James Brightman Friday 17th November 2017 Share this article Share

Companies in this article Electronic Arts

With only hours to go before the game's official launch, Electronic Arts announced the suspension of all microtransactions from Star Wars Battlefront II, as controversy surrounding the game's loot boxes had reached a crescendo. "We've heard that this is overshadowing an otherwise great game. This was never our intention. Sorry we didn't get this right," said EA DICE GM Oskar Gabrielson.

But with in-game purchases removed, that means the oh-so-sweet "recurring revenues" that all publishers are after won't be possible until EA reinstates the microtransactions. Between that and the controversy in general, one analyst says Battlefront II could end up taking a financial hit. "The escalation of EA concessions over the past month are a potential negative indicator of pre-order sales trends and overall unit confidence," Bank of America Merrill Lynch analyst Justin Post wrote in an investors note, according to CNBC.

Post added that the game's "bumpy launch week creates incremental risk to early unit sales (initial reviews also underwhelming). ... We think unit sales could come in below EA's earlier FY18 outlook for around 14 million units."

"Most likely everyone's grandparents will still just buy the box with the cover they recognize and put it under a tree once this blows over" Joost van Dreunen, SuperData

EA's stock price is down around 3% as of this writing. And while CNBC's story claims Wall Street is "freaking out" over the gamer outrage, other analysts that GamesIndustry.biz spoke to about Star Wars Battlefront II had a different perspective.

"I think this story has taken on a life of its own," said SuperData's Joost van Dreunen. "It's a perfect storm of internet dribble and mis-information picked up by amateur media eager to fling dirt at a game company. Certainly, EA could have done a better job with its monetization strategy. (I mean really: if I'm buying anything Star Wars-related you better give me Darth Vader out of the box.) But overall consumers seem perfectly happy with loot boxes and microtransactions (see Hearthstone, FIFA, GTA 5, Destiny 2, etc.).

"For outsiders it is probably remarkable that EA has conceded in this case. But it was the smart move. In the run-up to Black Friday, Cyber Monday, and December holiday sales, they're enforcing damage control to avoid Star Wars Battlefront II becoming 'that game'. Most likely everyone's grandparents will still just buy the box with the cover they recognize and put it under a tree once this blows over."

SuperData is sticking with the 14 million units forecast over the next year, which puts it roughly in line with the first Star Wars Battlefront. The Star Wars license also carries even more weight at this point in the console cycle, van Dreunen added: "With the console market in the second half of its lifecycle, more price-conscious consumers will look for value indicators (like Star Wars IP)."

IHSMarkit's Piers Harding-Rolls isn't concerned about the game's performance either, and with the microtransactions promised to be reinstated at a later date, the additional revenue stream will eventually factor in. Overall, the financial impact should be "relatively limited."

"Most Star Wars games have been crap over the years [but] I think EA could be in a good spot here for several years if they play their cards right" Lewis Ward, IDC

"I think pulling the microtransactions for the time being is the correct move for the game, EA and for its partner Disney," Harding-Rolls commented. "The fact is, while this whole controversy is centered on the specific use of microtransactions in this game, AAA console titles use a hybrid business model of which the initial purchase remains a very important part of the revenue mix especially in the opening weeks of sale. This move defuses the situation and shines a more positive light on Star Wars: Battlefront II in the eyes of the consumer and more broadly on EA, which is really important for the launch.

"The nature of big franchises and umbrella brands means there is always some chance (however small) that negative consumer sentiment could bleed from one area of entertainment into another. With the next installment of the Star Wars' movie franchise coming mid-December, I imagine that Disney was fully behind EA's decision. The financial impact will be felt in the launch quarter as a result of less microtransaction sales, which as a share of the total revenue will be quite small in the opening phases."

IDC research manager Lewis Ward remains confident in the power of the Star Wars brand and, importantly, EA's ability to deliver.

"There are going to be Star Wars games coming out for the next 10 years," he said. "There's a huge new movie about to be released, and the last thing EA wants is to jeopardize this potential long-term revenue stream. Most Star Wars games have been crap over the years [but] I think EA could be in a good spot here for several years if they play their cards right.

"Obviously, this loot crate controversy has been a fiasco and PR disaster, but I also think there's been some hyperventilating on gamers' part... I totally get the outcry if a company like EA screws up their game's microtransaction system - it can devolve into pay to win. And perhaps EA got close to that line here. FIFA and many other games have certainly shown them that microtransactions can be highly-lucrative."

While Ward is remaining positive overall, he still wonders if the recent controversy could prevent some sales at launch.

He continued, "Honestly, I think they wanted to stop the black eye, to put an end to the controversy for at least the game's first few weeks on the market - and they'll probably kick the can down the road far enough to get it past The Last Jedi's opening window. At the end of the day I doubt EA's 4Q17 will be materially impacted by the temporary shutdown of Star Wars Battlefront II microtransactions. EA's more serious near-term concern is that all this multiplayer controversy may keep hundreds of thousands of would-be buyers from spending $60 in the first place. On the bright side, perhaps EA has also taken this Yoda quote to heart: 'Train yourself to let go of everything you fear to lose'."

At the end of the day, EA's decision to halt microtransactions in Battlefront II shouldn't be taken as a signal that loot boxes are suddenly going away either. As Niko Partners analyst Daniel Ahmad said on Twitter, "The main takeaway from the EA statement is what I've always been saying. MTX and Loot Boxes aren't going away. They're already accepted. All that's happening is EA tweaking the system to make it 'fun and addictive' instead of 'intrusive and predatory'."

Update: For its part, EA has now stated in an SEC filing that the removal of microtransactions from the game is not expected to impact the company's 2018 fiscal guidance.