Breaking Up Is Hard to Do

A licensing war has been quietly brewing in the world of sports video games, and last week it boiled over in rather ugly fashion. The dispute is between Electronic Arts and FIFA, the nonprofit organization that organizes the World Cup and acts as the global governing body of international football. And the outcome could forever change the trajectory of one of the world's most lucrative sports game franchises and the broader category it belongs to.

At the heart of the issue is the rights to the FIFA brand and its associated trademarks, and whether EA deserves an exclusive contract to keep using it as its existing 10-year license approaches the expiration date.

• The dispute became public in early October when EA said it was considering rebranding the FIFA franchise as it reviewed its "naming rights agreement with FIFA." EA also sent out a press release about its renewed contract with FIFPRO, the football players union, that raised suspicions further.
• Plenty of soccer games have come and gone in the past three decades, but only EA Sports' FIFA has survived to this day with a vast majority of the real footballing world onboard, including rights to player likenesses, team names and the coveted FIFA brand. Those deals are separate from the FIFA licensing one, meaning EA could go on without the FIFA name if it chose to.
• Both companies want to cash in on the bright future of football games, and both are now nearing what might have once been an unthinkable conclusion: that neither EA nor FIFA needs the other anymore.

The New York Times blew the story wide open last week. In a report titled "EA Sports Is Planning for a FIFA Without FIFA," journalist Tariq Panja detailed how the relationship between the leading sports game maker and the nonprofit has almost completely fallen apart.

• The story contains a number of bombshells. Among them is the fact that FIFA counts its EA licensing deal as its most lucrative agreement, worth about $150 million per year. Meanwhile, EA's FIFA games have generated more than $20 billion in sales to date.
• EA's contract expires in 2022, and negotiations over the past two years have strained the relationship. It's a purely financial disagreement, with FIFA reportedly asking for close to double its current licensing fee and more stringent rules. EA is demanding more freedom to monetize its football games with new ventures like esports and even NFTs.

FIFA was not pleased. The organization sent out a press release on Friday saying it plans to "adopt a new commercial positioning in gaming and esports to ensure that it is best placed to make decisions that benefit all football stakeholders." Reading between the lines, it looks unlikely that EA will retain its FIFA license come next year.

• EA is already in a strong position. The company holds more than 300 licensing agreements across the world of pro football that let it create photo-realistic simulations using all manner of real-world names, brands, trademarks and other legally protected entities. EA also recently registered two trademarks in Europe for EA Sports F.C., a potential new name for the franchise.
• Much of EA's football profit comes from in-game microtransactions generated by its fast-growing Ultimate Team live service component, which made $1.6 billion last year thanks largely to FIFA games. That type of reliable revenue stream may be what the FIFA organization is interested in tapping into on its own.
• FIFA may not need or want EA all that much, either. The organization is trying to diversify with a number of new ventures and a plan to hold the World Cup every two years. "The future of gaming and esports for football stakeholders must involve more than one party controlling and exploiting all rights," the organization said last week.

Many of the most successful sports game franchises are built around singular brands, like Tony Hawk and Madden. But in many cases, these brands end up sucking much of the oxygen out of the room while often providing little in the way of innovation.

Pro football doesn't need just one brand or game developer to own a majority of the market share, and certainly not a game as painfully iterative as EA's FIFA is today. If both parties do indeed walk away from their relationship, a new generation of football games, some carrying the FIFA name and others without it, could spring up and provide some much-needed competition to whatever form EA's football franchise takes in the future.

A MESSAGE FROM TRELLO

If your organization wants to belong to that class of innovators during future times of change, there are methods you can use to continue innovating even when the waters are murky. Just like with running, you have to make innovation a daily habit in your company—not just an activity you practice when the conditions are right. Here are four ways you can set yourself up for success.

Learn more

Overheard

• "TiMi is looking to grow. Obviously, not only outside of the Chinese market, but also growing outside of what's been successful for them. For expanding into the Western market and trying to establish a name for the studio, and a really compelling product, it feels like the easier path is by making a really compelling PC/console game." ―Scott Warner, the creative director of new Seattle-based studio Team Kaiju, chatted with GeekWire about parent company Tencent's TiMi Studios and its ambitions to grow outside the mobile free-to-play market.
• "Looking towards the future, we envision that the metaverse will continue to transform how you connect, create, and express yourself through shared experiences. You can learn about ancient Rome by walking through its streets with your classmates, rock out at concerts with friends who live thousands of miles away, and host a virtual team building activity with your colleagues across the globe. Just about anything you can do in real life you can experience on Roblox." ―Dan Sturman, the chief technology officer at Roblox, gave a keynote address at the company's developer conference last week, where he spoke about the company's metaverse ambitions, its upcoming NFT-like, limited-run collectibles and more-realistic avatars.

Lootbox

On Protocol: Amazon Games chief Christoph Hartmann sat down with Protocol last week to discuss the successful launch of New World, the trials of big-budget game development and Amazon's broader game industry ambitions.

Valve vetoes crypto and NFTs. The owner of Steam has updated its terms to prohibit blockchain games or ones allowing players to exchange NFTs and cryptocurrency. It proved a controversial move, and Epic Games has already acted quickly to open its game store to so-called pay-to-earn titles, The Verge reported on Friday.

Scopely scoops up a mobile Sony property. The free-to-play publisher plans to acquire Sony Pictures Entertainment's GSN Games, a division of the Game Show network specializing in mobile and online gaming, for $1 billion.

Google uses the Apple playbook in its Epic case. While Epic v. Apple is tied up in appeals, Google is borrowing a tactic from the iPhone maker with a counterclaim against Epic for breach of contract, TechCrunch reported last week. A similar claim led to Epic paying Apple $6 million.

Game delays are creating a competitive winter release slate. The launch of indie darling Heart Machine's long-awaited new game Solar Ash has been pushed from October to Dec. 2, while FromSoftware's next action-adventure game, Elden Ring, has been delayed by one month to Feb. 25.

Final Fantasy XIV hits a major milestone. The revered MMORPG from Square Enix has surpassed 24 million registered players, making it the most profitable game in the franchise's multidecade history, IGN reported last week. More than half of that player growth has happened in the last four years, following the release of Stormblood.

The Switch gets dethroned. Sony has finally beat Nintendo in U.S. console unit sales, breaking the Switch handheld's 33-month streak, according to September data from the NPD Group. We'll have to wait until next month's report to see if the Switch OLED model helps Nintendo reclaim the top spot.

New studio Possibility Space sports impressive talent. ArenaNet co-founder Jeff Strain has a new studio formed of seasoned developers from EA and Ubisoft, among others, Gamesindustry.biz reported. Two notable names include artist Jane Ng, best known for work on Campo Santo's Firewatch, and former game journalist and podcast host Austin Walker, who departed Vice's Waypoint earlier this year.

The Switch Online expansion pack gets a peculiar perk

Nintendo, never content with taking a traditional approach to services, has announced a new benefit to its upcoming Switch Online expansion pack: paid Animal Crossing DLC. It's an interesting choice to sweeten the deal for the $50 per year subscription, which the company plans to sell starting Oct. 25.

But it also forces a potentially unnecessary perk on customers eager to try the included N64 and Sega Genesis games if they don't play Animal Crossing, like yours truly. Nintendo seems to be banking on converting enough of the game's existing players into new subscribers, while also hoping players like me pony up the extra $30 even though it includes something we don't plan on using. It's classic Nintendo, in other words.