Many people have been waiting until today to buy EA stock in the dip. Its share price has fallen more than 40% since the summer. The reason today is significant is because the next iteration of Battlefield (Battlefield V), one of EA’s largest IPs, released today. This game was not received well critically, and is hailed as unfinished and buggy. Recently I have been looking at video game companies as potential investments, and as a person who spent much of high school playing an Xbox 360, purchasing countless games from companies like EA, Activision and Microsoft, I realized that what happened today has become the industry standard.
To make clear what I mean, I am going to describe day one of any online playable video game here: At release avid video game players and fans of a video game franchise are excited to buy the game (your early adopters). These people do not care what the game is like on the first day as long as they get to play it. When a game releases it is frequently a struggle to play it in the first week due to server connectivity issues and availability. This happens with EVERY video game. Even companies with a good track record of releasing “quality” games still release unfinished games. Another release date issue is that the game may promise to add a large feature piece of content later.
In my experience playing video games I have been everything from early adopter to late majority and laggard. I am often not disappointed on a release date, but disappointed with how the developer moves the game forward after release. Some games keep you playing with new content for 2-3 years (Activision-Blizard/Bungie’s Destiny for example). However, the industry standard has become “release the game as the infrastructure on which we will build this iteration between now and the next major iteration.” As a customer of game companies, I do not see an issue with this. As a part owner, I certainly do. This would be like if Samsung released a phone without all of the software complete, promising to “patch it later.” However, that is only a problem because the customers would be outraged. With videogames, the customers do not see this issue.
In terms of buying EA stock on this major dip. Today could be the day or it could not, but it is a major games company that is going to be sticking around for a while, and its business strategy is going to proceed as it was.
Just some food for thought if anyone else is contemplating a buy.
Disclaimer: Consult your financial professional before making any investment decision.