FIFA and EA Sports Are Ending One Of The Most Successful Partnerships In Sports History

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Electronic Arts (EA) has been one of the world’s best-performing companies for several decades, and its partnership with FIFA is undoubtedly a big part of that.

The results speak for themselves. EA has sold more than 325 million copies of its FIFA video game series. It has been translated into 18 different languages. It is sold in more than 50 countries globally, and the video game has generated more than $20 billion in sales over the past two decades alone — or about $1 billion annually.

That makes it the world’s best-selling sports video game franchise in history.

But fans aren’t the only ones that benefited. The licensing agreement between FIFA & EA Sports has grown to become the organization’s single-most valuable commercial agreement. It is reportedly worth about $150 million annually, and EA Sports has seen its stock price surge more than 2,000% since the release of FIFA in 1993.

For context, the S&P 500 is up roughly 800% during the same period.

But even after a three-decade partnership that has created billions of dollars in economic value for both parties, Electronic Arts and FIFA could not come to terms on a new licensing agreement, and the video game series is officially coming to an end.

The *why* is actually quite simple. Sure, FIFA didn’t want to give EA exclusivity anymore, and they reportedly wanted a few changes within the actual video game itself. But it’s really all about the money. The New York Times has been reporting more months that FIFA was looking to double the $150 million it gets annually from EA Sports, despite the company already being its largest commercial partner.

Instead, the partnership will end, and FIFA plans to launch its own rival soccer game in 2024, along with several other soccer-themed (non-simulation) games this year.

Here’s what FIFA President Gianni Infantino said in a statement:

The reason why he is saying that FIFA will be the “only authentic, real game” is because Electronic Arts isn’t going to just throw away their multi-billion-dollar franchise because FIFA wants more money. Instead, EA said that they will introduce EA Sports FC starting in 2023 after its partnership with FIFA officially ends this year.

Of course, EA won’t be able to use the FIFA name or even reference the World Cup without a licensing deal. But given they still have over 300 different licensing deals currently in place with individual clubs globally, they should be able to build a pretty compelling video game even without the official FIFA name and logo.

For context, those deals include a portfolio of more than 19,000 players, 700 teams, 100 stadiums, and 30 leagues — that means the game might not look all that different.

It’s unfortunate that the FIFA video game franchise will no longer exist (in its current form) after several decades of success. It’s not just a popular video game. It has become a cultural phenomenon, and millions of people globally play it each day.

But the reality is that both parties—Electronic Arts and FIFA—wanted to maximize the financials of the deal, and it made more sense to do that separately than together.

So EA is placing a bet that its marketing, distribution, and current market-share dominance will hold more power than the widely-known FIFA name. And FIFA is placing a bet that the exclusive license is worth much more than the current $150 million they are getting from Electronic Arts.

It will probably take some time to see how this all plays out. My guess is that FIFA is thinking about this from a multi-decade viewpoint, even if that means they have to watch their revenue drop slightly in the short term. But soccer is the world’s most popular sport, and I don’t expect either of these parties to give up without a fight.

I hope everyone has a great day. We’ll talk tomorrow.

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