Battlefield 4: How It's Losing the War to Call of Duty: Ghosts

On Dec. 5, Electronic Arts' (NASDAQ: EA  )  stock dropped roughly 8.2% on news that fixing Battlefield 4 bugs could delay content produced by Swedish developer EA DICE.  As online gaming grows in importance, the company knows that losing online players could be worse than slower game production.    

The bugs
Battlefield 4 has a few problems with the most noticeable one being a "one-hit kill" bug. This multiplies the damage done by a single bullet, leading to instances where "normal rifles" deal more damage than intended. In addition, the game sometimes crashes when gamers play with a large group of friends. DICE released a patch on Dec. 5 that fixed these two glitches, but there are still other bugs that need to be fixed. Among these is a glitch where players are killed "before correct Internet packets have arrived to be interpolated by their camera." This gives the illusion of spontaneous, unexplained character loss.

An EA representative told gaming website IGN that DICE is "not moving onto future projects or expansions until we sort out all the issues with Battlefield 4." This means anticipated titles such as Star Wars Battlefront and Mirror's Edge 2 could be released later than the company expected. This issue also resulted in new downloadable content for Battlefield 4 being put on hold.   

News of potential game delays scared investors which caused the stock to drop. However, with the increasing importance of online game play, EA made the right choice in focusing its efforts to fix Battlefield 4's bugs.  

Digital importance
One of EA's goals is to increase revenue from digitally delivered content to 40% of total revenue in fiscal 2014. One way to achieve this goal is to release quality add-ons to popular video games between title launches. By charging consumers for additional downloadable content, or DLC, a company can further monetize its most popular titles and increase the likelihood that a gamer will buy the next installment of a series. According to Andrew Wilson, "The closer we [EA] can get you [the gamer] in terms of engagement to the next launch, the greater propensity you have to purchase." This is one reason why EA is focusing all of DICE's resources on fixing Battlefield 4's bugs.

If the glitches were to continue, gamers wouldn't buy additional content for Battlefield 4 and they might switch to playing competing games like Activision Blizzard's (NASDAQ: ATVI  ) Call of Duty: Ghosts. Activision already attributes roughly 59% of its revenue to digitally delivered content and boasts over 4 billion hours played online for the Call of Duty franchise alone. Call of Duty: Ghosts has sold over 6 million more copies than Battlefield 4 and it will likely widen the gap as glitches remain a problem for the EA game.

Conclusion
According to CEO Andrew Wilson, "The future of this company [EA] will live and die based on hit quality software."  If this is true then the company needs to work on ensuring the quality of its existing products before moving forward with new ones.  The DICE team is using all of their resources to fix Battlefield 4's bugs and the overall effect will depend on how fast the game maker can remedy the glitches. As time passes, more consumers will switch to other games and other title launches will be pushed back which is bad news for investors and gamers. An EA representative said, "We know we still have a ways to go with fixing the game – it is absolutely our #1 priority."

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