Electronic Arts has suffered a massive hit to their shareholder value for the month of November thanks to Star Wars Battlefront 2.
According to a report by CNBC, EA has lost over 8.5% of their own stock market value - roughly $3.1 billion dollars - due to the ongoing controversies surrounding Star Wars Battlefront 2 and the implementation of loot boxes and microtransactions.
Part of the current panic was due to EA fixing their projected sales quarter forecast which began in November. The company has provided a lower than expected estimates on incoming revenue for the month of December, leading to stock prices to fall by 4% in a single day. Other analysts describe the game as being underwhelming in terms of sales due to the controversy, shaking investor confidence in not only Star Wars, but for EA as a whole.
Currently, the game is selling below expectations, at least in the U.K where physical copy sales are down by nearly 60% when compared to the previous Battlefront title.
It should be noted, however, that similar windfalls have occurred before; most notably with French publisher Ubisoft over Assassin's Creed: Unity. The game launched with a poor reception that saw a stock decrease of nearly 9%, but within a month the company recovered the loss.
Analysts are concerned, however, about EA's current business model going forward, mostly due to the ongoing investigation in both Star Wars Battlefront 2 and Activision Blizzard's Overwatch by the Belgian Gaming Commission, as well as calls from other politicians worldwide to intervene and regulate the gaming industry over what is deemed as predatory practices.
One Analyst on Wall Street is looking for self-regulation within the industry instead of government intervention. "Battlefront 2 is the pointy tip of the iceberg. … The biggest recent controversy has centered around EA's Star Wars Battlefront 2, where early evidence suggests player anger over a mishandled loot box economy may in fact be impacting initial sales," Cowen's Doug Creutz wrote in a note to clients Monday according to the CNBC report. "We think the time has come for the industry to collectively establish a set of standards for MTX implementation, both to repair damaged player perceptions and avoid the threat of regulation."
The outcry regarding loot boxes has spurred a massive debate in the gaming community over the merits of implementation and regulation of loot boxes, including a discussion whether or not outside intervention or government regulation should be part of the solution.
For EA's part, they quickly removed microtransactions from Star Wars Battlefront 2, but the move is only a temporary one at this time. CFO Blake Jorgensen noted at the Credit Suisse 21st Annual Technology, Media & Telecom Conference that the company "pulled off on the MTX, because the real issue the consumer had was they felt it was a pay-to-win mechanic. The reality is there are different types of players in games. Some people have more time than money, and some people have more money than time. You want to always balance those two."
Jorgensen, in the same conference, also addressed why the game was not focusing on cosmetic purchases often found in titles like Overwatch, he noted that the company is working closely with LucasArts on how to implement cosmetic items, but it has been difficult due to a respect for the world canon of Star Wars, even joking at one point that "Darth Vader in Pink" is too much of a violation of canon.
For the past few years, EA has been attempting to implement more loot boxes and microtransactions into many of their online services, emulating a model popularized by EA's FIFA and UEFA Champions League, which featured the "Ultimate Team Modes," an online mode that allows players to purchase cards of players of varying value and skill and use them in matchups against other players. In 2016, Ultimate Team Mode, along with the rest of the microtransactions found in FIFA 17', raked in over $800 million in profit for the company.
Jorgensen noted that microtransactions are not dead for EA.
"We're learning and listening to the community in terms of how best to roll that out in the future, and there's more to come as we learn more. But I would say we're certainly not changing our strategy. We think the strategy of deeply engaging games, keeping the community together, and allowing people to play those games with new content coming via events over time is critical to the future of our business. We feel like we've nailed that in the sports games, and we'll continue to try and find the best model that works in the non-sports games."
The push for microtransactions has been strong by EA, who last month also shut down Visceral Games for a variety of reasons, but saw Jorgensen state that the closure of the company being a "purely economic" decision over lack of interest in a full-blown linear game.
What are your thoughts on all of this? Is EA really in trouble here, or is this just a setback? Should there be outside regulation? Leave your comments below.