EA FC 24 Is EA Sports Big FIFA-Free Gamble

Businessweek

One of the world’s most popular video games lost the licensing deal that helped make it famous. This is the story of making EA Sports FC 24.

By Mark Milian and Cecilia D’Anastasio

October 11, 2023, 5:00 AM UTC

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Sitting in a mock living room at his office in Vancouver, John Shepherd gestures to a video game avatar of soccer star Erling Haaland on a screen beside him. He’s especially proud of Haaland’s shorts. Shepherd narrates over a series of animations showing the Norwegian giant kicking and swiveling his hips. “It’s not easy to get that cloth looking physically accurate,” he says. “That was multiyear development.”

Shepherd has been working on FIFA, Electronic Arts Inc.’s smash hit soccer franchise, since 2008, after starting at EA as a game tester fresh out of college. By the time his first edition launched, FIFA was already 16 years old and an international phenomenon. Now he’s executive producer, and the game is one of the bestselling series in the world—bigger than Minecraft or The Sims—with more than 375 million copies sold and versions in 20 languages. Snoop Dogg and Michael Phelps have declared themselves fans. Real-life professional soccer stars protest publicly on social media if they think their virtual equivalent isn’t fast enough. EA has put out at least one new FIFA game every year for the past three decades—until now. On Sept. 29, after the failure of licensing renewal negotiations, the company released the first game in the series not called FIFA.

The partnership between FIFA, the video game, and FIFA, the Fédération Internationale de Football Association, soccer’s corruption-prone, Zurich-based governing body, was one of the most lucrative in sports media. Like most corporate breakups, the split was mostly about money, with FIFA asking for more than EA was prepared to pay. There were other disagreements, too: EA’s leadership had long chafed at the requirement to run proposed game tweaks past bureaucrats in Zurich, while FIFA feared any loss of control.

The newest edition of the game is called EA Sports FC 24 (FC, as in “football club”). While it retains almost all the content from previous games—authentic versions of nearly every major club, national team, league, stadium, player, ball, shoe, jersey and, yes, the shorts—you can’t play the World Cup. In interviews with Bloomberg Businessweek, EA executives argue that this shouldn’t matter, that their customers care more about the other aspects of professional soccer that FIFA doesn’t control. At the same time, they give the distinct impression that EA would have happily renewed its licensing agreement if only FIFA weren’t asking so much. EA was set to pay $160 million a year for the rights, but FIFA wanted much more, says Michael Pachter, an analyst at brokerage Wedbush Securities. (EA and FIFA declined to comment on the terms.)

The FIFA rebrand comes at a key time for EA and its chairman and chief executive officer, Andrew Wilson, an Australian-born veteran of its FIFA franchise. The company will likely soon become the most valuable independent game publisher left standing. Microsoft Corp. is in the final stages of its $69 billion acquisition of Activision Blizzard Inc., which would add Call of Duty and Diablo to a stable of franchises that already includes Halo, Elder Scrolls and Minecraft. Sony Group Corp. has also been steadily buying game studios, such as Bungie and Insomniac Games. Over the past year, EA shares have routinely moved up or down in response to developments in Microsoft’s pursuit of Activision Blizzard—a sign that investors suspect EA could be the industry’s next acquisition target. There’s no clear list of interested suitors, but as EA has a market value of $33 billion, speculation centers on deep-pocketed tech companies.

The industry is consolidating, in part, because of the ballooning costs of developing blockbuster games. Meeting the expectations of modern players, who are accustomed to the glossy graphics and sharp play of action-adventure games such as God of War, can require a staff of hundreds, many years of labor, and a budget exceeding $200 million per game. A dud can be devastating.

Consider Haaland’s shorts. “Our shorts used to be super stiff, like they would barely move,” Shepherd explains. The thighs of a more muscular player like Haaland would sometimes burst out of his virtual uniform, leaving an odd patch of disembodied flesh on the screen. So a team within EA spent years studying how real cloth deforms on the body, testing ways to replicate it. “It’s difficult with the yearly cycle to get something every year that has such an investment like cloth,” says Fab Muoio, lead producer on FC. And all that work might barely be noticed. Nobody is buying a $70 game for the shorts.

EA’s focus on realism originates with its founder, Trip Hawkins, who started the company in 1982 after leaving a job at Apple Inc. A lifelong sports fan, Hawkins spent years courting legendary commentator John Madden to persuade him to consult on—and lend his name to—a simulated American football game.

With team rosters and playbooks that mirrored the real National Football League, Madden, which continues to be a big seller, pioneered the verisimilitude that’s now standard across the industry. Encouraged by its success, EA began looking toward the much bigger audience, then largely outside the US, that prefers the other kind of football. The company struck a deal with FIFA to use its brand, and, just before Christmas 1993, EA released FIFA International Soccer. It topped the charts in Europe despite what seem to the modern eye like major limitations: Rather than superstars, for example, gamers had to make do with generic names such as P. Stryker.

In 1996, EA asked the flamboyant French forward David Ginola to put on a bodysuit and kick around a ball for its cameras, and his performance became the basis for the game’s first use of motion capture. The technology, now commonly used in films and video games, takes the recording of a person’s movements and maps them onto the skeleton of a digital figure to create more realistic action on-screen. Reviewers described the animation as a breakthrough, though it was rudimentary by today’s standards. “We would just have kicks,” says Paul Baruzzi, a senior gameplay animator. “It was one animation, and we make the ball go.”

It wasn’t always obvious that EA was destined to corner the soccer market. In the 2000s, Pro Evolution Soccer, developed by Japan’s Konami Group Corp., was winning fans with intricate club management features that allowed the trading of players and adjustments of team formations. “It was a dogfight,” says Peter Moore, who ran EA Sports at the time. But even if working with FIFA was annoying—marketing materials and major changes to the game went to Switzerland for a six-week approval process—the brand set EA apart. “We always worried during that period of time that if we walked away from FIFA, Konami would pick up the FIFA name and leverage the work we’d done,” Moore says. So EA kept reupping with FIFA and added affiliate deals that prevented Konami from using the names, players and jerseys of numerous major clubs. As a result, sales of PES slid as FIFA’s soared.

With its major adversary relegated, EA searched for more revenue from its soccer titles. In addition to putting out a new main title annually, it sold a street soccer version, a standalone product for the World Cup and a short-lived series for the European Champions League. Some years, there would be three EA soccer games to choose from. This soon proved too much for even its biggest fans, who weren’t prepared to pay separately for similar games. Then the company discovered a much more effective way to get customers to consistently shell out money: in-game purchases.

There’s a World Cup tradition dating from the 1970s known as the Panini sticker book. Fans buy packs containing five random stickers of players and try to complete a book of teams designed for each tournament. Inevitably, collectors have duplicates and gaps, so they trade. Think of it as the McDonald’s Monopoly game for the soccer-obsessed. The stickers inspired EA to create a new mode inside the game, FIFA Ultimate Team, which made its debut in 2009. Players assemble a fantasy team by purchasing packs of digital trading cards that can be bought and sold in an in-game marketplace. In 2016 sales of digital goods overtook sales of packaged games. The gap has widened every year since, and these sorts of live services now account for three-quarters of EA’s $7.4 billion in annual revenue. In the 2021 fiscal year, which ended in March, the company generated $1.6 billion from Ultimate Team modes across its suite of games. (The company no longer breaks out Ultimate Team revenue.)

These extra in-game payments also made EA very unpopular. Parents hated the additional requests for money from their kids—and the occasional shock credit card bill. And many gamers disliked the idea of a mode where the player who spent more won more. In 2012 and 2013—the year Wilson took over as CEO—the website Consumerist named EA the worst company in America and called on it to “stop treating your customers like human piggy banks.”

Despite the grumbles, the popularity of FIFA only grew: Sales increased 20% last year, according to Wilson. But in 2021 the company began to seriously contemplate perhaps the biggest change to FIFA in its nearly 30-year history, says DJ Jackson, vice president for brand. Talks on a new licensing deal were stalled—and not only over the financial terms. EA wanted to relax the process for running changes by Zurich and expand its use of the FIFA name outside of the game while retaining exclusive access.

Yet even as FIFA struggled to recover from a series of scandals, it worried about giving up too much brand control. Over the previous few years, multiple international soccer officials had pleaded guilty to US criminal charges related to fraud and bribery. (A FIFA spokesman says the organization “has implemented extensive reforms” since then.) “Cover art every single year would be this long, drawn-out challenge,” Jackson says. “Six swooshes on this piece of content but only one Adidas three-stripe.” How would FIFA’s official licensing partners—which include Adidas AG—react?

EA floated in an October 2021 press release the prospect of changing the name of the game. This appeared to be, at least in part, a negotiating ploy. The company still hadn’t made up its mind about how to proceed, Jackson says. “The FIFA license is obviously a big one for us. It was the name of the game for 30 years,” he says. “We felt that there was a delta between what the organization was asking and what we were prepared to pay.” The final decision was made early last year, and, after much debate, EA announced its new FC name a few months later. (One alternative was Copa, the Spanish word for cup and the name of many of the most prestigious soccer trophies in Latin America.) It remains an adjustment for many employees, who still call the game FIFA out of habit, Jackson says. “There’s almost a swear jar now.”

By the time the first customers got their hands on the final FIFA version in September 2022, work was well underway on FC 24. Putting out a new title annually requires a rigid cycle. Production typically starts in early September. That’s when the next game’s major features are decided, and each EA team starts anew. The gameplay division makes adjustments to the controls, the match experience group refines the presentation on the field, then the sound teams capture stadium chants, select the soundtrack and so on.

Much like in the real FIFA, women historically have been an afterthought in the video game. That’s beginning to change as women’s soccer gains in popularity. EA added the first female players in 2015 for the World Cup and women’s clubs last year. In August it pushed an update to FIFA 23 touting the addition of a hijab for Nouhaila Benzina, a defender for Morocco’s national team. FC 24 will allow players to deploy women in Ultimate Team and introduces the first headlining female announcer, the Sky Sports commentator Sue Smith.

An important ritual for Sam Rivera, who’s in charge of gameplay for FC, is to gather his most devoted customers into a room and listen to them complain. To accomplish this, EA routinely flies professional video game players to Vancouver to solicit their feedback. These conversations influence what the company prioritizes in development. One feature geared toward pros in FC 24 is called the controlled sprint dribble: a third running speed between jogging and sprinting. Another is precision passing, which allows the player to put spin on the ball. It takes Rivera a full minute to explain all the buttons required to make one of these passes. “When you go back to last year’s game and you don’t have that feature, you feel like, ‘Oh, something is missing,’” he says. Such changes are intended, in part, to persuade fans to pay to upgrade to the latest release. EA also stops updating the rosters and other features of older games over time, providing another reason to upgrade.

In both good and bad news for EA, gamers so far seem indifferent to the FC 24 tweaks. While video game review site IGN praises the game’s enhanced realism in ball physics, player likeness and field wear and tear, it concludes FC “is just about the same, frustrating but beautiful game that FIFA’s been for many years.” The loudest complaints from fans are about the $30 cost of a special pack of Ultimate Team cards.

But there’s that notable absence: the World Cup. With the FIFA partnership terminated, EA no longer has the right to simulate the federation’s flagship event, the world’s most popular single sporting competition. Previous games allowed players to trace a team’s real passage through the tournament and re-create—or rewrite—some of the most iconic moments. While there’s plenty more to do in the game, as excitement builds for the next men’s World Cup, to be jointly hosted by the US, Canada and Mexico in 2026, the gap might start to seem more glaring.

EA’s Vancouver studio occupies a series of buildings, partly connected by elevated walkways and all decorated with sports memorabilia. The company’s UFC, NHL and Skate games are made here along with FC 24, and the workspaces look like a college fraternity converted into cubicles. Guys in sweatshirts and ball caps sit at desks next to TV screens and game controllers, with rows of national flags and jerseys hung from the ceiling. The office’s intramural soccer league is technically coed, but there aren’t enough women to balance out the teams. It’s no surprise who the best players are: “The FC dudes,” says Juliana Nogacz, the office’s employee engagement and events lead.

Although the majority of the work on EA’s games is done in Vancouver, some of the online services are developed in Bucharest. A team in Cologne, Germany, is responsible for evaluating players and setting their ratings, which determine how fast their avatars run and how accurate their passes are. The process can be contentious: In September 2022, the French superstar Kylian Mbappé, who shared the game’s cover that year with Australian women’s captain Sam Kerr, protested his 36% defensive rating. “It’s like I’m not here when we defend?” he said in a YouTube video. “I go take a coffee?” Dzuljeta Tamsone, an assistant producer in Cologne and an ex-Latvian national football player, is used to the complaints: “Our ratings reveal always encourages a spirited discussion,” she says.

In late March, the FC 24 team was making final preparations for a marketing blitz. Starting Easter weekend, the game would be advertised at 119 televised matches. The ball for the Liverpool-Arsenal English Premier League game would stand on a lime green pedestal featuring the FC 24 logo. At Real Madrid’s match with Villarreal, Karim Benzema, the reigning winner of the Ballon d’Or—an annual award for the world’s best player—would hold an FC 24 banner with gold tassels by his teeth.

Also in late March, Wilson hit send on a companywide memo announcing that as part of a restructuring, EA was terminating 6% of its staff, about 800 employees. Those were hardly the only tech or media layoffs last spring, but the decision was still a surprise to many in the company. The subsequent reorganization created two distinct development and publishing arms: EA Sports and EA Entertainment. It was clear which one was top dog: What would soon become the entertainment arm had just canceled mobile versions of two of its biggest series, Apex Legends and Battlefield. It also appeared to be hit harder by the layoffs.

A potential buyer might find the neat division between EA’s valuable sports games and everything else convenient. In an interview, Wilson says that wasn’t a factor, but he adds: “Is it plausible that someone would want to acquire a company like ours at some point? Sure, I mean, if you want to be part of the future of entertainment.”

EA regularly flies professional video game players to Vancouver to get their feedback. Photographer: Mackenzie Walker for Bloomberg Businessweek

Outside of sports, EA’s biggest franchise is Star Wars. The latest game, Star Wars Jedi: Survivor, came out in April and was a bestseller. But Star Wars, like the sports leagues, is owned by someone else: in this case, Walt Disney Co., which had a decade-long exclusive licensing deal with EA before letting the agreement expire this year. EA will keep making Star Wars games, but it will have competition from NetEase, Skydance Media and Ubisoft.

Could something similar happen with soccer? There’s a real risk that another gaming company will take the FIFA brand and begin selling games under its banner. Still, the complicated nature of sports licensing means it won’t be easy to build a full-throttle competitor. EA has exclusive agreements with many global football leagues and teams, meaning a challenger wouldn’t be able to feature them.

These relationships are key to the biggest technical achievement in FC 24. EA had been trying for years to make FIFA feel more current, with live rosters that reflect which players are hot and which are warming the bench. Now it’s using an AI-driven technology, HyperMotion V, to capture data from athletes’ actual match performances and incorporate them into animations and gameplay. EA will be able to produce individual representations on a scale that would be logistically impossible with traditional motion capture. FC 24 now has custom animations for more than 1,200 players, up from about 50 in FIFA 23. None of that would happen, of course, without permission from the leagues and teams.

Rivera envisions all sorts of new HyperMotion-powered features. “Let’s say it’s the Champions League final,” he says, “and Haaland scores an amazing goal. We get the data the next day.” From there, a player might be able to see the game through Haaland’s eyes and experience everything he saw on the field at that moment.

HyperMotion can do a lot, but it can’t yet do muscles or hands. For those, EA still uses motion capture. The Vancouver studio typically hires soccer players from nearby colleges, who are asked to strip down to their underwear and run on treadmills. Alternatively, they put on black bodysuits covered with dots and play on the A Stage, an expansive warehouse with cameras suspended on metal beams overhead. Staffers sit on the sidelines in front of computer screens, and the footage is fed into machine-learning software that analyzes muscle flexing or hand movements. “Artificial intelligence is getting to a level of detail that allows us to replicate the motion of each finger in the game,” Rivera says.

All this costs money. Happily for EA, the breakup with FIFA opens possibilities for generating revenue. One example is a new partnership with Nike Inc.—something that was impossible when EA was tied to FIFA, which was tied to Adidas. The companies declined to disclose financial terms, but the swoosh is all over FC 24; there’s also a new Nike Ultimate Team campaign mode.

The pressure is on for both commercial and critical success. “What are the stakes if FC was a flop?” Wilson asks. “It’s a big part of our company. The stakes are high.”

But Wilson is already looking past FC to a world where EA’s empire stretches beyond video games. There’s nothing on the walls of the conference room next to his office in Redwood City, California, but an abstract painting and a whiteboard—colleagues warn that he’s prone to use it. Reaching for a blue felt marker, he draws a circle with spokes representing old media: “books, radio, TV, movies, theme parks.” He draws another circle representing a new kind of entertainment company: “play, create, watch, connect.” This is not exactly a unique insight—see Mattel Inc.’s huge success with Barbie, for example. Yet despite EA’s heavy reliance on others’ intellectual property, Wilson says EA is ready for the transition. He professes admiration for Disney and says that even though that company has struggled to make its own video games, much of what it’s doing will survive the shift. He’s especially fond of Disneyland. So when will we be able to visit an EA equivalent? Wilson hesitates, then says: “It costs a lot to build theme parks.”

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