Thursday, November 30th 2017

EA Bleeds $3.1 Billion in Stock Value Over Battlefront II Fiasco

Electronic Arts (EA) bled USD $3.1 billion (£2.3 billion) in stock value at the markets over the week, as the company scaled down its controversial loot-crate system deployed in "Star Wars: Battlefront II." The company is fighting a PR debacle as gamers complain of terrible pricing of the base-game, DLC, and an aggressive loot-crate system that's drawing the attention of government regulators around the world, who are threatening to impose gambling regulations against the game.

The concept of loot-crate is simple. You pay a seemingly small amount of money for a "mystery box" containing either something great (like weapon-attachments), or something of no tangible impact on gameplay (like skins). You're incentivized to buy more loot-crates in hope that you'll get something better. This becomes a gamble. In 2016, EA earned over $800 million in profits selling loot-crates among other micro-transactions, across various game franchises, such as Battlefield and Need for Speed. With EA scaling down several of its ancillary revenue models for the game, the studio's stock bled 8.5 percent month-to-date. Drew Crum, an analyst with investment firm Stifel also attributes underwhelming Black Friday sales of the game to EA's bear-hug.

Source: GameRevolution
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64 Comments on EA Bleeds $3.1 Billion in Stock Value Over Battlefront II Fiasco

#1
Darmok N Jalad
the54thvoid said:
I may be wrong but the share price falling means investors DONT like that loot crates are gone for now. Investors and stock prices have nothing to do with the 'ethical' value. Price dropped because shareholders sold stocks because loot crates were good for them.
Generally, a drop in share price means investors think the company made a bad move.
Possibly. I bet most of EAs shares are held in mutual funds, so I doubt those shareholders care how EA makes their games. The company took a huge backlash from buyers, but more importantly, it caught the attention of regulators. That is likely why they dropped the stock, as they know EA is going to be a liability while they deal with the potential legal problems they just made. EA banked its future on a bad business practice, and since buyers finally stood up and a big title flopped, it’s going to be a hard candy Christmas at EA. EA gave the speculators a lot to worry about.
Posted on Reply
#2
Vya Domus
the54thvoid said:
I may be wrong but the share price falling means investors DONT like that loot crates are gone for now. Investors and stock prices have nothing to do with the 'ethical' value. Price dropped because shareholders sold stocks because loot crates were good for them.
Generally, a drop in share price means investors think the company made a bad move.
Exactly and this was followed by even more investors pulling out because of fear of losing even more. All this still has nothing to do with them "listening to people".
Posted on Reply
#3
rtwjunkie
PC Gaming Enthusiast
It couldn't have happened to a better company! :roll:
Posted on Reply
#4
progste
Frick said:
Let Bioware die with them.
Bioware is already dead, there is only EA now.
Posted on Reply
#5
ShurikN
Bioware of old and the current EA lapdog Bioware only have the name in common. If Anthem fails (and it will considering it's a loot driven game published by EA), Bioware will end up just like Visceral, and the dozen before them.
Posted on Reply
#6
FordGT90Concept
"I go fast!1!11!1!"
JackOne said:
Learn from it, go back to being a decent company or go down for good.
I can't name one time EA was "a decent company." There's nothing to "go back to."

[LEFT]
techy1 said:
good, not that I care about Battlefront... but I am damn sure every game developer is watching this and thinking: "hmm... EA got a bit too greedy and got backlash, I wonder how this will play out... if this will quiet down - maybe we also can get away with a more "loot" in future?"... I hope this brings answer to all of them (for this moment)
I think the worst that will happen is ESRB/PEGI being required to add "Gambling" to games that have loot boxes.

There may be a few countries that may go full ban on that content but I'm not sure which.
[/LEFT]
Posted on Reply
#7
newtekie1
Semi-Retired Folder
the54thvoid said:
I may be wrong but the share price falling means investors DONT like that loot crates are gone for now. Investors and stock prices have nothing to do with the 'ethical' value. Price dropped because shareholders sold stocks because loot crates were good for them.
Generally, a drop in share price means investors think the company made a bad move.
Not exactly. The drop in stock price means that investers are concerned that EA isn't going to make money. When you botch a major product launch, investors tend to leave. It isn't that investors want loot crates, it is the fact that EA botched a major product release.

This isn't about the investers listening to the people, they don't give a shit, it is about EA losing $3 Billion because they put out a product that people didn't want to buy because EA got too greedy, and because of backlash there was poor sales of a major product. The investers leaving is just a by-product of the backlash, but it is a by-product that EA is more likely to recognize.
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#8
Laurijan
EA went to far. Will be hard to regain customer trust.
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#9
Fourstaff
$3bln is not even 5% drop though. Not much at all.
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#10
Steevo
Rockstar needs to get slapped down as well, the whole single player updates are dead since they found their cash cow.

Or, they need to open up the game so modders can create more content. It's a no win position currently, either you have to play online with random people that prevent you from leveling up unless you want to pay for shark cards, and hope you make enough to move up, or grind away for hundreds of hours to reach the same level as pay to play idiots. I'm not a fan of either idea honestly.
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#11
Readlight
Hungry World is ready to eat that big fish.
The global EA ..... time has bean come.
Posted on Reply
#12
rtwjunkie
PC Gaming Enthusiast
Fourstaff said:
$3bln is not even 5% drop though. Not much at all.
Actually, that much loss in stock value is huge.
https://en.m.wikipedia.org/wiki/Electronic_Arts

Revenue
US$4.845 billion[1] (2017)
Operating income
US$1.224 billion[1] (2017)
Net income
US$1.210 billion[1] (2017)
Total assets
US$7.718 billion[1] (2017)
Total equity
US$4.060 billion[1] (2017
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#13
Fx
This news was excellent to receive this morning along with my fresh cup of coffee.

Great way to start the day.
Posted on Reply
#14
newtekie1
Semi-Retired Folder
Fourstaff said:
$3bln is not even 5% drop though. Not much at all.
Their shares peaked at about $119.6 on Oct 31st, and dipped down to $105.5 yesterday(though it has regained a little today).

Their Market Cap on Oct 31st was $36.8 Billion, yesterday at close they were at $32.5.(AFAIK, this is where the $3 Billion number is coming from.)

That's a little over an 11% drop in share price and market value. A one month drop of over 10% definitely gets a company's attention.

rtwjunkie said:
Actually, that much loss in stock value is huge.
https://en.m.wikipedia.org/wiki/Electronic_Arts

Revenue
US$4.845 billion[1] (2017)
Operating income
US$1.224 billion[1] (2017)
Net income
US$1.210 billion[1] (2017)
Total assets
US$7.718 billion[1] (2017)
Total equity
US$4.060 billion[1] (2017
Yes, but those numbers aren't where the $3 Billion comes from. It comes from the ~$32 Billion market value.
Posted on Reply
#15
Laurijan
Fx said:
This news was excellent to receive this morning along with my fresh cup of coffee.

Great way to start the day.
Yeah the heavenly angels were singing in a chor while i watched the news and had my coffee.
Posted on Reply
#16
Totally
Fourstaff said:
$3bln is not even 5% drop though. Not much at all.
That's a pretty big number for investors who only care about YoY. I can just imagine the conniptions people like those who weren't fast enough to run out the door are having right now.
Posted on Reply
#17
SkullFox
Frick said:
Let Bioware die with them.
I fucking AGREE with this!!! ever since they did not release Star Wars KOTOR 3, I've been hoping they die a slow painfull death!!.
Posted on Reply
#18
lexluthermiester
JackOne said:
They got too greedy and now the whole thing imploded. Congrats and well done. Learn from it, go back to being a decent company or go down for good.
Couldn't agree with you more on this one. EA has done some good things in the past. Those things have been far overshadowed by the nonsense they try.
Liviu Cojocaru said:
Remains to be seen... I think loot boxes should disappear from all games just ban them all :D
Also agree with this.
FordGT90Concept said:
I can't name one time EA was "a decent company." There's nothing to "go back to."
To be fair they have done a some good things. Command & Conquer 3 and Red Alert 3 are good examples and two of my favs games. There have been other good things.
FordGT90Concept said:
There may be a few countries that may go full ban on that content but I'm not sure which.
FordGT90Concept said:

Belgium for a start. They've already ruled "loot-boxes" as gambling and that nation is not a gambling friendly country by any stretch.
Posted on Reply
#20
Fourstaff
newtekie1 said:
Their shares peaked at about $119.6 on Oct 31st, and dipped down to $105.5 yesterday(though it has regained a little today).

Their Market Cap on Oct 31st was $36.8 Billion, yesterday at close they were at $32.5.(AFAIK, this is where the $3 Billion number is coming from.)

That's a little over an 11% drop in share price and market value. A one month drop of over 10% definitely gets a company's attention.
My bad, I read the market cap wrongly.
Posted on Reply
#21
Xzibit
SkullFox said:
I fucking AGREE with this!!! ever since they did not release Star Wars KOTOR 3, I've been hoping they die a slow painfull death!!.
Toss them in the Sarlacc pit
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#22
fizhsmile
Its GACHA! :laugh: EA just trying to implement GACHA in battlefront but ended pretty bad :roll:
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#23
Divide Overflow
They can bleed out completely and it would bring a smile to my face.
Posted on Reply
#24
jaggerwild
They bleed out and your BF games are worthless, so toss them away too.
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