Battlefield 4 from Electronic Arts (NASDAQ:EA) recently launched alongside the newest edition of the Call of Duty franchise from Activision Blizzard (NASDAQ: ATVI), providing gamers with an alternative to the best-selling series. EA's Battlefield was in a prime position to steal away sales from Call of Duty, as the latter's annual releases had become repetitive, thus dealing a big blow to one of Activision's biggest cash cows.
But Battlefield 4 has had technical problems so severe that EA's studio DICE has suspended all other projects in order to fix them. Meanwhile, some shareholders have filed a lawsuit against the company, claiming that EA's management knew of the technical problems but released the game anyways, selling shares before the game's launch. A PR nightmare on multiple fronts, EA may have let a golden opportunity slip between its fingers.
For some, Battlefield 4 was essentially unplayable at launch. The game often crashed, wiping out progress in the single-player campaign, and online multi-player, the main feature of the game, was unstable at best. Patches have been released, fixing some of the problems, but the studio behind the game was forced to suspend all other development, including Battlefield 4 expansion packs and the upcoming Star Wars Battlefront, in order to deal with the game's problems.
This isn't the first time EA has bungled the launch of a game. Electronic Arts released a new version of SimCity back in March, but the game was unplayable for days due to server issues, and it took weeks for the team to iron out the major bugs. The Battlefield situation is even worse, with problems persisting two months after launch.
Insider trading allegations
A class action lawsuit alleges that executives at EA knowingly over-promised on Battlefield 4, and that the vast technical problems were known to the company prior to launch. Optimistic guidance issued before the launch led EA's shares to climb above $28, allowing some executives at the company to sell at inflated prices. The stock has fallen significantly since then.
Proving that executives knew of the problems will be difficult, if not impossible. Given the scope of the problems, it's likely that someone knew about them, but management may have been detached enough from the process to be unaware of the impending disaster. It is therefore unlikely that this lawsuit amounts to much of anything.
The real consequence for EA
Battlefield 4 was supposed to be EA's answer to Activision's Call of Duty series, but the game's launch issues will likely have long-lasting negative effects on the Battlefield series. Call of Duty: Ghosts had a silky smooth launch compared to Battlefield 4, and gamers are always going to choose the game that actually let's them play. There's nothing more frustrating than spending $60 on a product that doesn't work.
With the Call of Duty series relying on the same basic formula every year, the Battlefield series had a real opportunity to take away market share from Activision. But with the game non-functional for many two months after launch, EA has blown that opportunity. And when the next installment of the Battlefield series is eventually released, gamers will not forget this fiasco.
These issues are certainly not helping with EA's image. The company was voted the worst company in America by readers of The Consumerist earlier this year, beating out big banks for the honor, and the Battlefield 4 issues only add to the myriad of complaints levied against the company. From releasing day-one downloadable content for Mass Effect 3 to forcing SimCity players to be online in order to play, EA has not been good at making its customers happy. That's not a good long-term strategy.
The bottom line
Electronic Arts has proven twice this year that it can't launch a game with a major online component without subjecting gamers to frustrating technical problems. SimCity was bad, but the situation with Battlefield 4 is far worse, causing delays of future games and tarnishing the Battlefield brand. Electronic Arts has let a golden opportunity slip away.
Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard. The Motley Fool owns shares of Activision Blizzard. 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.