KeyBanc Capital Markets Says Outrage Over Battlefront II Microtransaction Pricing Not Justified
You have to admit, the outrage was over-the-top but you have to hand it to the gaming community, they won this round when EA announced they would be pulling microtransactions from Battlefront II, for now. According to one Wall Street firm, they say gamers livid over Electronic Arts’ in-game moneymaking strategy are overreacting. That might be so, but it worked!
KeyBanc Capital Markets analyst Evan Wingren wrote in a note to clients Sunday:
“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.”Â
Shares of Electronic Arts have declined 10 percent month to date through Monday. Wall Street is worried controversy over EA’s Star Wars Battlefront II in-game monetization model will hurt the video game’s sales. Wingren noted there is now a “slightly higher probability” the title will not hit his 13 million sales unit forecast.
The analyst estimated cost per hour for a typical Star Wars Battlefront II player. He said if a gamer spent $60 for the game, an additional $20 per month for loot micro-transaction boxes and played around 2.5 hours a day for one year, it comes out to roughly 40 cents per hour of entertainment. This compares to an estimated 60 cents to 65 cents per hour for pay television, 80 cents per hour for a movie rental and more than $3 per hour for a movie watched in a theater, according to the firm’s analysis.
Evan Wingren said:
“If you take a step back and look at the data, an hour of video game content is still one of the cheapest forms of entertainment. Quantitative analysis shows that video game publishers are actually charging gamers at a relatively inexpensive rate, and should probably raise prices.”
As a result, the analyst reiterated his overweight ratings for Electronic Arts, Activision Blizzard and Take-Two with price targets of $134, $78 and $144 respectively.
As we told you last week, Electronic Arts announced Thursday it temporarily turned off all in-game purchases in Star Wars Battlefront II in response to the negative sentiment from the gaming community. The initial uproar centered on in-game purchases. They allowed players to save time by paying extra money to accelerate the “unlock” of major characters like Darth Vader. The gaming community flooded social media and Reddit with thousands of negative posts, saying the company is unfairly compelling consumers to spend more money for content that should be part of the initial $60 game price.
Star Wars Battlefront II officially launched on Friday.
What are your thoughts? Did gamers overreact? Or is this a win for good the guys? Tell us in the comments below.