It’s the latest chapter in the Star Wars saga. No, not the Skywalker saga. That story will continue when The Last Jedi releases next month. The saga I’ve talking about is that of EA’s Star Wars Battlefront II and gamers reaching the breaking point regarding microtransactions in video games. The negative reaction has gone from gamers, to governments, and now Wall Street is worried about the impact this might have on certain markets. KeyBanc Capital Markets analyst Evan Wingren added his comments to the mix in a note to his clients.
We view the negative reaction to Star Wars Battlefront 2 (and industry trading sympathy) as an opportunity to add to Electronic Arts, Take-Two, and Activision Blizzard positions. The handling of the SWBF2 launch by EA has been poor; despite this, we view the suspension of MTX [micro-transactions] in the near term as a transitory risk.
Gamers aren’t overcharged, they’re undercharged (and we’re gamers). … This saga has been a perfect storm for overreaction as it involves EA, Star Wars, reddit, and certain purist gaming journalists/outlets who dislike MTX.
Wingren went on to talk about video games currently having one of the lowest dollar-to-hour ratios in the entertainment industry, even if players were to pay $20 every month on microtransactions and loot boxes after buying the initial game. “Quantitative analysis shows that video game publishers are actually charging gamers at a relatively inexpensive rate, and should probably raise prices……Despite its inconvenience to the popular press narrative, if you like Star Wars and play video games at an average rate, you’re far better off skipping the movie and playing the game to get the most bang for your buck,” Wingren’s comments of course make some assumptions about amount of time spent playing and the enjoyment of the content, but keep in mind that his perspective is that of a financial analyst looking strictly at averages.
Wingren’s comments come just as governments are looking at loot boxes in games. The Belgium government declared that loot boxes in games will be classified as gambling, and Hawaii announced their intentions to investigate EA and legislature that would ban games with loot boxes. CNBC reports that shares for Activision Blizzard, Take-Two, and Electronic Arts have been declining. For more on the Star Wars Battlefront II saga, visit the game’s hub.