WHAT ELECTRONIC ARTS DITCHING FIFA CAN TEACH US ABOUT BRAND LICENSING…
FIFA has been a massively successful video games franchise for decades now for Electronic Arts. In fact, your author once interviewed to manage the brand, back in the early noughties, coming a close second to the winning candidate!
FIFA delivered $1.6bn in revenues to EA in the financial year ending March 2021. That’s a big chunk of their revenues, and so to make such a fundamental change, and to drop the FIFA name has to be seen as a major financial risk. However, FIFA were reportedly demanding to double their receipts from the game to a whopping $1billion.
Needless to say, there have no doubt been all kind of conversations behind closed doors to try to get a deal done that worked for both sides, but in the end, EA have decided to go it alone. This seems to offer a big lesson on brand licensing, which could be that Licensors can kill their own golden goose if they are not careful. EA already reportedly have deals with the major national leagues & with UEFA for the Champions League, and so the question is what is the value of the FIFA brand & IP? Football is a massively tribal sport, and fans care first about their teams and star players, and the video games player cares about that plus perhaps the glamour and kudos of the top players in the world. In the end, there may not actually be that much value in the FIFA name, or at least not enough to merit $1bn.
That is not to say that EA won’t face risks with their new ‘EA SPORTS FC’ title. For those old enough to remember, FIFA (the game) once had major competition from International Super Star Soccer, which morphed into Pro-Evolution. Looking back in time, Pro-Evo was a far better game, but they didn’t have the license or the star players, which FIFA did, and over time EA fixed the gameplay to make it as good as Pro-Evolution, and maybe better. The key thing to note here is that a worse game with branding and star players won a head-to-head battle.
The key question going forward will be whether the star players, national leagues & UEFA champions league will be enough to propel EA to ongoing success versus whatever official FIFA versions EA’s competitors are willing to pay to produce.
In the end, FIFA can’t fail but to lose out though, because at the very least the effect of these changes will be to split up the video console football (soccer!) revenues between multiple titles. And it seems unlikely any other company would stump up $1bn, when EA will be directly competing. The Golden Goose may be about to downsize, and in that should be a lesson for Licensors in general, a lucrative bird in the hand, is often the best option.