Are EA's "Battlefield" Problems a Concern For Investors?

EA now admits that "Battlefield 4" launched in an unacceptable state. Will improving the quality of its output propel the company in the right direction?

Jun 23, 2014 at 8:05PM

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The quality of Electronic Arts' (NASDAQ:EA) software output has been the subject of frequent criticism. Consumer dissatisfaction with the company's games allowed the publisher to twice win Consumerist's "Worst Company in America" poll, before being supplanted by Comcast for this year's dubious honors.

In most cases, EA's response to consumer pushback has been to downplay the legitimacy of complaints while pointing to solid sales numbers. Now, it looks like the company is making an effort to improve its image and quality-control standards.

The company has recently admitted that its premier first-person shooter Battlefield 4 shipped in an unacceptable state. Additionally, EA has promised to restructure the way it handles game development and product testing. What do these efforts mean for Electronic Arts? Will the company make good on its goal to improve the quality of its software output?

Missing the target
Battlefield 4 stands as one of the most controversial video games released in the last decade. While the game handles hot-button issues like international conflicts, terrorism, and espionage with the subtlety of a chainsaw, the most prominent criticisms stemmed from the game's shoddy quality. The title shipped with game-breaking bugs, and its highly central online mode was unplayable for a substantial portion of users.

Reports have swirled that EA rushed the game to market to gain an edge over Activision Blizzard's Call of Duty: Ghosts, Battlefield's chief genre competitor. The quality of the game even prompted several lawsuits.

EA changes its tune on Battlefield 4
Despite the vocal complaints about the game, EA initially stated that it believed the product had a strong launch. In February, EA's chief creative officer dismissed claims that the game was broken or had a bad debut, stating that Battlefield 4 was a strong product in terms of both gameplay and sales performance.

While the publisher issued assurances that Battlefield 4 was making the grade, speculation began to build that the quality of the game could have a negative impact on future releases in the Battlefield series. If such a scenario were to play out, the first game to feel the deleterious effects would likely be this fall's Battlefield: Hardline. The title has been put forth as central to EA's earnings for the year.

Leading up to the release of Battlefield: Hardline, EA appears to have changed its tune about the quality of Battlefield 4. In an interview with Eurogamer, EA CEO Andrew Wilson recently described the launch of the last Battlefield game as "unacceptable." Wilson proceeded to state that the game's problems were the result of client-side server issues, a somewhat dubious claim, before emphasizing that greater attention to detail was being given to the upcoming Hardline.

EA aims to improve its development practices
EA's admission that Battlefield 4 shipped in a sub-optimal state comes on the heels of news that the company is fundamentally reworking its development practices. The company aims to bolster efficiency while also allowing for more product testing and quality control. The need for improvement is not limited to the Battlefield series or its developers.

Microsoft saved Titanfall and gifted EA a viable franchise
Titanfall, one of EA's premier new franchises, was almost canceled due to ongoing issues with the game's production. The publisher signed a multi-game deal with Respawn Entertainment, a studio headed by some of the talent responsible for Call of Duty's immense popularity. But the developer's first project wasn't coming together. Respawn and EA had disagreements over the direction of the game, and only Microsoft (NASDAQ:MSFT) stepping in with funding stopped the project from getting canceled.

Microsoft needed a high-profile game for its Xbox One console, particularly after the system's troubled unveiling, and its interest ultimately saved Titanfall. EA has benefited greatly from the deal with the platform holder, and it would have taken a sizable hit if the project wasn't rescued from the outside.

Microsoft secured platform exclusivity for the first game in the series, but subsequent entries are likely to grace Sony's PlayStation 4 as well. Essentially, EA got a sizable bailout from Microsoft, who footed the bill to establish a new property that is now on track to go multiplatform. The arrangement wound up working out for the third-party publisher, but it can't count on similar rescues the next time development of a high-profile game is floundering.

Improved quality is a good goal to have
EA is smart to address the quality problems in its software output. How effective its new development practices are and what effect the new structure has on the company's bottom line remain to be seen, but treating big series with a higher degree of care is a good way to preserve their relevance. If costs can be managed, making better games should help EA grow and do so in a profitable manner. Regardless, it seems investors are willing to give the company the benefit of the doubt with shares almost doubling year to date.

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Keith Noonan has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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