The use of capital needs to be as precise as a sword, and the La Liga title move by ET Sports is a key strike in sharpening its competitive edge.
The poor value for money of FIFA's license is as obvious as an elementary school Olympiad puzzle.
The annual partnership between ET Sports and FIFA costs a whopping $250 million, compared to a fraction of what it costs to title La Liga. In the last round of the partnership, ET Sports spent just $150 million on the license.
La Liga's former title sponsor, Banco Santander, invested 20 million euros per year, which increased the league's title revenue by 50 percent. Before that, the Spanish foreign bank (BBVA), sponsorship costs 26 million euros, the intervention of ET Sports, to help the La Liga League out of the dilemma of shrinking assets.
The Banco Santander logo was integrated with the La Liga logo during the title period.
It is widely recognized that La Liga is the second most influential soccer league in the world after the English Premier League. Using the cost savings from FIFA, ET Sports continues to acquire exclusive gaming rights to La Liga, and the league has seen a win-win situation in terms of revenue growth as a result.
However, FIFA does not seem to realize that its exorbitant asking price has resulted in the loss of a stable source of revenue for itself.
It is important to note that the nature of the partnership between EE Sports and FIFA is a "licensing partnership" rather than a "sponsorship partnership". Therefore, ET Sports only has the right to develop FIFA-licensed games, but not the rights and interests of sponsors. On FIFA's official website and in various competitions, fans see sponsors such as Adidas, Coca-Cola, Wanda, etc., but not the logo of EE Sports.
It's at FIFA's e-competitions that you'll have the chance to see the ET Sports logo.
Title rights are usually the highest level of sponsorship entitlement. When the event is mentioned in official channels, the name of the title sponsor is always mentioned. Materials such as billboards, broadcast packages and event logos will also showcase the sponsor's image.
La Liga has 380 matches per year, with Real Madrid, Barcelona, and Atletico Madrid being highly popular with fans around the world. FIFA, on the other hand, hardly has any influential tournaments in non-World Cup years, and the Club World Cup and other tournaments are like chicken ribs. The two contracts between ET Sports and La Liga and FIFA show an inverse ratio in terms of price difference and rights and interests, and exposure effect, which fully illustrates the lack of cost-effectiveness of the FIFA license.
ET Sports exchanges rights partnerships for advertising effects.
The FIFA franchise has always been a cash cow for ET Sports. Every year the release of the new game can reach ten million copies sold, and the built-in kryptonite card mode "Ultimate Team" (UT) is to drive a staggering secondary income. According to EEG's fiscal year 2021 earnings report, the UT mode of EEG Sports' games generated $1.62 billion in revenue a year.
In its June 2022 earnings release, ET did not disclose revenue from the UT model separately, given the gambling controversy behind the UT model. However, the earnings report showed that the category's revenue increased dramatically from $5.63 billion in 2021 to $6.99 billion in 2022, and that the UT model played a significant role in that. It is inferred that the revenue from UT model continues to grow. Combined with previous years' information, the UT model has generated more than $1 billion in revenue for five consecutive years for EEG.
FIFA series owns the copyrights of the five major leagues, UEFA club matches, club matches of the South American Football Confederation (CONCACAF), the top leagues of many countries and the secondary leagues of some countries, basically covering the mainstream professional matches, which is built on the basis of the cooperation with many copyright holders.
However, licensing costs will continue to rise, and the pressure on the FIFA series to maintain the quality of its licenses is increasing by the day. Especially in Serie A, league licenses and club licenses are independent of each other, resulting in the FIFA series losing or currently losing the licenses of Serie A teams such as Juventus, Roma and Atalanta at one time - these clubs were signed by the Japanese game company Konami and became exclusive to the Live Soccer series.
Theoretically, since the UT model is based on collecting player cards to form virtual teams, the basic guarantee of being able to operate smoothly is owning player rights. In contrast, the importance of club rights and tournament rights is relatively low. However, in practice, cooperation with clubs and tournaments brings a lot of traffic to the UT mode. Clubs will take the initiative to publicize that their players have been selected for various best lineups in the game, and tournaments will announce some important awards in conjunction with the game - for example, the best player of the month in the English Premier League is titled by ET Sports.
Therefore, retaining the licenses for these important tournaments is to retain the game's exposure, advertising effect, and thus its ability to draw money. If Real Madrid's official social media said to fans, "Benzema's special Golden Ball Award card has been launched, have you drawn it yet?" , how much extra attention could it bring to ET Sports?
The lucrative revenues of EEG did not come out of thin air, but rather through significant investments in rights and "money for money".
However, it's also difficult for ET to afford the excessive cost of licensing.
Let's move on to an arithmetic problem: how much of ET Sports' budget has been spent on FIFA licenses in the past?
The last time the two sides reached a new contract was ten years ago. Ten years ago EDS was awarded the annual cost of the four letters of "FIFA", and ten years later EDS has extended the La Liga naming rights for five years, which is a huge amount of money to spend.
During this decade, the gaming market has changed dramatically: the development cost of "3A masterpieces" has become higher and higher, and the UT model of ET Sports has become more and more complex, becoming a service game that requires additional staff to operate year-round. The cost pressure of the FIFA series lies not only in the copyright, but also in the development team's labor expenses.
Even during the summer hiatus, when promotion for new releases begins, UT Mode still has to host a number of themed events to attract popularity.
Perhaps some of the important rights lost by ET Sports in the last decade reflect the "neck-snapping" effect of FIFA's licensing costs.
ET Sports most recently owned the rights to the UEFA Cup in 2012, after which the UEFA Cup rights were owned by Konami. The negotiations for the ten-year FIFA license happened to be negotiated in 2013. Does this perhaps mean that the new FIFA contract takes away from the budget for working with UEFA national team events?
In 2019, Konami signed an exclusive partnership deal with Juventus, meaning that for the first time in more than two decades, FIFA failed to own the rights to the top five league teams in their entirety. Juventus, originally a partner club of ET Sports, switched to the Live Soccer camp, apparently at an attractive price offered by Konami. Without the cost of a FIFA license, would ET Sports have been able to match the offer and not have to worry about the resulting change in the cost structure of the club's partnership system?
The loss of Juventus was just the beginning, with Roma, Lazio, Atalanta, Napoli and more becoming Live Soccer exclusives one after the other. Starting from the 2022/23 season, Juventus' contract with Konami ended and reemerged as an ET Sports partner, returning in FIFA 23. However, the Serie A team lineup for FIFA 23 is still incomplete.
In addition, in 2020, Konami and Serie B have entered into a partnership, FIFA 21 will eliminate the classification of the Italian second division. Although ET Sports did not have the rights to Serie B, it will still integrate Serie B teams with the virtual league name of "Calcio B" (B), trying to keep the Italian league system relatively intact. Now, Italy has become the only country among the five major European soccer powers that has not reflected the secondary league in FIFA games, resulting in the reduction of FIFA series' ecological restoration of the league of the mainstream European soccer powers.
ET Sport's abandonment of Serie B may not be due to cost issues, but rather a reluctance to pay a higher premium in order to compete with Konami. However, Serie B's withdrawal from FIFA is still a striking reflection of the pressure on ET Sports' rights in recent years.
"Unlocked" will open up new opportunities in licensing for ET Sports.
ET Sports has parted ways with FIFA. With the end of the "necklace", there are more possibilities for ET Sports soccer game rights cooperation.
The title of La Liga is naturally a breakthrough punch. As "Generation Z" has become a new target audience for traditional sports, the discussion of combining traditional sports with digital entertainment has become increasingly heated. Soccer games, a form of digital entertainment derived from traditional sports, are seen as the best way for traditional sports to capitalize on digital entertainment. The title partnership between ETTV Sports and La Liga further reinforces this view - a larger percentage of the new generation of La Liga fans will have grown up playing soccer games.
Meanwhile, the La Liga title also gives ET Sports top-level sponsor status in both of the top two leagues, helping it to consolidate its core market. The English Premier League does not have a title sponsor, but ET Sports has always been a "Lead Partner".
ET Sports has been deeply involved in the UK market for many years, and even the sub-league system is more complete than in other countries, with Championship, League One, and League Two rights included over the years, and FIFA 23 is even rumored to be introducing a fifth tier of the National League. Complete coverage of the English professional soccer licenses has allowed the FIFA series to sell well in the U.K. FIFA 22 sold 3.36 million copies as soon as the game was launched in September 2021, and by the end of 2021 still managed to top the weekly sales charts for physical games in the U.K. from time to time.
Although not a top-level sponsor, ET Sports has a place on the Bundesliga's sponsorship list. The English Premier League, La Liga, and Bundesliga are often regarded as the top three leagues, and ET Sports owns exclusive rights to all of them. The partnership also comes with the rights to clubs in all three leagues, which can be said to build a base plate for ET Sports at the club rights level.
The Serie A issue cannot be addressed directly at this time. Although ET Sports is an official sponsor of Serie A, its license does not cover every specific club. At the same time, despite saving on licensing fees on the part of FIFA, when Konami makes every effort to compete for the exclusive rights to certain specific Serie A clubs, ET Sports will still tend not to match the overly high offer, and thus the Serie A club rights for ET Sports' soccer games will still be missing in the coming years.
Updates such as Inter Milan, which remains an ET Sports partner club for the 2021/22 season, and an exclusive partnership with Konami for the new season. From the 2023/24 season, Inter Milan will only appear in live soccer.
ET Sports may be reluctant to pay a high premium for specific Serie A powerhouses, but it could try a new strategy. If Serie A could package club licenses like other leagues, ET Sports could obtain Serie A club licenses by partnering with Serie A. ET Sports could try to put in the effort to PR the Serie A league so that the Serie A league would find a way to convince the clubs to agree to be represented by the Serie A league in the sale of all the clubs' commercial rights.
It will be an art of negotiation. Packaging commercial interests will certainly hurt the interests of the giants who can afford to sell exclusive interests. But the Serie A league could pull in the small and medium-sized clubs, pointing out that because the Serie A league does not have the right to sell overall rights on behalf of the clubs, the Serie A league is unable to secure more lucrative sponsorship contracts, and thus is unable to offer clubs a larger share of the money to improve their operations and competitiveness at the European level. With small and medium-sized clubs fighting for their rights, the giants may have to give in. This is how the representation of La Liga broadcasting rights has changed before, with giants such as Real Sociedad originally selling the rights themselves, but in the end La Liga obtained the authority to unify the sale of broadcasting rights.
And to help the Serie A League improve its pulling power, ET Sports could propose a big contract that would show the Serie A League and small and medium-sized clubs the benefits of packaging. This contract could even be a title contract similar to that of La Liga. Indeed, ET Sports has now realized the title of the Italian tournament, naming the Italian Super Cup from the 2022/23 season. And Serie A's current title contract with Telecom Italia expires in 2024.
The backbone of ET Sports' offer of a big contract clearly comes from the cost savings from the FIFA license.
Save money and focus on women's soccer model development
The newest addition to the ET Sports soccer game may also be closely related to saving on FIFA licensing fees - the women's club tournament model.
Starting with FIFA 23, women's soccer clubs will be featured for the first time in an ET Sports soccer game. Chelsea women's soccer star Cole will join Kylie Mbappe as the main spokesperson for the FIFA 23 cover. Previously in FIFA 16, the women's mode made its first appearance and was seen as a major moment in the promotion of women's soccer.
FIFA 23 will include the Women's Premier League and Women's Ligue 1. The price difference between the rights for women's soccer matches and men's matches is significant, but ET Sports still has to invest in new labor costs for women's soccer clubs. For example, the face production team will need to visit each club to scan and extract the real faces of the players in the partner leagues. Another example is the manpower to produce standalone women's soccer patterns.
If in the future, ET Sports expands the scale of women's soccer cooperation at the club level, such as joining the Women's Champions League, the North American Women's League and other tournaments and clubs, the workload of the team will increase accordingly, behind all of which adequate manpower budgets are needed to support.
From the time Yidian Sports announced the end of cooperation with FIFA, people familiar with the soccer game industry believe that it has almost no impact on the heat of Yidian Sports soccer games. The title of La Liga, the launch of the women's soccer model and other actions, more to a certain extent, to reflect the art of sports from the shackles of low cost-effective copyright, ushered in a broader marketing space.
"FIFA" is certainly the gold standard of ET Sports soccer game, but the new transformation is likely to start from the "sign change".
