If you follow the news in the past few weeks you’ll see all kinds of game commercials and awards shows. Video games are coming to the end of the year so celebrations ensure, at least that is on the outside. On the inside, you are seeing a financial drop that we have not seen in several years of growth. How these companies will respond is the scariest part of the game industry. Usually it comes in the form of layoffs and cuts. This response impacts people’s real lives who work on the games we love. So in an effort to provide an overview on what is happening and why, let’s take a look at two of the biggest companies out there. EA and Activision Blizzard fight an epic battle, not in space or with swords, but with numbers, against financial analysts.
EA has a long history in games. “It’s in the game” still rings in my head. Two years ago EA was making a fortune. The stock price rose drastically and in July was as high as $148/share. That is high. Too high as a matter of fact. The end of the year or dreaded third quarter is when all the bills come due for companies and the choices made on Battlefront 2, Battlefield V, and the anger from fans overall has finally hit.
Star Wars: Battlefront 2 – Back in January, yes same year, EA saw sales of the epic Star Wars game plummet due to huge outrage from the fans over the loot crate controversy. The game attempted a pricing scheme that back fired on EA causing one of the largest Reddit wars to date. This was not the best start for the company. Sales underperformed and the reality of a tough year began. Outrage spilled into Lucasfilm as well and a poorly received The Last Jedi film did nothing to help fandom go to their wallets and buy the game, or spend on loot crates. The result was EA backing away from the loot crates and offering a better system, but by then it was too late, the damage had been done.
Battlefield V – Delaying the title was a mistake. That is the headline you will see. Going up against a monster hit like Red Dead Redemption II was a mistake as well. Not to mention a Destiny 2 expansion as well as Call of Duty on the battlefield and you are fighting for small turf among gamers. The title did not do well. We are still in the holiday season, but sales were enough to convince hedge fund managers to pull out, which means, stock price drops. EA is trading in the $80s this week. It has last almost half its value.
This battle has been in the news a lot more recently. Mostly from the backlash of probably the first negative BlizzCon ever. Activision makes big games, however, they are losing players. Call of Duty did not do as well as they hoped. Destiny 2 actually saw some life over the quarter, but not enough and still underperformed. The real battle though came from Blizzard.
Blizzard makes games for hardcore gamers. They are a fanatical fan base who invest hours, days, lives into their products. World of Warcraft has seen a numbers drop in the past year (mind you it is a 14 year old game). However, the real damage has come from Overwatch and Hearthstone not performing as well as analysts hoped. Even with Overwatch League to boost, (still trying to figure out the prices Blizzard charges for teams despite the down turn in interest) the titles are not meeting analyst’s forecasts. Fans however, remained passionate. That is until BlizzCon.
The epic disaster of BlizzCon comes most notably from Diablo. The game is still a strong money maker for Blizzard and fans are lifelong. However, the Diablo: Immortal mobile title announcement failed horribly at the convention and fans rebelled on the show floor with questions and jibes at the development team. Blizzard did not do any favors to itself by trying to remove Reddit posts and control the fallout of the announcement. Now, fan passion has turned into fan skepticism, with the same passion as before, not a great equation.
Game companies have to stop trying to cater to Wall Street forecasts and start looking at their quality products and supporting a positive fan base again. Big companies like EA and Activision need to do a better job staying in touch with their fans. There is also the giant pink elephant in the room that we did not discuss in this article, Fortnite. For now, let’s see how these companies react and if their stocks continue the fall, or recover for 2019.