Electronic Arts halts in-game purchases for 'Battlefront II' right before launch - InvestingChannel

Electronic Arts halts in-game purchases for ‘Battlefront II’ right before launch

Shares of Electronic Arts (EA) dropped in morning trading after the video game developer announced that it was temporarily suspending micropayments features in the new “Star Wars” game hours before the game’s launch. IN-GAME PURCHASE CHANGE: Just hours before its full launch, Electronic Arts announced in a blog post that it will turn off all in-game purchases for the “Star Wars Battlefront II” title, one of the company’s biggest releases this year, until further notice. Oskar Gabrielson, the GM of EA game developer DICE, said in the post that the company’s goal “has always been to create the best possible game for all of you – devoted Star Wars fans and game players alike. We’ve also had an ongoing commitment to constantly listen, tune and evolve the experience as it grows.” However, Gabrielson said that “it’s clear that many of you feel there are still challenges in the design. We’ve heard the concerns about potentially giving players unfair advantages. And we’ve heard that this is overshadowing an otherwise great game. This was never our intention. Sorry we didn’t get this right.” As a result, Gabrielson said EA is turning off all in-game purchases, adding that “the ability to purchase crystals (currency) will become available at a later date, only after we’ve made changes to the game.” Electronic Arts said in a regulatory filing that the change is not expected to have a material impact on its fiscal year 2018 guidance, which includes earnings per share of roughly $3.63 and revenue of about $5.08B. GAMER CRITIQUES: The controversy centered around the in-game purchases that allow players to spend real money to “unlock” characters like Luke Skywalker and Darth Vader. Many fans were outraged, taking to Reddit and other social media outlets to claim that Electronic Arts was introducing a “pay-to-win” culture, CNBC said. Earlier this week, EA said it was reducing the cost to unlock key characters by 75%. “Unlocking a hero is a great accomplishment in the game, something we want players to have fun earning. We used data from the beta to help set those levels, but it’s clear that more changes were needed,” EA said this week. ANALYST COMMENTARY: Baird analyst Colin Sebastian, who kept an Outperform rating and $130 price target on EA shares, said he believes the company is taking the right step in suspending in-game purchases. He believes the game will still attract a large Star Wars fan base as well as holiday gift givers despite recent negative publicity and expects it to remain a top-seller for the holiday season. Should Battlefront II underperform amid recent negative publicity, Sebastian sees Activision Blizzard (ATVI) and Ubisoft (UBSFY) benefiting. Morgan Stanley analyst Brian Nowak said the change reduces the risk of a unit sales miss due to negative headlines but also speaks to how EA needs to refine its microtransaction strategy. BofA Merrill Lynch’s Justin Post thinks unit sales could come in below EA’s earlier outlook for around 14M units in FY18, but believes FY18 EPS estimates are still achievable with other game franchises offsetting any Battlefront shortfall. PRICE ACTION: Electronic Arts is down nearly 3% in morning trading to $108.34. Year-to-date, however, shares are up nearly 38%.