to start today's video I need you to take a look at this chart just so that you actually feel the story because it's EA stock it has just fallen off a cliff it's lost 6 billion in market value in just one day it is the largest single day drop in the company's history so the question then is what would cause their investors to sell so fast that the price dips 15% well the other thing you've probably heard by now anyway is the Drgon Age The Veil guard did not do particularly well which is true it didn't and we're core Gamers right for us something like Drgon Age is the thing that we'll actually care about it's a game that underperformed after internal reboots and years of development time blows but if you flip over to CNBC and the other Financial press you will see a different focus on today's story because as it turns out Drgon AG's struggles are are just the tip the tip of the iceberg here for investors that is not even close to EA's largest problem right now even though it is a game that absolutely fell short of expectations and by a large margin so if a loss that big is basically a rounding error compared to the thing that's actually spooked investors you know it's not really a fun time in EA right now two games missed their financial Target so much that EA have been forced to slash their financial forecasting here's how the story basically went down what sets it up is actually last October because then EA was feeling absolutely amazing so much so that they bumped their yearly forecast up from 7. 5 billion to 7. 8 billion they were riding high off Madden and EA Sports college football doing well and the thing to understand here is that college football was absurdly successful right actually getting the college football scene into a video game turned out to be a humongous thing for us audiences so much so that that was actually the fastest selling Sports title ever in the US so that was absolutely huge they were feeling great they upped their forecasts and uh well now they've had to uh they've had to go and give people bad news but to make that bad news just a little bit more tolerable they at the very same time announced that there's obviously going to be another EA Sports college football doing that was obviously an attempt to make their bad news go down a little bit better but there's a thing that goes on in markets everyone assumed there would be another college football so college football was what people would say already priced into the market which is why it hasn't really helped them out too much that's because their bad news was really quite bad what they did right is they just announced that their forecast has been updated it's now 7 billion to 7.
15 billion which is actually down 500 to $800 million from the guidance that they issued in October that is a humongous change now this is not to say that EA is hurting that they've literally ran out of money and they're going to be screwed the point here is that these are public companies and especially in video games staying level is not good enough the line has got to to go up and that is why Wall Street freaked out at this news EA basically went from being an amazing safe bet for growth to just being safe not safe for growth and the six billion stock drop that is pure panic from investors who expect constant growth now there's two games that are taking the blame here one crushed by unrealistic expectations and the other one bleeding enough money to cost EA half a billion dollars on its own but first we're going to talk about Dave by which I mean Drgon Age The Veil guard so it hit 1. 5 million players in Q4 of 2024 and that includes people playing on the EA play subscription this is actually bad at least as compared to what EA wanted because they actually wanted double they wanted that to be 3 million they were off by 50% so I guess we got to ask how the hell could EA be so off I mean this is literally their job they should be good like if they're good at anything they should be good at forecasting sales here's basically what I can piece together previous Drgon Agee games were actually real solid performers Drgon Age Origins did 3. 2 million units in 3 months Drgon Age 2 hit 2 million in 2 months and Inquisition was bioware's fastest selling game ever then a bit more recently mass effect effect legendary edition actually exceeded expectations and when that happened EA almost certainly saw amazing dollar signs on the horizon because Drgon Age had actually historically outsold Mass Effect so if anything wow vilard should really be in for for a pretty good run but if that was their analysis it missed extremely obvious problems let's go through them so valgard is a direct sequel to a 2014 game right 2014 is like two console generations of lost momentum and also vilard only released on the new consoles I mean yeah it obviously released in PC as well but as I covered in this story pretty recently the install base of the new console gen is nowhere near catching up to the PS4 and Xbox One combined and to think back to the Mass Effect legendary edition sales well funnily enough they did benefit from a what 120 million install base for the PS4 just as one example which this game obviously could not sell on but in addition to that there's also B's reputation it's not good anymore I mean you've got Andromeda you've got Anthem and even for this game there were multiple exposes about trouble development there were core staff layoffs in 20203 and basically them rebuilding the whole game since 2022 which kind of notably was after Mass Effect legendary edition overperformed as for the final game itself Veil guard and I say final because its most recent patch does pretty much seem to be you know it and there's going to be no DLC for it if you look just by the Numbers the finished product is a 70% on Steam per steam users it has an 80% critic average but only a 70% critic recommendation and the critic recommendations in open critic are far more analogous to steam scores than the actual like rated critic average so actually critics and people who at least bought the game on Steam are kind of aligned and it's like yeah 70% if it's your thing buy it but really not much else reason to buy it it's also a bit weird because it's not structured like origins or inquisitions so it's going to lose some people who really liked those games and at least based on me talking to people I know who have played the game and reading reviews Veil guard also puts its worst foot forward I've seen people be very critical about the game but actually say that it's ending ended up being quite the banger but that never matters if the first bunch of hours of your game puts people to sleep allegedly the very controversial reveal trailer was not even made by BioWare apparently right it was pushed through by EA Marketing in spite of the developers not being happy with the trailer of course we all know how badly received that trailer was and if the Publishers marketing team are the people helping with the sales predictions and also as an example got it's so wrong with that trailer and they're not listening to the Developers well maybe that just doesn't bode well for EA's understanding of the thing that they've got to sell but also industrywide expectations and budgets are hell of a thing there's so many examples but some easy ones are Final Fantasy 16 which sold 3 million copies in 3 months but was considered a disappointment and is entirely contrasted by metaphor ref fantasio because it spent 8 years in development it sold 1 million copies day one and was therefore considered to be a completely outsized success perhaps and this is just a theory right but having sane costs for your games and sane expectations actually matters when it comes to the running of your business why are there different standards here well this is actually a fun thing that industry analyst Matt piscatella made a really good point on even though it sounds absolutely godamn insane to quote him sometimes sales targets are adjusted to account for longer or more expensive development than were originally planned for even if everyone involved in the adjusting knows that the resulting Target is outlier SL unreasonable I don't know why flagrant [ __ ] is normal but Matt's been in the game as an analyst longer than I have so I'm going to take his word on it and the idea that big companies do completely stupid [ __ ] well um yeah that stands to reason doesn't it and so at least for this game after 10 years of on andof development Veil guard needed Inquisition numbers are better context be damned now bowar is not closing they are now focused purely in Mass Effect some staff are temporarily moving over to B ble field or some other opportunities within the company but while dragon Ages struggles hurt EA's real Financial nightmare lies in sports sports have basically being their Golden Goose and now the Golden Goose is showing some uh some kind of concerning signs of ill health so here's what happened right EA's shb bet has always been their sports games and it's not like they've been annihilated here as I said college football was the bestselling Sports title in the US industrywide everever not just EA but the success of that type of what I would here call American football well that came at uh what was to EA an unexpected cost but perhaps to anyone else was an expected cost it seems to have eaten into the Madden audience right so they've had a massive win little bit of a loss there but meanwhile there is EA Sports FC which is their post FIFA partnership Flagship allegedly hemorrhaging players analysts say that it is down 1.
