With Battlefront 2 Microtransactions Coming Back, EA Stock Price Hits All-Time High

EA is riding high.

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Now Playing: GS News Update: Star Wars: Battlefront 2 Underperforms, Microtransactions Coming Back


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While Star Wars: Battlefront II might have failed to reach EA's initial sales expectations, that doesn't mean the company overall is suffering from a financial perspective. The publishing giant's stock price has now reached an all-time high.

The company's stock price closed today, January 31, at $126.96, which is up by almost 7 percent compared to the day before. That's a massive gain, equal to around $8.26 per share. The stock price surged above $131 today before settling to where it closed at the end of the day.

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The huge gain comes a day after EA reported earnings for its fiscal third quarter. As we reported yesterday, revenue for the period rose slightly to $1.16 billion. Overall, EA posted a loss of $186 million for the quarter, but the majority of this loss was due to a $176 million tax expense that EA incurred as a result of the recently enacted Tax Cuts and Jobs Act.

What might have investors enthusiastic about EA's prospects is the fact that the company is forecasting revenue of $5.1 billion for its fiscal year ending March 31 and profit of $1.015. EA's massive annualised sports franchises--FIFA, Madden, and NHL--are all expected to return this year. Additionally, it is a World Cup year, so that could help the FIFA franchise (even though the United States failed to qualify for the competition).

Also, investors were likely happy to hear that microtransactions are coming back to Star Wars: Battlefront II in the coming months. Given that the game has already shipped 9 million copies (with potentially millions more soon) that represents a massive install base for extra sales with microtransactions. Even if only a very small percentage of players spend money on Battlefront II microtransactions, it could result in a huge revenue swell.

In addition to its returning sports games, EA is expected to launch a new Battlefield game in October which is yet another reason why investors might be feeling bullish. BioWare's new IP, Anthem, is no longer coming this year, however.

Additionally, EA said during the earnings call this week that it believes in microtransactions and could apply them to more of its games. Another positive for EA is that the mix between digital and packaged sales is trending in further in favour of digital lately. For digital full games and extra content, the margins are higher than packaged games because there is no physical retailer involved (though EA still pays some store fees for digital content).

Speaking on the subject of microtransactions this week, EA CEO Andrew Wilson said Battlefront II was a "learning opportunity" for the company. EA removed microtransactions from the game just before its public launch in the wake of feedback from the pre-release phase. Players were understandably upset when it was discovered that loot boxes containing game-affecting weapons, items, and abilities, could be purchased with real money. This led some to believe that Battlefront II would be a pay-to-win experience.

"We never intended to build an experience that could be seen as unfair or lacking clear progression, so we removed the feature that was taking away from what fans were telling us was an otherwise great game," Wilson said. "We are fortunate to have such passionate players that will tell us when we get it right, and when we don't. We're now working hard on more updates that will meet the needs of our players, and we hope to bring these to the Battlefront II community in the months ahead."

EA is of course not the only publisher whose games use microtransactions. Grand Theft Auto and Red Dead parent publisher Take-Two has said it wants to have some form of "recurrent consumer spending" in all of its games. Games from publishers like Ubisoft, Activision Blizzard, and Nintendo also use microtransactions in some form.

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