EA is losing interest in esports. What will happen to the relationship between game publishers and esports in the future?

EA and Respawn Entertainment eventually gave up on this. Instead, they offered the team a flat license fee of $60,000, far below what the team felt was fair. By the way, one sponsorship deal, especially for the top teams in North America, can earn upwards of $1 million a year. An executive from an organization that participated in discussions with EA said of a revenue-sharing arrangement for a different title, “I’ve doubled that amount ($60,000) in one quarter for a game[withholding the title]. is earning,” he said.

In response to EA’s proposal, each team led by TSM and Team Liquid wrote a letter of rejection. The letter, published by Digiday, reads: “We are not satisfied with the proposed licensing, nor do we believe that this licensing decision was made in good faith.” It was signed by executives from 14 of the 20 companies participating in the revenue share discussion.

100 Thieves, Alliance, Cloud9, Complexity Gaming, DarkZero, FaZe Clan, Fnatic, G2 They are eSports, NAVI, NRG, Sentinels, Space Station Gaming, Team Liquid, and TSM.

talks terminated

The EA side presented a counter proposal of 50:50 revenue share with no upper limit and MG (minimum guarantee) for in-game skin sales.

He also offered revisions based on sales performance rather than a flat license fee. The three organizations that sold the most skins were $160,000, the next three were $120,000, the next six were $80,000, and the bottom. Eight earned $60,000, but not including revenue share.

So, the teams again asked EA and Respawn Entertainment to consider an uncapped revenue sharing model as close to 50:50 as possible. “Our experience in multiple esports titles and leagues provides a perspective that will help ALGS build the best esports league in the world,” the email said.

After this counteroffer, EA said, “We need time to internally discuss how best to work with the team to create a meaningful and win-win partnership around Apex Legends and ALGS. Insufficient,” the talks were completely terminated.

dying esports

Rumors of an inadequate funding offer from EA and Respawn Entertainment’s reluctance to deal with the esports team have been around for months.Also, from around September 2022, when EA and Respawn Entertainment stopped working, Apex LegendsEsports team skins leakedIt had been. One team executive said they began designing and developing joint skins with developer Respawn Entertainment in March 2022.

According to emails exchanged between EA and the team, the team-branded skins were supposed to hit the Apex Legends marketplace in mid-October, but by mid-September, the two sides still hadn’t completed their economic terms negotiations. No, there was no guarantee.

The team put people into developing skins, but when EA emailed the team that it was “pausing sales of certain items,” executives say they wasted money, despite contractual agreements. Felt.

In mid-2022, EA launched a team-branded “Banner,” an in-game item for Apex Legends, throwing a stir at the team. However, sales were modest. “It was a really small amount of sales,” said one team executive, adding that “some teams didn’t exceed the $60,000 minimum banner sales.”

Another executive said it was because the team wasn’t involved in its design and the items were less appealing than weapons and character skins. “The first season, when we weren’t involved in the design, it was a very poor product that no one wanted.”

Is it revenue-focused or marketing-focused?

Due to the low sales numbers, EA and Respawn Entertainment decided that a revenue-sharing deal for the sale of weapons and character skins was not a viable business. Some insiders talk about how EA’s business philosophy influences its attitude towards esports.

“Even if you make $100 million in bundle sales and give the team $20 million, I don’t think the team will bring in more than $20 million in sales,” EA said. That’s what Respawn Entertainment thinks,” said one team executive.

He continued, “From a bottom line perspective, yes. By investing in and participating in esports programs, we can do marketing for free,'” he said.

But EA and Respawn Entertainment don’t think so. Controversially, if you look at FIFA’s games that implement pay-to-win mechanics such as paid ultimate team modes and gacha features, which were previously banned in the Netherlands and Belgium, they are marketing with a focus on revenue. I am not interested in such things as anything as long as I can secure a profit.

Is EA the worst publisher in esports?

In esports, financial support from publishers, paid in the form of revenue shares and stipends, is a hot topic. Financially-strapped teams rely heavily on sponsorship revenues and, unlike traditional sports, cannot expect large media rights revenues. One solution to this problem is for publishers to support teams financially.

In return, the team can put more effort into promoting the publisher’s game and focus the team’s resources. Part of the equation for solving this is revenue sharing, where publishers sell esports team-branded items in-game and share the revenue from those sales with the team.

One team executive was critical of EA. The relationship between EA as the publisher and Respawn Entertainment as the developer means project management can be a hassle. “To be honest, EA is the worst publisher in esports. It’s significantly worse than everyone else.”

The only way esports will survive

There is still room for accountability for the failure of revenue-sharing negotiations. At least two team executives said EA was in charge of communications with the esports team, but the revenue-sharing initiative was scrapped after EA failed to convince group company Respawn Entertainment. Another executive told Digiday that EA management, not Respawn Entertainment, didn’t want to go forward with revenue sharing.

Most esports competitions have a minimum guarantee. Riot Games has organized the Valorant ecosystem to focus on lucrative revenue share for teams without paying high entry fees.

In addition, like other competitions, the teams that become partners are guaranteed annual rewards. ESL ensures that CS:GO (Counter-Strike: Global Offensive) professional leagues share 25% of total revenue with teams under the Louvre Agreement.

Clearly, for esports to thrive (or even survive) in the current climate, it needs help from publishers.

Mark Flood (handle Cashflo), founder of Disrupt Gaming and former head of North America operations at Astralis, said: “If all the esports we knew, the teams, the professional atmosphere, etc., were completely gone. We’d go back to grass-fighting competitions with game fans, and publishers would have $1 million in prize pools.” , and all such competitions are run through a “Challonge,” a platform for grass-fighting tournaments.For publishers, such “grassroots esports” are characterized by large-scale production, super-high salaries, and professional operations. I can assure you that it will be as valuable as the current esports that are.”