Microtransactions make for a not-so-micro loss for EA shareholders.
Consumers have long been told that if they’re unhappy with a business practice, they should voice their discontent with their spending habits. Following tStar Wars: Battlefront II’s disaster of a loot box microtransaction system, video game consumers seem to have done just that, and publisher Electronic Arts has felt the pinch.
CNBC reports that EA's stock dropped 8.5 percent month to date as of Tuesday, equating to a loss of $3.1 billion in shareholder value. The loss came in the face of other top US game publishers Take-Two Interactive and Activision Blizzard gaining 5 and 0.7 percent in value, respectively, during the same period. The S&P 500 also enjoyed a 2 percent gain during this time.
The loss is thought to largely be attributable to the backlash over the aforementioned Battlefront II microtransactions. Electronic Arts' initial response the fan anger over the system became Reddit's most-downvoted comment of all time, and the company was forced to remove the system, though it is reworking the system with plans to bring it back at some point.
Consumer anger over the microtransactions has been so intense that Battlefront II’s first week sales were down 61 percent from the original Battlefront’s debut week in the UK. CNBC also points that the game has failed to crack Amazon’s list of 100 best-selling video games for 2017. And at least one market analyst felt a need to warn investors about Battlefront II.
“We were underwhelmed by sell-through for Star Wars: Battlefront II (EA) over the Black Friday weekend, which follows a controversial launch for the game,” analyst Drew Crum of brokerage and investment firm Stifel informed clients Sunday.
But some analysts feel the microtransaction problem, while handled poorly by EA, is a short-term issue that will eventually blow over.
“We view the negative reaction to Star Wars Battlefront II (and industry trading sympathy) as an opportunity to add to Electronic Arts, Take-Two, and Activision Blizzard positions,” KeyBanc Capital Markets analyst Evan Wingren wrote in a note to his firm’s own clients Sunday, according to CNBC. “The handling of the SWBF2 launch by EA has been poor; despite this, we view the suspension of [microtransactions] in the near term as a transitory risk.”
Continuing, Wingren railed against gamers and some corners of the games media for overblowing things. He even went so far as to suggest gamers aren’t paying too much for content — they’re paying too little.
“Gamers aren’t overcharged, they’re undercharged (and we’re gamers)… This saga has been a perfect storm for overreaction as it involves EA, Star Wars, Reddit, and certain purist gaming journalists/outlets who dislike [microtransactions],” Wingren wrote.
That being said, he allowed that there was a “slightly higher probability” that Battlefront II would not reach its initial sales forecast of 13 million units.
Still, EA itself doesn’t think the controversy will have a “material impact” on the company’s fiscal year results. The publisher did, however, offer a December forecast that was slightly lower than Wall Street estimates on October 31, when the company’s shares were already down five percent.