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Electronic Arts Inc. (EA), Activision Blizzard, Inc. (ATVI): Does This Gaming Disaster Matter?

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A new version of the popular SimCity franchise was launched on March 5 by Electronic Arts Inc. (NASDAQ:EA), marking the first proper update to the venerable series in a decade. The game requires the player to be constantly connected to EA’s servers at all times, even when playing in single-player mode. This is an extreme form of DRM, or digital rights management, aimed at preventing piracy. However, due to the apparently unexpected loads on the servers, the launch of the game was a complete disaster. People who bought the game couldn’t download it. Once they did download it they couldn’t connect. Servers were busy or simply not working. On top of that, in-game bugs prevented features from functioning properly and progress in the game from being saved.

Almost two weeks later, the game is still a mess. Electronic Arts Inc. (NASDAQ:EA) has greatly increased server capacity, but the game still has serious problems. This has caused a backlash against EA, and Twitter is ablaze with angry comments. Negative reviews began pouring in for the game, and Amazon briefly suspended sales of the digital version in the face of so many problems. EA’s PR response was equally disastrous, refusing to give refunds to players unable to play the game.

People hating you is not good business, or maybe it is?

Electronic Arts Inc. (NASDAQ:EA) has managed to become arguably the least liked game company due to these types of issues. In an effort to stop piracy the company makes playing the game difficult for the very people who actually bought it. Last year competitorActivision Blizzard, Inc. (NASDAQ:ATVI) ran into similar problems with the launch of Diablo III – servers were overloaded, causing many players to be unable to play the game that they had just paid for. This should have served as a lesson for EA, but SimCity’s launch was actually worse.

The question is, does any of this matter? People are still buying the game, it seems, and SimCity will likely go on to be a hit. The negative publicity is certainly not a good thing, but EA is no stranger to that. EA owns many very popular franchises, and most people will keep buying those games regardless of EA’s reputation. The bungled launch of Diablo III didn’t even put a dent into Activision Blizzard, Inc. (NASDAQ:ATVI)’s results: both revenue and earnings grew in 2012. Diablo III has sold over 3 million copies worldwide even after the horrible launch, meaning that many gamers are quick to forgive.

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