EA and other video game publishers are taking a beating from investors

by
Posted December 4th, 2017 at 3:15 pm

With the recent debates over video game monetization – and the arguably predatory practices that may warrant classification as gambling – gaining even more steam the place to look for the most immediate impact is on Wall Street. Investors hate uncertainty but that’s exactly what the clash between publishers and consumers has brought about as the gravy train planned for the years ahead has seemingly gone off the tracks.

It’s not just the sense that the latter has stood up to the tactics being enabled in popular games forcing adjustments to be made but lawmakers in the US have started to take notice and other countries are beginning to recognize the loot box/card pack model as gambling.

EA’s stock dropped another 5% today, and now since the end of October it is down 15%. That’s a loss in Market Cap of nearly $6 billion which is astounding. It’s not just EA though that has taken a major hit. Take Two fell 8% today and is down 14% in the last two weeks. There’s also Activision which is down 11% in the last week.

It’s important however to acknowledge that these stocks had been rising for some time continually breaking all-time highs. EA’s stock is still 32% above where it was on this same date last year. Take Two is up 112% in the same time period.

A correction may have been overdue for these stocks but there’s no doubt that the potential of unlimited revenue out of games built with that in mind had been tantalizing for both the publishers and investors. With it becoming clearer that major changes will have to be enacted one way or the other the future financials may not be as promising as once hoped.

Tags:
  • MoneyMayweather

    If this brings about better gameplay in games I’m all for it.
    NBA 2k used to be about innovating the game of basketball but I don’t think they done that in five years Madden has changed for the better but they’ve totally neglected franchise mod.

    EA and 2k have become greedy and their games are showing stagnation at this point.

    they need to start investing on game play aspects to make the games more fun and EA needs to invest in it’s Offline modes more. I get time is put in game play but more time instead of seeing how they can nickel and dime you.

    • ClubSteve

      both 2k and madden need to lighten up on vc and such…..remember all-pro football 2k8? you just match up legends and go at it. it was basically ultimate team without vc (and NFL license)….and you could make your own uniforms too. the game came out before it’s time.

      • hungryandrew

        The game had no customization, the uniforms were set already along with fictional teams. One of two knocks of the game, the latter being no solid franchise mode.

  • Just a guy

    This is 100% market correction, nothing more.

    • Keith.

      These companies are way overvalued, but especially EA, and their own executives know it best.

      There have been 109 insider trades of EA stock in the last 12 months, and 106 of them were sells (3 buys). In the last 3 months, the breakdown is 16 sells from EA insiders, 0 buys. Andrew Wilson, for one, has made a killing.

      http://www.nasdaq.com/symbol/ea/insider-trades/sells

      Going to be interesting to see what comes from their statement that turning off micro transactions in Star Wars won’t materially affect their financials. Those types of statements are what typically lead to lawsuits down the line, if they turn out to be false.

  • Jeff

    Off topic ive read Australian open tennis for ps4 and xbox releases in january its being made by big ant i think whoever does the ashes cricket game

    • MoneyMayweather

      It’s only releasing in Australia and NZ. in January won’t be out in america until Spring.

      • pbe

        They dropping a college football game soon too… I think in 2019, that company is a sleeper company

        • That’s not happening.

          But I do like Big Ant, supporting sports that the larger publishers ignore.

        • MoneyMayweather

          with real colleges? or generic ones?

      • Jeff

        You can get it on amazon they always put up games from different countries they’ll just cost a little more

  • Ken Mooney

    Microtransaction became a noticeable issue when the second/third iteration of MUT came out. They drastically reduced the amount of coins earned for finishing a collection. EA, around the same time announced that they were eliminating the online season pass, because they were “listening to fan feedback” — Translation: adjustable income towards UT coins. Pre-order bonuses started becoming all about UT for all EAS games too. To make more space for UT games they eliminated team play, and striped down Online Franchise (Madden 06 had a freak’n radio show people..but hey, we get tweets…whoo-hoo), they brought back team play…but specified it for MUT…because it meant more $$$ in their pocket.

    I think the stock price is a reflection of the market balancing out with some of the out-cry over microtransactions. The US/Foreign Governments are stepping in, which may help, and I would like for them to focus on some other more important issues: taxes, education, human rights to name a few.

    The reality is this, and we have been saying it for years: Speaking loudly with your mouth, or angrily typing on a blog does not compare to keeping your wallet closed towards a business. EA saw potential sales drop, and within days made changes to their game, and are still making changes. Who stepped in? Disney. Why? Because big brother doesn’t like a thinning paychecking.

    • Iown You

      That also goes to show how much more vocal and active other gaming communities are that football gamers aren’t. To be fair, Madden’s sales have dropped in units over the years, but not enough. Most of the people complaining are still buying the game no matter what BS Tiburon does to it.

      • Ken Mooney

        Personally, as a gamer of many games, the poor approach would be to single out a certain genre of gaming/gamer, especially in the universal case of microtransactions, crates, cards, etc. They did not start with EA/EAS, it started in PC gaming, and the first use on the console was Bethesda, I believe w/Oblivion <- '05? I referenced EA with Madden because it is does contain one of the largest formats for microtransactions, including a drastic shift in the use of 'coins' or whatever currency used in game. When it comes to sports gaming, the out cry vs change is far less than what you see say with a FPS. Think about how quickly the turn around time is for a sports game, the demand based on new rosters alone. People aren't thrilled with UT right now across the board, nor 2k. With that said, the companies know that people will buy the yearly installs, especially if there is no competition. Now take the same company, EA, and think about how they handled, changed and adjusted BF II, not only that but Disney stepped in too. It took three years plus to get EAS to beef up Online Franchise, it took EA days to make changes to the way transactions and progressions work within BFII. The difference? A yearly recycled game vs a three year project, big brother stepping in (Disney) v Big bother doing nothing (NFL). Furthermore, Battlefront has competition from multiple sides, and the company knows this. if Madden 19 came out with only a roster update (something we have seen in the past) There maybe an our-cry, but sales will be fine, because their is only one football game to play right now. Now, you're upset about BFII, ok, go play: COD (pick one), Battlefield, Overwatch, PUBG, Destiny, etc.

        Sorry its not on sports gamers, its the nature/reality of the business.

        • Iown You

          I don’t know what any of that has to do with countering the point of football gamers having a unique level of apathy that other communities show an opposite level of? I could easily bring up how gamers of FPS communities have risen up and revolted against design that ruined their game like the Star Wars situation. I can bring up how the 2D RPG community out of worry that the genre was in jeopardy responded by developing its own software to make RPGs (such an idea was foolishly rejected by the football gaming community). I could bring up how the TINY Lacrosse gaming community stood up and SUPPORTED WITH MONEY an indie lacrosse game from its humblest beginnings as an XNA indie game, to the very refined Casey Powell game it eventually became. That community was not happy with its situation and they took action. Football gamers don’t take action, they take apathy. The Lacrosse gamers are enjoying a nice new indie game, football gamers were too busy turning their noses up to every indie effort and the reward for that is nothing to play except Madden. I could go on and on.

          Further, turnaround time for a sports game is an irrelevant point for several reasons:

          1. The preparation for the first iteration of a AAA sports game is usually about 36 months just like it is for many other AAA titles. Once that foundation is built, the difficulties with yearly iterations lies more with finding new ways to put on a fresh coat of paint. There is a reason you’ve seldom seen sports games miss their yearly deadline (save for NBA Live which coincidentally happens to be an EA game, go figure). The yearly situation is not as dire a situation as many believe, and you never seen any company bitch about it but Tiburon. Think about that…

          Many of the issues complained about in today’s Madden were not issues in older Madden’s or other football games, meaning that they either took something out without explanation, or they put something in that nobody wanted or that further ruined the game in some way. Those are not issues of development time, those are issues of development direction.

          2. Madden has been in development since 1983, first game in 1988. There hasn’t been a break since. That makes it the most mature development in gaming history, meaning it’s had more development time than any other game on the market. The development time excuse has zero weight for that reason and…

          3. Because when 2K was developing football games they worked on the SAME schedule, and with a development team about 1/4th the size and budget of Madden, AND with far fewer years of historical development behind them, yet 2K produced a game that was superior in practically every aspect. This teaches you that TALENT and desire are the major factors. Never forget that.

          As for gamer’s part in this, I really wish you were right about this, but you just aren’t. Time and time again over the past 13 years, football gamers have bitched and moaned in tiny Youtube communities, never said a word to the companies themselves, and still went out and bought Madden anyway, never supported any indies that tried, and continued to bitch some more as if that did anything to help. They did it for so long that they became a caricature of themselves that Tiburon learned not to listen to or respect because their behavior taught Tiburon that they would still buy the game anyway.

          Finally, I don’t agree with the idea being as simple as “don’t like Stars Wars go play Call of Duty, or Overwatch, or Destiny”. Those are all very different games with the only thing comparable is that they’re shooters…

  • Hoops

    2K basketball game is all about VC now. Last gen had better gameplay and many less glitches.
    EA works only for cash purposes. They are not interested in delivering a great experience for gamers. They work on subpar products as long as they can give some profit.