagging sales figures are likely part of the reason why PES has gone through a rebrand in that it has changed its name to eFootball and it will now only be available to play online. Even with this rebrand taking place, FIFA Football seems to be way ahead of the pack when it comes to football games and that is unlikely to change from a commercial standpoint even if EA decides to go through its own rebrand.
As the negotiations between FIFA and EA are still ongoing, it is unclear at this time what the status of the relationship will be in the coming weeks or months. With that being said, FIFA recently released a statement in which it has said that competition in the gaming industry in relation to football games needs to move away from one party domination, and that it is engaging with stakeholders in the industry along those lines. If this back and forth continues, sports gamers might soon find themselves choosing between an EA product (perhaps EA Sports FC), a FIFA licensed product, and a product from Konami (perhaps eFootball).
- Electronic Arts Inc: Electronic Arts Inc is an American gaming company famous for its involvement in releasing a long list of games, including FIFA Football, Madden NFL, Medal of Honour, Star Wars Battlefront, and The Sims.
- FIFA: FIFA (the International Federation of Association Football) is the governing body of association football. The organisation perhaps best known for organising and promoting major international football tournaments such as the World Cup and the Women’s World Cup.
- Licence: In intellectual property, the term ‘licence’ refers to a contractual agreement between parties whereby one party grants another party the permission to use a form of intellectual property, in a specified way, in exchange for some form of compensation. In this particular case, the term is used to refer to FIFA granting EA the permission to use its trade mark protected name (FIFA) as the name of EA’s football game, and quite possibly in other ways, in exchange for a licensing fee. As a part of the agreement, the party granting the license also agrees not to sue the other party for using the intellectual property during the term of the agreement, subject to the party using it in line with the agreed terms.