EA Halts In-Game Sales for 'Star Wars Battlefront' Sequel -- WSJ

By Sarah E. Needleman and Ben Fritz Features Dow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 18, 2017).

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Electronic Arts Inc. halted in-game sales of virtual goods in its high-profile sequel to "Star Wars Battlefront" on the eve of the game's launch, bowing to pressure from Walt Disney Co. as well as customers who fear big spenders could gain an unfair edge over other players.

On the eve of the videogame's launch, Electronic Arts said it was turning off such microtransactions for now and that they would be restored at an unspecified later date.

The decision came after executives at Disney, which owns "Star Wars" and licensed the videogame rights to Electronic Arts, grew upset at how online outrage over the costs of gaining access to popular characters such as Luke Skywalker reflected on their marquee property, a person familiar with the matter said.

Even Chief Executive Robert Iger was alarmed. Ultimately, Disney's head of consumer products and interactive media, Jimmy Pitaro, sent a message to Electronic Arts this week outlining Disney's concerns, the person said.

"We've heard the concerns about potentially giving players unfair advantages," Oskar Gabrielson, general manager at Electronic Arts's DICE studio, said in a statement Thursday. "This was never our intention. Sorry we didn't get this right."

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A little more than a month before the "Star Wars Battlefront II" launch, players testing the game told Electronic Arts it had gone over to the dark side.

The sequel packed in too many ways to bleed money -- for souped-up weapons or fancy character animations -- from people already expected to spend $60 to buy the game, the testers said. With the Nov. 17 release date looming, Electronic Arts developers retooled the game by making some features more widely available without asking players to reopen their wallets.

It wasn't enough: A social media outcry in early November forced Electronic Arts to tweak the game again, allowing players to much more quickly access beloved champions such as Luke Skywalker and Darth Vader without needing to dole out extra cash. Electronic Arts finally put a temporary stopper on Thursday, the day before the launch.

Electronic Arts doesn't expect the move to have significant impact on fiscal 2018 earnings, it said Friday in a Securities and Exchange Commission filing. The company's guidance calls for $5.1 billion in revenue for the fiscal year ending in March.

Halting microtransactions "reduces the risk of a unit miss," Morgan Stanley analyst Brian Nowak said in a note to investors. The company needs to redefine its in-game spending strategy so it doesn't impair the core game experience, he said.

Shares of Electronic Arts were down 2.5% in afternoon trading Friday.

Electronic Arts's pivot on the cusp of releasing a potential blockbuster -- the game's predecessor sold more than 14 million copies -- reflects swelling tension over how videogames in the $100 billion industry are conceived, created and sold.

Driving the transformation is videogame companies' ability to sell full games, including their back catalogs, as well as expansion add-on content and lucrative in-game goods digitally, at any time.

Global sales of microtransactions and other extra content for console videogames are expected to rise 30% to $7.29 billion this year, according to the research firm Newzoo.

The allure of digitally fueled gains has sent the shares of major game publishers soaring to new highs over the past five years.

As of Thursday's close, Electronic Arts' stock price was $111, up from $78 a year ago and $13 in 2012. Take-Two Interactive Software Inc.'s stock price was $118, up from $46 a year ago and $11 in 2012. Activision Blizzard's was $64, up from $38 a year ago and $11 in 2012.

"Right now the videogame industry is very sexy," said Evan Wingren, an analyst at KeyBanc Capital Markets Inc. "The digital shift is driving more investor interest than probably ever before."

Microtransactions are an increasingly important piece of the pie, but critics have balked as such in-game goods for sale shift from nice-to-haves such as new costumes to more integral pieces of content, such as access to high-powered characters. Other games, including Activision Blizzard's "Destiny 2" and Warner Bros. Entertainment Inc.'s "Middle-Earth: Shadow of War" also faced a backlash over microtransactions.

Sales during the important holiday season shouldn't have too much an impact as gift givers likely aren't aware of the brouhaha, Wedbush Securities analyst Michael Pachter said.

Electronic Arts was "much too aggressive in the implementation" of its monetization strategy, Mr. Pachter said. He expects Electronic Arts to reinstate in-game purchases by January after further tweaking the formula.

Joseph Budak, a 19-year-old college sophomore, said he canceled his preorder of the game in early November after participating in the beta. No matter how well he did, he said, he couldn't make quick headway unlocking in-game content. "It was unfair."

Write to Sarah E. Needleman at sarah.needleman@wsj.com and Ben Fritz at ben.fritz@wsj.com

(END) Dow Jones Newswires

November 18, 2017 02:47 ET (07:47 GMT)