Loot boxes, "disappointing sales", and game publisher stock prices


#21

From what I could see, and I’m not really digging today, it all looks like normal “buy low, sell high” type trading in a public company. The important thing to note is that they have to report on board members or major shareholders doing this.


#22

Announced a few hours ago… what a way to start the New Year:

Activision Blizzard plans to fire its CFO for an unspecified cause

https://finance.yahoo.com/news/activision-blizzard-plans-fire-cfo-231800509.html


#23

Reuters reported that a source familiar with the matter told the news wire Neumann had been poached by Netflix to become the steaming giant’s new CFO. The video game company declined to comment on that report.

I’ve not heard of executives being fired for taking a job at another company. If you fire someone who’s worked there for awhile you have to pay severance and stuff, so companies usually prefer that you resign.


#24

Yeah, the tone of those initial articles did come across as a bit click-baity.


#25

Here’s a new report from Bloomberg that’s an example of the articles that got me thinking if it’s really worth reading into the game publisher stock price declines:

https://www.bloomberg.com/news/articles/2018-12-31/tech-rout-spurs-second-biggest-quarterly-etf-outflow-on-record

Tech Rout Spurs Second-Biggest Quarterly ETF Outflow on Record

The plunge that pushed technology stocks to their worst quarter in a decade prompted exchange-traded fund investors to flee the sector at the second-fastest pace on record.

In particular, concerns over the demand prospects for Apple’s iPhone sparked heavy selling, sending Apple into a bear market and as it lost its title as the largest stock on Wall Street. Those concerns were augmented by weak outlooks from a number of high-profile semiconductor companies.


#26

We live in a world where Kylie Jenner can tweet that Snapchat is dead and subsequently wipe $1.3 billion from the company’s value - so sure, online voices can have a big impact.

But let’s not get carried away here - outrage and bad press only go so far in causing stocks to tank.

I think @SIGSTART’s take is closer to the reality. While bad reviews and negative press can impact sentiment around games (and even lead to changes - see Shadow of War), investors (who probably aren’t even gamers) don’t really care. They follow the money.

A good example would be the EA SW Battlefront 2 saga - Reddit was ablaze with victory cheers when EA changed its tune (albeit temporarily) with the game, and EA’s stock took a knock. Except it didn’t - it actually surged.

EA missed its target (8 million) for sales with that game, but it still sold 7 million copies, and made loads of money. It also continued to make money from all of its other properties and platforms (FIFA! FIFA! FIFA!)

Mega publishers like EA, ActiBlizz, Ubisoft etc are bigger than any single title. The same goes for private behemoths like ZeniMax (Bethesda). The bad reviews around Fallout 76 are stinging, sure, but Doom Eternal will make up for it and more. As will the next 12 ports of Skyrim.

Backlash from the Diablo Immortal reveal was heavy, and sure, bad press may have caused its stock to take a knock - but you know, ActiBlizz is going to keep on making sweet sweet cash from everything else. And they’re going to release Diablo Immortal and probably make money from that too.

Investors don’t care about reviews, they care about sales (and money money money). And not the sales of one title (unless it’s a publisher that hinges off a big release every few years), but across the whole group.

Then there’s recurring income like microtransactions and loot boxes which are pretty much a part of every major publisher in some form. There’s a reason they’ve become so pervasive - because it brings in ALL THE MONEY. Ask Take Two.

When these things come under threat, then you’re more likely to see stocks face a longer term decline. But it will be based on numbers (sales, revenue, proft, etc) and not how many downvotes you have on reddit.

Public backlash can have an impact, but investors are more likely to react to something with a more solid base. Companies are more likely to suffer loot box fallout from possible regulation and legislation than they are from gamers complaining about them (especially when the silent majority keep buying them).

That said, this isn’t a “too big to fail” kind of thing. If gaming publishers continue to alienate their audiences and ignore the feedback, this WILL impact sales and revenues etc EVENTUALLY. But there’s always money to be made - and investors to go along for the ride.

You can literally kick your biggest game IP to the curb, and give a big fat middle finger to your gaming audience and still enjoy a 330% gain on your stocks over 5 years.

Just ask Konami.


#27