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EA's Star Wars: Battlefront II Controversy

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Heroes are born on the battlefront, and in Star Wars Battlefront 2, you're able to experience it for yourself. Play as heroes from all three eras of Star Wars in massive battles across iconic locations, and take part in a thrilling single-player story as Iden Versio fights to avenge the Emperor.

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Gamers livid over Electronic Arts' in-game moneymaking strategy in its new "Star Wars Battlefront II" title are overreacting, according to one Wall Street firm.

"We view the negative reaction to Star Wars Battlefront 2 (and industry trading sympathy) as an opportunity to add to Electronic Arts, Take-Two, and Activision Blizzard positions. The handling of the SWBF2 launch by EA has been poor; despite this, we view the suspension of MTX [micro-transactions] in the near term as a transitory risk," KeyBanc Capital Markets analyst Evan Wingren wrote in a note to clients Sunday.

"Gamers aren't overcharged, they're undercharged (and we're gamers). ... This saga has been a perfect storm for overreaction as it involves EA, Star Wars, reddit, and certain purist gaming journalists/outlets who dislike MTX," Wingren wrote.

Shares of Electronic Arts have declined 10 percent month to date through Monday. Wall Street is worried controversy over EA's "Star Wars Battlefront II" in-game monetization model will hurt the video game's sales.

Wingren noted there is now a "slightly higher probability" the title will not hit his 13 million sales unit forecast.

The analyst estimated cost per hour for a typical "Star Wars Battlefront II" player. He said if a gamer spent $60 for the game, an additional $20 per month for loot micro-transaction boxes and played around 2.5 hours a day for one year, it comes out to roughly 40 cents per hour of entertainment. This compares to an estimated 60 cents to 65 cents per hour for pay television, 80 cents per hour for a movie rental and more than $3 per hour for a movie watched in a theater, according to the firm's analysis.

"If you take a step back and look at the data, an hour of video game content is still one of the cheapest forms of entertainment," he wrote. "Quantitative analysis shows that video game publishers are actually charging gamers at a relatively inexpensive rate, and should probably raise prices."

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Gamers are overreacting to EA's 'Star Wars' controversy; publishers should raise prices: Analyst

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Gamers livid over Electronic Arts' in-game moneymaking strategy in its new "Star Wars Battlefront II" title are overreacting, according to one Wall Street firm. "We view the negative reaction to Star Wars Battlefront 2 (and industry trading sympathy) as an opportunity to add to Electronic Arts, Take-Two, and Activision Blizzard positions.

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Imagine buying a new chess set. Chess is your favorite game. Also you love "Star Wars." It's a Star Wars chess set!

Now imagine playing your friend who spent $200 for the random chance that his pawns obtain the board-clearing powers of a queen. Plus his king looks like Darth Vader and yours still looks like a scruffy-looking nerf herder.

You might get mad. Or you might up the ante and spend a few hundred bucks to even the odds. Now imagine that you're both children.

These are some of the questions that have been gripping the video game industry in a controversy leading up to the Friday release of "Star Wars: Battlefront II," this year's marquee Star Wars title timed to Disney's highly anticipated "The Last Jedi" film next month.

It all started a month ago, when EA showcased that "Battlefront II" would have a "loot box" system in place for players. On top of the $60-$80 retail price, the game was going to allow players at home to spend more money on digital "boxes," which can give you random extra benefits. Each loot box contains a random reward. You could get abilities to do more damage or move faster, or you might get a dud, like a "dance" emote for your character. And if you get that dud, you might spend even more money and up the chances of permanently becoming more powerful, like the ability to make Boba Fett fly around with 100 percent invincibility. It's why critics have called it "glorified gambling": You don't know what you're spending money on, but the more you spend, the higher the chances of winning.

As the website Rock Paper Shotgun explained, you could get those same benefits without spending real-life money, but you'd have to do it by playing matches against other players to earn fake game money, which could take dozens if not hundreds of hours.

Loot boxes have become increasingly normal in recent years, included in games like the popular shooter "Overwatch" as well as the recent "Call of Duty" game. Publishers claim that because development costs of top games rival Hollywood summer blockbusters, selling post-release digital content is needed to make up costs.

But with "Star Wars," creating a random loot economy raised flags because some consider the practice akin to gambling, and the brand is marketed heavily toward children. Beyond that, most other competitive games do not offer "pay to win" advantages, which imbalances the game to favor paying players.

Weeks of public outcry culminated in the game's publisher, EA, taking to Reddit to defend itself on the controversy. That comment became the most downvoted (or disliked) post in the site's 12-year history.

On Thursday night, the eve of the game's launch, EA said it had temporarily removed the in-game purchases.

"The ability to purchase crystals in-game will become available at a later date, only after we've made changes to the game," said Oskar Gabrielson, general manager of DICE, the game's developer. Crystals are the fake currency in the game you can buy for real money, which you then trade for loot boxes.

The Washington Post asked EA if players can be guaranteed that "pay to win" mechanics have been removed from the game.

"With regard to yesterday's announcement on pulling the in-game purchases for launch, we do not have anything further to share at the moment beyond Oskar's post," an EA spokeswoman said in response.

Belgium's gaming commission is investigating whether the game constitutes gambling. But EA asserts that the loot box mechanic (called "crates" in the Star Wars game)is not gambling.

"A player's ability to succeed in the game is not dependent on purchasing crates. Players can also earn crates through playing the game and not spending any money at all," said the EA spokeswoman. "Once obtained, players are always guaranteed to receive content that can be used in game."

On Thursday, Jimmy Pitaro, chairman of Disney's consumer products and interactive media division, made a call to EA hours before the decision was made to pull in-game purchases. The Wall Street Journal reported that the call was to express Disney executives' unhappiness at how the outrage "reflected on their marquee property."And a Disney/Lucasfilm spokesman said the company supports EA's temporary decision to end the crate-purchasing.

"Star Wars has always been about the fans - and whether it's 'Battlefront' or any other Star Wars experience, they come first," the Lucasfilm spokesman told The Post on Friday. "That's why we support EA's decision to temporarily remove in-game payments to address fan concerns."

For years, critics and gaming psychologists have criticized loot boxes. While it may not legally be gambling, they say, the same intermittent nature of rewards and spending is in place.

"If you put it in fundamental terms, it's really the same thing," said Kimberly Young, a licensed psychologist and founder of the Center for Internet Addiction. "It's called gambling."

Loot boxes were popularized in China and Korea, where the practice is now regulated. Just this year, developers in China became required to disclose the probabilities of loot boxes in popular games like "Overwatch" and "Hearthstone." In 2012, South Korea introduced a law that would require major gaming companies to add features that let parents limit how long their children can play the video games.

"Americans are falling so far behind what other countries are doing, and it's all about profit," Young said. "You have gaming lobbyists who don't want us to talk about this. We just haven't had it come to a head yet."

EA's temporary pullback may seem like a milestone, but many gamers remain cynical, including Jim Sterling, a prominent games journalist. For years he's been warning the practice will only become more mainstream, which it now has with publishers like EA and Warner Bros getting in on the act. He dubbed 2017 " the Year of the Loot Box," blaming Activision-Blizzard's "Overwatch" for popularizing the concept.

"In the long run . . . I believe companies will continue to see how far they can push the envelope," Sterling said to The Post. "This is far from the first time a publisher has reached for too much too quickly, had to walk it back and take baby steps toward its end goal of acquiring as much as cash for as little additional effort as possible."

He believes EA suspended the in-game purchase only to "curry favor with the audience and perhaps make those nervous investors a bit happier."

(On Friday, EA filed a note with the Securities and Exchange Commission stating that Thursday's decision " is not expected to have a material impact on EA's fiscal year 2018 financial guidance. ")

Chief among Sterling's concerns is the fact that Activision-Blizzard patented a method to encourage these microtransactions. And EA and Activision-Blizzard are far from the only gaming behemoths testing the waters. Sterling said it's almost as if the entire industry "en masse is feeling out the limitations" of the trend.

"From my perspective, the incoming firestorm of retaliation [on the Star Wars game] was a given, but this is an industry run predominantly by alienated rich old guys who know little and care less about video games, so it would not surprise me in the least if they were completely taken by surprise when they faced their very own galactic rebellion," Sterling said. "Emperor Palpatine always thinks his Death Star is invincible until they blow it up. Electronic Arts and its insidious ilk aren't much different."
Read more: With a new trilogy in the works, Star Wars has defeated Star Trek for decades Best video game consoles and other gaming gifts for this holiday season Why this company is spending billions to get parents to play more video games

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How a Star Wars video game faced charges that it was promoting gambling

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Imagine buying a new chess set. Chess is your favorite game. Also you love "Star Wars." It's a Star Wars chess set! Now imagine playing your friend who spent $200 for the random chance that his pawns obtain the board-clearing powers of a queen.

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With the excitement already building for the year-end release of the latest " Star Wars" film, the new video game " Star Wars: Battlefront II " was poised to capitalize on all the excitement for the vaunted Disney franchise.

Unfortunately for Electronic Arts, the video game studio behind "Battlefront II," controversy and fan anger over the game's microtransactions greatly decreased enthusiasm for its November launch, illustrating increasing consumer discontent with some current trends in the gaming industry.

Microtransactions refer to a business model where virtual goods, such as characters, costumes, or weapons, can be purchased online for small sums of real currency. One form of microtransactions are loot boxes, a type of unlockable in-game content that contains a randomized selection of items. These loot boxes can either be earned through normal gameplay or can also often be purchased for real money.

The purchasable items in "Battlefront II" are being roundly criticized for providing a dramatically different gameplay experience and provide an unfair advantage over players who do not purchase them.

In the week before the game's wide release, "Battlefront II" was made available to play for subscribers to the EA Access service. But in order to unlock iconic character Luke Skywalker or Darth Vader, estimates had gamers needing to spend 60,000 in-game credits which could be earned after an estimated 40 hours of gameplay.

While characters like Vader could not be purchased for money, players not willing to invest that amount of time could instead purchase crystals, a separate type of in-game currency than the credits, which could be used to buy loot boxes in the hopes that the boxes would contain the items they want. Crystals ranged in price from $5 for 500 to $100 for 12,000 crystals.

Word quickly spread around the internet and upset many people who were anticipating the game's release. EA responded to the situation on Reddit, saying that the high unlock requirements were meant to give players a "sense of accomplishment"; the comment quickly became the most downvoted comment in the website's history.

By one estimate on the fan website SWTOR Strategies, it would take 4,528 hours of gameplay or spending $2,100 to unlock all of the game's content. EA then cut the unlock prices by 75%, so a top-tier character like Darth Vader now cost 15,000 credits as opposed to 60,000.

Other gaming companies quickly got in on the joke. The Starcraft II Twitter account took aim at EA, tweeting "Number of pay-to-win mechanics in StarCraft II: 0." Game developer CD Projekt Red tweeted that their upcoming game "Cyberpunk 2077" would have "no hidden catch, you get what you pay for - no bullshit, just honest gaming.... We leave greed to others."

.@PrettyBadTweets Worry not. When thinking CP2077, think nothing less than TW3 - huge single player, open world, story-driven RPG. No hidden catch, you get what you pay for - no bullshit, just honest gaming like with Wild Hunt. We leave greed to others.

- CD PROJEKT RED (@CDPROJEKTRED) November 19, 2017

The day before the game's wide release, EA announced that while the loot boxes would remain in the game, microtransactions would temporarily be suspended. However, reports that Walt Disney consumer products and interactive media chairman Jimmy Pitaro contacted EA CEO Andrew Wilson hours before the announcement suggested the possibility that Disney strong-armed EA into suspending microtransactions in order to protect the " Star Wars " brand image.

But EA also signaled that microtransactions will be returned to the game after changes are made, a reflection of how crucial they are to "Battlefront II" achieving profitability.

EA's big fumble illustrates the delicacy with which companies will have to approach microtransactions in the future. When it comes to popular intellectual property, the companies that own those rights will likely become more involved earlier on to ensure that fan engagement with the property remains positive, according to Wedbush Securities analyst Michael Pachter.

"I do think for the next version of 'Star Wars,' Disney is going to get involved earlier before EA springs it on an unsuspecting consumer," he said.

Following the announcement, EA released a statement to investors that the "change is not expected to have a material impact on EA's fiscal year." Pachter agrees, stating that most people who purchase "Star Wars" games are gift-givers who would be unaware of the controversy and doubts that after the changes, more than three percent of prospective buyers will still be angry enough not to buy the game.

CNBC reported that Evan Wingren, an analyst at KeyBanc Capital Markets called the negativity surrounding "Battlefront II" an "overreaction," claimed that gamers were being undercharged for games, and even that it would be a good time to purchase stock in EA.

However, according to Eurogamer, physical sales of the game have dropped 60% compared to EA's previous "Battlefront" game, although this does not account for digital purchases of the game, which could have been much higher. According to CNBC, EA shares have declined 10 percent month to date through Monday.

This is not the first time that EA has met the ire of gamers and "Star Wars" fans. When the first game of the "Battlefront" series reboot and the third title in the franchise was released, EA also sold a $50 season pass of extra downloadable content (DLC), causing consumers to accuse EA of selling an unfinished game and finding an excuse to raise the price tag to $110. Following the fan outrage, the company announced that the DLC for "Battlefront II" would all be free.

A recent trend in gaming has seen game developers shift away from paid DLC content to providing free DLC but incorporating microtransactions and loot boxes into their games. While loot boxes and microtransactions initially began with cosmetic items, like outfits or character "skins" that do not affect gameplay, fans have complained that more recent titles like "Battlefront II" and Warner Bros.'s "Middle Earth: Shadow of War" have demonstrated a tendency toward a pay-to-win model, where powerful weapons, characters, or other game-changing content are available for purchase, thus making the game unfair for players who are unwilling to spend extra money.

Though "Shadow of War," which is tied to the universe of J.R.R. Tolkien's "Lord of the Rings," initially drew the anger of consumers for its microtransactions and loot boxes, the controversy died down as players discovered that the game-changing items provided were not necessary to complete the game nor did they provide too much of an advantage.

Belgian and Dutch authorities are looking to regulate loot boxes, arguing that by putting loot boxes in games marketed towards children and making them available for purchase with real money without knowing what they will contain in return, games encourage gambling in children. On Tuesday, the Belgian gambling commission declared loot boxes a form of gambling and are now looking to have them banned across Europe.

Pachter, who is a lawyer, said that while he is unfamiliar with Dutch or Belgian law, such a suit should not have any legal basis under U.S. law since items received do not have a tangible monetary value attached.

However, that sentiment is not shared by Hawaiian politicians, who are making efforts to have loot boxes classified as gambling; have games containing loot boxes restricted from purchase by anyone under age 21; and restricting those types of mechanisms in games.

""This game is a Star Wars-themed online casino designed to lure kids into spending money. It's a trap," said Hawaiian state representative Chris Lee. "This is something we need to address to ensure that particularly kids who are underage, who are not psychologically and emotionally mature enough to gamble-which is why gambling is prohibited under [the age of] 21-are protected from being trapped into these cycles which have compelled many folks to spend thousands of dollars in gaming fees online."

While this new legislative effort may have an uncertain future, industry analysts and veterans believe that microtransactions and loot boxes are not going anywhere. While the industry transitions away from paid DLC, Pachter believes that companies will follow the models of Blizzard's "Overwatch," whose loot box and microtransaction items are all cosmetic, and Bungie's "Destiny 2," which rolled out its microtransaction content in a more controlled manner and wasn't tied to massive IP and fan expectations.

"You didn't hear anybody complain about 'Destiny' or 'Overwatch,' which is ongoing and doing $100 million a quarter in microtransactions," he said. "I think there'll be a tilt back towards cosmetic stuff. People like to dress their characters in outfits. People will buy them."

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'Star Wars' Video Game Microtransactions Ignite Controversy

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With the excitement already building for the year-end release of the latest " Star Wars" film, the new video game " Star Wars: Battlefront II " was poised to capitalize on all the excitement for the vaunted Disney franchise.