EA is feeling the burn after the gaming community as a whole rebelled against the microtransaction model in Star Wars Battlefront 2. EA debuted an aggressive loot box system in Battlefront 2, a gashapon machine with shooter elements, which tied in-game progression to premium currency transactions that cost real money. Electronic Arts’ stock is down 8.5 percent month-to-date, which equates to around $3.1 billion in losses.
EA’s December quarter sales forecast was fairly optimistic when it came out on October 31. Baird analyst Colin Sebastian rated the stock with an outperform rating and $130 price target per share. Well, as of right now it’s trading at $109.47 a share after hitting a low today of $106.91.
After social media and Reddit were flooded with negative posts about Battlefront 2, during which an EA account on Reddit managed to get the most downvoted comment of all time, it seems like sales of the game aren’t meeting expectations. U.K. physical copy sales are down, and it’s not even on the top 100 list of Amazon’s best-selling games of the year.
Stifel Analyst Drew Crum commented that he was underwhelmed by sell-through for Star Wars Battlefront 2 over the Black Friday weekend. However, even if the game had sold well, it’s obvious EA was factoring heavily on microtransaction sales to generate most of the profit from the game. Now that those have been disabled, it’s likely that lost revenue would make it a failure in EA’s eyes no matter how many copies were sold.
EA generated over $800 million in profits with microtransactions in 2016, mostly through purchases for Ultimate Team mode in its sports games. When speaking about this in February this year, EA CGO Blake Jorgensen told investors they intended to bring this mechanic to Battlefield and Battlefront.
It looks like EA dipped a little too deep though and managed to bring concerns about loot boxes into the mainstream finally. Politicians worldwide are getting involved with measures to curb predatory microtransactions and protect children from what is essentially gambling. With this going on, it’s obvious that EA’s investors have gotten cold feet when it comes to the company’s business practices.
Will EA bounce back from this? Yes, undoubtedly. While the company’s profits might have been harmed in the short term, this is far from disastrous for such a large publisher. However, since the light has been shone on how harmful and anti-consumer loot boxes and microtransactions can be, EA and others may rein in their attempts to publish themed gashapon machines.