- Football game publishers’ obsession with realism has transformed the licensing landscape
- While elite clubs and leagues are taking advantage, licensing business is messy lower down
- Decentralisation favours the top clubs, but prevents leagues from realising potential
While difficult for many from older generations to fully understand, virtual recreations of real-life sports have become just as popular as the real thing among people under the age of 25.
The EA Sports FIFA franchise had 45 million unique players during 2018, while Konami’s Pro Evolution Soccer series had an estimated five million people. Over half of those players have invested hundreds of hours into the game, meaning that much like its real-life counterpart, football video games are a multi-billion-dollar industry. Enjoyable, immersive gaming experiences are shaping millions of young lives in ways that music and film can no longer achieve.
This cultural shift has given sports leagues and teams the marketing platform they’ve been looking for. The 50 million active players across FIFA and PES gives rights-holders the opportunity to ‘reach the unreachables’ for hundreds, sometimes thousands of hours per person each year.
For the game publishers, achieving commercial success is no longer purely down to an accurate recreation of the sport itself. A sports game must also offer players a chance to feel what it’s like to be a professional sports superstar – to play like the world’s best players and provide the feeling of being in the world’s most famous sporting arenas.
In order to do this, publishers spend hundreds of millions of dollars to license intellectual property, and many more millions to digitally recreate it. As a result, football games have become so realistic that the bonds that develop between young people and the digital forms of players, clubs and leagues are incredibly strong, and directly transferable to the real world.
For the past 25 years, EA Sports has consistently spent more than Konami on licensing and partnerships with clubs and leagues, often tying them down to exclusive contracts. The continual expansion of its licensing programme has made FIFA the undisputed market leader over the past decade. Pro Evolution Soccer once rivalled FIFA in the sales charts, but its historic failure to invest in licensing has massively reduced its market share.
Well-placed sources say EA Sports spends between $100m (€90m) and $150m on partnerships and licensing each year, plus a large royalty fee to FIFA for the use of its name. Konami spends considerably less – between $30m and $40m on licensing and partnerships.
EA Sports’ lead partner deal with the English Premier League, from 2019-20 to 2024-25, is understood to be worth well in excess of $30m per season. The partnership began over two decades ago as a simple licensing deal but has now expanded to include patches on referee and assistant referee uniforms, sponsorship of in-broadcast stat overlays and LED time in Premier League stadiums.
The partnership continues to include a licensing deal covering all 20 Premier League clubs, but the amount of IP included in that licensing deal has exponentially increased since the original deal struck in the mid-90s.
EA’s new deal includes the right to have every Premier League club’s name, kit, crest, and stadium in its FIFA series. All 20 Premier League stadiums appear in painstaking detail, and each Premier League team has its anthems and songs recorded live at a stadium so that their appearance in the game is authentic.
The deal also includes exclusive rights to the ePremier League – the esports version of England’s top-tier league – which will be based on the FIFA game until at least the end of 2024-25.
Aside from its licensing and royalties deal with world football governing body Fifa, EA’s partnership with the Premier League is its most important and most expensive partnership. It is also one of its most straightforward.
EA Sports’ deal with the Premier League is unique in that all the intellectual property it could ever want from the league can be secured in a single deal. Premier League clubs agree to sell all their video game licensing rights as a collective, with virtually no intellectual property excluded. The Bundesliga is also organised in a similar fashion, with only its stadiums excluded from its collective licensing deal.
However, most other leagues and competitions are far more difficult to pin down. Many prominent clubs and leagues rely on the zeal of game publishers to appear in football video games, and many don’t appear at all.
“You can’t always do a league-wide deal where everybody steps in line,” says Peter Moore, now chief executive of Liverpool Football Club but formerly president of EA Sports. “Football deals are a little bit different (to American sports), and so there’s been instances where they’re a little bit more challenging to get them done, but I wouldn’t characterise any of them as awkward. They’re just not as simple.”
It is fair to say Moore is being charitable. One EA Sports employee tells SportBusiness: “We had a situation where we asked the teams, the players, the league: who has rights to the player names and likenesses? And they all said they did. Our legal department couldn’t believe it.”
For US sports, this licensing process is simple: a single publisher agrees an exclusive deal with the league and the players’ union, thus receiving every piece of intellectual property it could possibly need to recreate the authentic experience of an NFL, NBA, MLB or NHL game.
But to create the level of universal authenticity needed to garner sales in the tens of millions, football game publishers must acquire rights in individual and collective deals with hundreds of clubs, leagues, agencies and player associations; as well as deals to use branded sports equipment such as football boots and balls.
Completing a set of licensing rights for a league can be an arduous process, often involving middlemen and agencies. The most prominent example of this is in Italian football, where licensing club competitions and their constituent clubs requires deals with the national federation, Lega Serie A and each individual Italian club.
Brazil’s national team was filled with fake players on the 2018 version of FIFA due to the non-renewal of an agreement enabling the Brazilian football confederation to license players’ image rights.
Similar problems with player names and likenesses prevented the German and Dutch national teams from appearing in Pro Evolution Soccer and other football games. For years, neither country was a full member of FIFPro, the international players’ union, which has a mandate to sell name and likeness rights on behalf of every player from a member nation.
Jonas Lygaard, senior brand director at Konami, has had years of experience working on football games, having worked for EA for five years before arriving at Konami. Lygaard has managed to secure deals with every single Serie A club for Konami’s upcoming eFootball PES 2020 and, most recently, a deal with the league itself. The deals have taken over a year to complete.
“This market is muddy and non-linear. It basically depends on each country and how they have structured their rights – either centralised or decentralised,” Lygaard says. “Italy is the prime example of a decentralised set up where the league doesn’t hold any rights to the clubs’ intellectual property. They hold rights to the Serie A tournament logo, the competition, the structure and the trophy, but they do not own anything else besides that. That is why we needed go out and sign each club individually.”
Who owns what?
In most cases, FIFPro holds rights to player names and likenesses. In cases where a country is not a member of FIFPro or has a special arrangement with the union, player names and likenesses are either held by the individual players themselves, their clubs, the league their club belongs to, or the national federation.
Player likenesses are different to image rights. For a football game to exploit the image rights of players – using their real-life image in a promotional context – it must either need a specific agreement with their club or with the individual player. It does not acquire these rights via deals with a league.
A game publisher can acquire collective image rights to players from a certain club and exploit them by displaying multiple players in their club kit. If a player is to appear alone, an individual image rights deal is required with that player.
For example: from 2019-20 to 2021-22, EA Sports is the official video game partner of Liverpool Football Club. It had already received a licence to put Liverpool in FIFA 20 via its partnership with the Premier League. Aside from LED space and digital activations with Liverpool, EA acquired collective image rights and the right to access players for marketing material.
After this deal was struck, EA signed an individual image rights deal with Liverpool defender Virgil Van Dijk, who will appear on the cover of the FIFA 20 Champions Edition. The deal with the Premier League licenses the club in the game; the deal with Liverpool enabled EA to use Liverpool players in marketing material; and the deal with Van Dijk enabled him to appear on the cover. Without EA’s club partnership, however, Van Dijk would not have been able to wear his Liverpool kit on the cover.
In countries where professional football leagues are separate commercial entities, acquiring licences to have official leagues and clubs appear in a game is generally a simpler task. Of Europe’s top-five leagues, only Italy’s Serie A has not collectivised its video game licensing rights.
In South American countries, it is far more common for top-tier leagues to be operated by the football federation in that country. This generally makes licensing clubs and leagues a much more difficult task, as the federation’s ability to collectively bargain relies on clubs continually voting to do so.
In many cases, the federations and the clubs give their video-game licensing rights to agencies without too much thought. Figuring out which agencies have the rights they need – and whether those rights will be enough to fully licence a club or a league – is a constant headache for the publishers.
“It adds this extra layer of complexity in these conversations,” says Lygaard, who is trying to limit Konami’s use of agencies to acquire licensing rights. “In some countries, where there is no centralised league structure, every single club needs to be signed individually. There is a massive amount of work required to secure smaller clubs in specific countries. And for that, right now we are we are outsourcing that to some agencies.”
Whether centralised or not, clubs and leagues hold distinct sets of licensing rights. This has given clubs the opportunity to strike deals with either EA or Konami, regardless of the deals completed by the league they belong to. Some clubs are braver than others – deciding to agree exclusive deals with Konami and not appear in FIFA.
Decentralisation and competition
When Juventus agreed its exclusive partnership with Konami, the club added to the long list of brave decisions it has taken over the past three years.
Signing Cristiano Ronaldo for €100m; changing the club’s crest to an angular ‘J’ based on the club’s famous black-and-white stripes; promptly ditching those stripes for monochrome blocks separated by a single salmon pink stripe; and now, this.
Because Serie A clubs agree licensing deals on an individual basis, Juventus had the freedom to sign exclusively with whichever company it wanted. Its exclusive deal with Konami was agreed last summer, prior to the finalisation of Ronaldo’s transfer.
The partnership includes Juventus’s exclusive video-game licensing rights. This means the club is only authorised to appear in Pro Evolution Soccer only for the next three seasons. From 2019-20 to 2021-22, Juventus’s name, kit, logo and stadium will not appear in FIFA, where Juventus will appear as ‘Piemonte Calcio’. It will be the only Italian Serie A club that does not appear in the game.
Konami will also become Juventus’s official video game partner, replacing Cygames. Cygames is understood to have paid between €5m and €6m per season during its deal, and it’s thought Konami will be paying a similar amount.
The deal is a huge coup for Konami, but Juventus and its other sponsors will lose reach to as many as 45 million young people for the next three seasons. It will also be unable to compete in any form of FIFA esports.
The Konami deal represents a big risk for the club and sets them apart from Europe’s elite, as it’s a risk they didn’t necessarily have to take. The competition between Konami and EA – as well as the complex licensing landscape – is enabling clubs to split their marketing efforts across both games.
Clubs feel the power
As technology and video games have advanced, clubs have become more and more impressed with the level of realism offered by both EA and Konami. The near-perfect digital recreations of players, kits and stadiums have made the matchday experience on both games near-identical to a high-level TV production.
Clubs have fallen in love with this, and especially with the faithful recreations of their home stadiums.
“There are crews that travel the world – the job I always wanted – with digital cameras and go to every football stadium in the world and, of course, be granted access because the club wanted their stadium to be meticulously detailed in the game,” says Moore. “They’ll take hundreds of photographs of every angle of every stadium that they can get access to.”
“They are using very special, state-of-the-art cameras,” says Andreas Jung, chief marketing officer at Bayern Munich. “The Konami team travelled to Munich from Japan and they spent a lot of time – more than a week – scanning all the parts of the arena: the pitch, the stands, the players in the tunnel, the mixed zone, everywhere. They made incredible pictures and you will see that in the game.”
This reverence of clubs’ home stadiums is something that executives and gamers appreciate on a similar level. As a result, FIFA and PES are in a constant race to provide the most true-to-life experience possible. Top clubs have realised that every single piece of intellectual property they own has value to the publishers, and that exclusivity doesn’t have to be blanketed across every single piece of IP.
Bayern Munich will appear in both FIFA 20 and eFootball PES 2020, both as part of the Bundesliga’s deal with EA and a specific club partnership with Konami. Because Bundesliga stadiums are not included in the league-wide licensing deal with EA, Bayern decided to license its Allianz Arena home stadium to Konami on an exclusive basis, boosting the value of the partnership.
Jung took full advantage of the ability to reach both FIFA and PES’s audiences – something he believes is increasingly important as Bayern’s fanbase becomes ever-more global.
“Football is more than just a game taking place in the stadium every weekend or every second weekend in your own ground,” he says. “The fans around the globe are looking for new ways and opportunities to give their support and engage with their favourite team and with their favourite players every day. And if you see that only 75,000 spectators have the chance to attend the match in the Allianz Arena, so much more do not have the opportunity to make their way to Munich once in a lifetime.”
Paris Saint-Germain is another club that will appear in both games this season. It will appear on eFootball PES 2020 via the Ligue de Football Professionel’s deal with Konami, as well as FIFA 20 via the LFP’s licensing deal with EA. However, the club has had an individual partnership with EA for the past three seasons and has renewed for another five seasons from 2019-20.
PSG has made video games a key part of its marketing strategy, from activations in the game to an esports presence across multiple games and continents.
“The partnership includes licensing rights to Paris Saint-Germain IP and the collective use of our players, but also a broad range of sponsorship rights, including extensive digital rights,” says Marc Armstrong, chief partnerships officer at PSG. “EA Sports also work with us to produce high-quality ‘game-inspired’ content to promote key events for the club, such as player announcements or major kit launches (including the initial Jordan launch last year and our recent Home Kit launch).”
Liverpool recently gave up their partnership with Konami and have gone back to EA. The club was partnered with EA from 2013-14 to 2015-16, before signing a partnership deal with Konami from 2016-17 to 2018-19. Having had extensive experience working at EA, Moore believes that the difference in demographic between FIFA and PES is negligible and is thus comfortable with appearing on EA’s game exclusively.
Speaking about the game’s demographics, Moore says: “What you’ve got between Pro Evolution Soccer and FIFA is deep-rooted likes and dislikes – classic video game fanboyism.”
He continued: “What FIFA has done well is provided a level of authenticity through its licences over the last 10-15 years that has separated the two games.”
As much as the top clubs have woken up to new possibilities, the fact that video-game licensing is a nine-figure industry is a minor miracle. Marc Aubanel, who worked as an executive producer for EA for over 13 years from 1993 to 2006, remembers how it all began.
“When we first started licensing, none of this was commoditised. There was no player union where we could collectively license an entire league. I don’t think any of us that were expecting it to be so legally complex. So for us, we were wondering…how can they work like this? This business doesn’t even make sense! They can’t license collectively! It was a real shocker. But I think our persistence helped to build the modern licensing infrastructure for soccer in Europe – all because of the video game.”
Along with the modernisation of licensing, video games have provided football with an entirely new way to bring young people into the sport. Millions of children are spending more time playing video games than playing or watching sport, and games like FIFA and PES are ensuring many of them remain interested in football as they enter adulthood.
“If I look at my eight-year-old son, who two years ago started to be a superfan of football, the reason why he’s such a big fan of football now is because he played FIFA.” says Ralf Reichert, co-chief executive of esports tournament organiser ESL. “He had watched it on TV and had been to the stadium, but the real hook was playing the video game. Any sport federation, or anyone who owns a sport: if you don’t have a video game, you’re toast.”