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TheStreet Open House

Comeau: What Is Electronic Arts Thinking?

One of most compelling, and perhaps under-covered stories in the video-game industry right now, is the grassroots boycott being directed at Electronic Arts' (ERTS) upcoming title Battlefield: Bad Company, which is stirring up negative attention with its controversial downloadable content strategy.

Downloadable content is basically stuff gamers download to enhance the experience of a particular game. In the days when PC gamers dominated online play, downloadable content was pretty much all free and much of it was actually created by amateurs. For example, new levels or weapons could be added to a first-person shooter, or a racing game could receive new cars.

These days, console gaming increasingly revolves around online play, and recent blockbuster titles like Microsoft's (MSFT) Halo 3 and Activision's (ATVI) Call of Duty 4, are revered much more for their significant online multiplayer modes than their single-player campaigns.

Of course, video-game software companies are increasingly viewing the sale of downloadable content as a way to squeeze more profit out of their titles. For example, Activision has had notable success hawking new song packs for the monumentally huge Guitar Hero series, and it will almost certainly see similar results from its recently released expansion pack for the aforementioned Call of Duty 4.

However, EA looks like it's crossing a line with Battlefield: Bad Company, a title for the Microsoft Xbox 360 and Sony's (SNE) PlayStation 3 consoles, and now they're seeing a clear backlash from the gaming community.

To make a long story short, EA is doing the following with Battlefield: Bad Company. They are releasing two versions of the game, the regular one for $59.99 and a "Gold Edition" for $69.99. This is nothing new in the industry. Often, high-profile games come in multiple versions with the more expensive ones containing things like making-of-videos, artwork and sometimes paraphernalia.

But the "Gold Edition" of Battlefield: Bad Company will also contain five weapons that aren't included in the standard version of the game, and those who don't own the "Gold Edition" can obtain them by buying them as downloadable content.

As a result, the online multiplayer component of the game could be imbalanced at the expense of those who don't pony up for the "Gold Edition" or for the downloadable content. Gaming Web site SarcasticGamer.com, which is spearheading the boycott of the game, had the following comment: "How, in good conscience, can EA take more money out of fans' pockets, who have already spent 60 bucks on the game. EA has said that the game's weapons are appropriately balanced and that the new guns won't unbalance a game. If that's the case, then why buy them? What value do they even have? I'm not buying what EA is selling and you shouldn't either."

In a statement to the popular video-game site Kotaku, EA said, "All weapons are balanced for gameplay. More weapons offer players more choices but do not create an advantage/disadvantage for players who do not opt to buy new items."

The problem here is that no matter which side you think makes sense, EA does not need PR issues like this at a time when it's trying to change its image from the big, bad company that can't make quality games and slings the same old junk at gamers year-in, year-out. EA certainly isn't alone in having questionable downloadable content strategies, but as the biggest target in the industry, they need to watch their step more carefully and make sure they're actually delivering something for the money.

In fact, if this was a smaller company, this issue would probably receive a few blog mentions and be done with. But it's EA, and therefore gamers, particularly the hardcore crowd, will automatically think they're getting screwed somewhere. I expect the prevailing attitude will be, "I'll have two choices if I buy the game -- either I'm disadvantaged in online play, or I get ripped off." Not a good recipe for sales.

But ultimately, this is just another reason to avoid EA's stock, because this penny-pinching strategy is a sign that nothing's really changed at this company. Activision, a stock I like, charges pretty high prices on its downloadable content, but at least there, people know for sure what they're getting.

In keeping with TSC's editorial policy, Michael Comeau doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Comeau is a research analyst at TheStreet.com. In this role he performs stock analysis for TheStreet.com Breakout Stocks, and is also a regular contributor to RealMoney.com. Prior to his arrival at TSC in June 2004, Comeau worked as a Consultant to Toyota Motor North America, performing in-depth research on automotive industry issues, primarily in the areas of alternative engine technologies, competitive analysis and macroeconomics. His primary market interests include consumer technology, specialty retail, and small-caps. Comeau received a bachelor's degree in Finance from Brooklyn College, and has completed Level 1 of the CFA program.. He appreciates your feedback; click here to send him an email.

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