Alex Birlo on August 6, 2019
Around July last year, EA had its stock price around the highest point ever. It was near 149 USD per share, but from then it was only in decline.
As I am writing this, Electronic Arts’ stock price is at 89.55 USD per share. Which is a crazy decline of over 37%, this amounts to a total Stock Holder Equity loss of 16.5 billion dollars across the 300 million shares that are currently out there for the company.
This is an immense hit for the company and what keeps people – players and analysts alike – wondering when is the company going to realize that this is not a flook but a steady trend that resulted from their business practices.
This year’s troubles can be largely attributed to all the political controversy, sexism and historical accuracy debates surrounding “Battlefield V”, the failure of “Anthem” to deliver what was clearly promised – though it was an amazing concept – and the lack of steady content that kills the player base of “Apex Legends” – though this game had a strong backbone. But how can we not mention “Star Wars Battlefront 2” even if it was released much earlier?
It is impossible to ignore the fact that the whole loot-box focused progression thing controversy had no lasting effects on the company. The conflict steel continues even to date as different countries like the United Kingdom and the United States holding sessions regarding imposing bans on video games with loot boxes as a form of gambling.
We can outline several reasons for Electronic Arts’ behavior. First is that the money keeps flowing in. What I mean by that is that the information from the recent earnings call that they had, suggests that they are actually doing well in 2019!
Long story short, thanks to how well “Apex Legends” and “The Sims 4” did, in combination with the never-ending stream of money from microtransactions in EA’s “FIFA Ultimate Team” their live service model has only increased in percentage and brought more money.
The second point ties into the first – Anthem was not a big deal. There is no need to explain again how badly “Anthem” Failed at release and how dead is it’s player base. But never the less, during the earnings call there was no mention of that failure! And not only because they wanted to cover this up, but also because probably there was only a small portion of expected revenue to come from “Anthem”, or the other games’ success covered for Bioware’s grand failure. In any case, the implication of that is that they can continue doing what they did because they missed with one live service game and hit the jackpot with another one. From this point, it seems as though it is a simple matter of hit or miss and they can attempt more next year.
The third and final point is that lawsuits and parliament sessions can be persuaded given time and many facts to consider. What I mean by that is that, for example, the previously mentioned UK session regarding the ethical aspect of loot boxes and whether or not they are a form of gambling has ended with loot boxes not being banned in the UK as they are in many other countries.
Essentially what they argued is that while there are apparent mechanics to loot boxes that mimic real-life gambling, there is no way for the player to monetize the items they get and receive real-world income from it. And apparently EA is already acting to stop ‘third market’ activity where players trade accounts and loot box items like many do with CS:GO skins.
One thing they did ignore almost completely is the plethora of studies proving the addictive nature of the whole mechanic, but this is a story for another time. What is questionable is the fact that there are no regulations in the works specifically for this type of mechanic. Many countries had not banned loot boxes completely, but they did put regulations in place like disclosing the chance with which each particular item can be received from a loot box.
The massive hit to EA’s stock is a result of a steady line of releases that kept disappointing fans and causing controversies: Mass Effect Andromeda, Star Wars Battlefront 2, Battlefield V, Anthem. Not a single one of these games reached the hopes of players at release and continued being riddled with bugs and lack of content long into the future.
And a single game – Star Wars Jedi: Fallen Order – is not going to fix it all. It is going to take a long time and a massive change in the internal priorities of the company to make any significant progress at fixing what became of EA’s image.
But it is not likely that these changes will come. As we already saw there are plenty of reasons for EA to continue doing what they do because they look only at the numbers and the numbers are rising…