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EA investors file suit over  Battlefield 4
EA investors file suit over Battlefield 4
December 18, 2013 | By Alex Wawro




On Tuesday, securities law firm Robbins Geller Rudman & Dowd LLP filed a complaint that will likely lead to a class action lawsuit against Electronic Arts in the U.S. District Court for the Northern District of California on behalf of Ryan Kelly and anyone else who purchased EA stock between July 24 and December 4 of this year.

The complaint names EA as an entity as well as a few top EA men -- including Peter Moore, Andrew Wilson, and Blake Jorgensen -- as defendants, alleging that they violated the Securities Exchange Act of 1934 and knowingly or recklessly made false or misleading public statements about the quality of Battlefield 4 in a gambit to juice sales.

The complaint alleges that senior EA executives knew -- and did not disclose to the public or public shareholders -- that Battlefield 4 was a buggy, incomplete mess that would not be able to function as advertised if it was released on schedule.

Instead, they continually asserted that the game was of excellent quality, both in public interviews and during conference calls with investors.

There are tons of quoted examples of these allegedly misleading or reckless statements compiled in the legal paperwork, including Peter Moore's statement -- during a call meant to update investors on the quality of EA products -- that "We couldn't be happier with the quality of the games our teams are producing or the early reception those games are getting from critics and consumers," on the evening of July 23, 2013, three months before Battlefield 4 came out.

When the game went live, players and critics quickly began complaining of game-breaking bugs, including horrendous clipping issues and the inability to reliably find and stay connected to a multiplayer match. It got so bad that DICE felt the need to publish a public bug tracker that would let players know exactly what problem(s) it was working on fixing, as well as the status of said fix.

EA stock took a dive and the company went on the defensive immediately, issuing public statements that it was pulling people off other projects in order to focus its resources on fixing Battlefield 4. The complaint alleges that this decision ruined EA's financial prospects for the coming quarters, costing investors more lost revenue on top of the devalued stock.

Once again, there are a few good quotes cited in the complaint, including a statement from an EA representative to Polygon's Dave Tach that read: "First, we want to thank the fans out there that are playing and supporting us with Battlefield 4. We know we still have a ways to go with fixing the game — it is absolutely our No. 1 priority. [...] We're not moving onto future projects or expansions until we sort out all the issues with Battlefield 4. We know many of our players are frustrated, and we feel their pain. We will not stop until this is right."

The complaint further alleges that EA senior executives sold stock at inflated prices prior to the release of Battlefield 4, thus profiting from hype surrounding the game.

For example, the complaint alleges that EA CEO Andrew Wilson sold 40,000 shares of stock at a share price of $25.50 on July 26, with proceeds from the sale totaling more than $1 million -- $1,020,000, to be exact.

The complaint does not go into detail about exactly what portion of the proceeds from sales of EA stock by the defendants is alleged to be ill-gotten. Gamasutra estimates that if Wilson had tried to sell the same amount of stock three days earlier, before EA's stock price jumped up in response to the aforementioned (allegedly) misleading conference call that included Moore's statement about the quality of Battlefield 4, proceeds would have been roughly $953,200 -- or an estimated $50,000 in profit on company stock traded at allegedly inflated prices.

As you might expect, EA disputes this complaint. When reached for comment, EA Senior Director of Corporate Communications John Reseburg told Gamasutra via email that "We believe these claims are meritless. We intend to aggressively defend ourselves, and we’re confident the court will dismiss the complaint in due course."

For what it's worth, we couldn't find a lot of evidence in the filing that anyone at EA knew that Battlefield 4 wasn't ready for primetime when it came out in October. Instead, it appears as though the plaintiffs are alleging the defendants must have known what state Battlefield 4 was in thanks to their senior positions, thus rendering their positive statements about the game's quality false and misleading.

The plaintiffs hope to make EA pay for all damages sustained as a result of the defendants' wrongdoing -- which will be decided during the course of the trial -- plus interest, on behalf of everyone who bought EA common stock between July 24 and December 4. For more information and/or juicy quotes, you can read over the class action complaint in full.


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Comments


evan c
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I hope this teaches not only EA but the rest of the industry to stop the "ship now fix later" trend.

Arnaud Clermonté
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That's not at all what this lawsuit is about.
What they did wrong as far as this suit is concerned is lie to investors, not ship a buggy game.
It will only teach them to be honest with investors about how buggy the game is.

Doug Poston
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But, if I understand legality of investments, the information they share with their investors has to be public record.

So this still can be a win for the consumers, as long as the media follows what is told to the investors and not just blindly re-print the PR from EA media relations.

Ken Nakai
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It won't...they'll likely find something else to hamper the consumer with or more likely put more of the risk on the developers...

Tanner Mickelson
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Honestly, I think this lawsuit is ridiculous. EA is a terrible publisher and they should have given DICE more time to bug fix and polish the game, but is it really any worse than Skyrim? Skyrim has basically the same amount of bugs and people tolerate it because it's an open world RPG. Battlefield is just an FPS instead of an RPG so why didn't anyone sue Bethesda?

Merc Hoffner
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I think one of the critical aspects is their top executive share sales right at the apex of launch - a variation on pump and dump (http://en.wikipedia.org/wiki/Pump_and_dump). The executives were in a position to simultaneously cut the schedule to capitalise on launch hype while proclaiming everything was going great (normal so far) thus artifically raising the stock price, while secretly knowing the dangerous situation they created was pretty serious and likely to affect shares (ok, still typical shenanigans) and then took advantage of their privileged information to sell up ahead of a deflation they orchestrated (ok, now we're into illicit behaviour).

Robbie Bach was in similar trouble in 2007 - he sold up $6,000,000 in shares in his own company, about a week before announcing that RROD was real and they were accepting a billion dollar write down for the failure on top of a billion dollar loss for the year. AFAIK the SEC were called in, but they had bigger fish to fry the next year.

Common factor in both cases? Peter Moore. Just sayin' ;-)

Stavros Dimou
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You are missing some information here.
EA is a company that has shares,and it tries to conveince people to invest their money in it.
Bethesda is a private owned company - meaning it has no other investors and it only belongs to the few people who made it.

What EA did was to lie about the quality of their product to make people think it would be a good investment so the investors give their money,and it turned out that the product's quality wasn't that good,which made the price of shares fall down and thus the investors not only didn't made any profits but they actually lost money.

When someone tells you "give me your money to help me make something and you will earn more" and then you give him your money and you find out that this something wasn't that good,and that not only you won't earn anything but you will even loose a portion of what you gave.... well you can sue them.

An analogy would be if you crowdfunded through Kickstarter some game that sounded nice to you and you wanted to get the perk,and after the guy takes your money not only the game he ships is not as it was described,but you also don't get the perk you were promised.

Bethesda didn't got sued because it didn't asked from anybody to invest their money on Skyrim.It invested the money needed its own self.

Mario Benucci
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THe amount might be the same, but the impact is not. One of the post release bugs is that you can't connect to servers which was later partially fixed into getting randomly disconnected (still persists today).
IF you did randomly thrown out of SKyrim, I never heard of it. You had some bugs, but you can play the game. Many couldn't play BF4 after launch and those that play today should still light candles and pray that they'll be able to stick around to enjoy it.
There's a difference between some annoying issues that happen now and then and needing luck to actually play it.

Tanner Mickelson
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Looking at it from that angle I think EA could actually lose this... Although, if DICE had been given more time to polish the game in the first place, then I bet EA would never be in this position. I just hope the DICE studio isn't affected too much and all of this chaos stays on the publisher side.

Merc Hoffner
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What apt timing. This should have them worrying:
http://www.bbc.co.uk/news/business-25444864

Terry Matthes
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"You called down the thunder, now reap the whirlwind"

you = shareholders

thunder = corporate ethos demanding sales now to raise a stock priced based on speculative valuation

whirlwind = bug laden game

Brian Tsukerman
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As I understood it, senior executives at these companies only ever have two options when talking to shareholders: silence, and unabashed promotion. Since silence is usually interpreted as bad, why be surprised that they hype up their unreleased game? I'm more surprised that they didn't expect bugs and connection issues from the start, considering how rare it is for online games to launch as fully functional titles anymore.

@Tanner: Nobody sues Bethesda because it's a private company, so all the shareholders know one another and are likely members of it's BoD, unlike EA which is publicly traded. They can't mislead themselves since they would already know what quality to expect, regardless of what their marketing department espouses to the public.

Mario Benucci
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I'm not sure what the author of the article thinks it's wrong with the lawsuit.
Even considering a way to prove that EA was "actually" meaning a certain quality and not another, it's still misleading to the point where it caused a lot of harm. They were saying "buy the game, its content is of an amazing quality, even though we know you won't be able to enjoy it". The comparison with a great story in a book that pages fall out is good. You're telling me it's a good story but I can't verify it or enjoy it because the pages are gone. How is that helping me? And how is that helping the people who invested in you to publish the book? The cat's out of the bag, you book is missing pages, people are not buying it anymore and might not trust you again.
And it's not bananas at all. Games have high launch prices due exactly to this hype. But the companies know this and still pretend it's a good product while they know it has issues. That wouldn't be a problem if the game could still be experienced to some enjoyable degree but that's not always the case. SimCity and BF4 are two extreme examples of broken games that people, for quite a while, weren't able to experience them at all.

Marvin Papin
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So, FIFA 14 was just an upgrade, BF4 too with a biiig DLC released after launch, there's still miror's edge, ufc and star wars battlefront. But they are killing their IPs. What's next ?

Ian Griffiths
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The lack of knowledge about actual game development, particularly in large companies, from this comments section astonishes me. Do you really think that executives have time to trawl through the bug tracker? That they don't think cert is the point at which they have hit their requirements for game quality?

I believe that this whole thing is nonsense and potentially much more threatening to the future of games than anyone is acknowledging. Do we really want games companies to shoulder huge legal bills if a few bugs slip through? If this becomes a reality we will see a lot more companies shutting down to the detriment of all - gamers, developers, the economy, everyone but the lawyers.

People here claim to love games but they can't wait to jump on the bandwagon and slam any game or publisher for doing something they don't quite like. These games are made by hard working people who rely on these developers for their livelihoods. All they are trying to do is entertain their audience. I can't believe that more people aren't rushing to their defence.

Alex Maggio
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You don't need to visit a bug tracker to check the quality of a game... Moving that out of the argument places the burden in something worse. From the developer to the CEO there's a chain of command, if CEO's are talking wonders about a game being developed without knowing the state of it (wich I'm honestly very very doubtful of that) then the problem is bigger. Everyone in the chain is lying to the upper layer, hidding things from their superiors.

But I don't blame solely EA or DICE for this, I blame the whole industry, including console makers. Part of the big pressure to get this on time, was that BF4 was a launch title for PS4 and Xbone so an extra two month period of development (since the game has been out for nearly that ammount of time still with 800mb patches weekly) was a no no.

Merc Hoffner
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They absolutely could tell the build quality empirically, just as the consumers can - by playing. This does not require close inspection of the live code base. If the customer can tell then the execs can tell. And if the customer can tell then it should affect sales. And if the sales could be affected then it's absolutely the execs job to keep it in development. It's literally their only meaningful job. And yes, they do variously all claim to play the games they make. If they aren't managing development then what is the point of them? And, in this case at least, they're making millions out the back.

I agree that consumer complacency is often unmerited (Zelda's too different! but it's not different enough!). But with the brash talk, plentiful resource and share highjinks, this seems like a terrible case to defend the cause, and EA are making a regular spectacle of themselves. Sim City?

N.B. Compare the situation between Battlefield 4 and Watchdogs. I have no clue yet how that's all going to pan out of course.

Shea Rutsatz
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"If they aren't managing development then what is the point of them? And, in this case at least, they're making millions out the back."

I think the second sentence answers the first. Money!

Adam Bishop
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"Do we really want games companies to shoulder huge legal bills if a few bugs slip through?"

If "a few bugs slip through" then no, I don't want them to face huge legal bills. If they ship a game that they know fundamentally will not work for a huge chunk of players then yes, they should have to deal with the legal system. That's fraud.

Ian Griffiths
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Every response here is exactly what I expected - people simply don't understand the role of executives, particularly in very large companies.

They often have oversight of so many projects that they don't have time to test these things in a live environment. The builds they look at will be pre-prod under controlled circumstances with EPs saying - 'we're going to fix that...'. They have to look at marketing plans, legal arguments, meet with investors, handle business and strategy as a whole, manage and inspire thousands of employees. They have to trust those employees to deliver.

Ignoring that the EULA will probably cover that the service is delivered 'As Is', there are a lot of bugs that companies aren't aware of at launch and difficult to reproduce - especially on PC. I don't think the hyperbole of suggesting that releasing a buggy game is a fraudulent act is accurate or helpful. Not only because there is no definition of function for a game.

Ian Stitzlein
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Exactly this. EA Is a massive company. The execs only know what they are told by the individuals under them. The individuals under them are under pressure to make any problems they present seem fixable.

Keep in mind that MOST games are a buggy mess up until a few weeks before they are released. A bug under the radar that turns out to be a monster can wreck a project, just like this has. Thus, even the individuals reporting to senior management may believe that a problem is fixable, up until it is not.

Bob Johnson
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EA is terrible but any investor falling for this isn't much of an investor. BF42 was buggy upon release 10+ years ago. Nothing has changed.

"It's in the game" refers to bugs and mediocrity. IT's in EA's DNA across the board.

EA has that inferiority complex that they can't win by making great products. They have to win through marketing and market timing.

Why? I can only surmise that they have too many suits and thus too much of a short term mentality.

I glanced at the stock chart and it looks like if you bought EA stock in late 1999 you would have would have gained 0% over 14 years and no money would have been returned to you during that duration.



matt landi
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Very interested to see how this plays out. I don't know of any company that doesn't overhype their "AAA" titles. The sales for COD Ghosts are nowhere near expectations. I wonder if this suit would exist if the senior execs didn't sell some stock? If the plaintiffs win I'm not sure I like the precedent this sends.

Ian Griffiths
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I think what happened here is that DICE were simply trying to appease its user-base by saying they are dedicating more resources to bug fixing. By being so open with the player-base they are potentially going to be punished in the courts.

As I said before this is bad for games in general. We are likely to see companies withdraw from being so open with their customers if comments are potentially this damaging. Also, if these games are so buggy then why was this fact not in reviews, a few samples:

http://uk.ign.com/articles/2013/11/19/battlefield-4-ps4-review
http://www.eurogamer.net/articles/2013-10-29-battlefield-4-review
http://www.gamespot.com/reviews/battlefield-4-review/1900-6415517
/

G Irish
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"Also, if these games are so buggy then why was this fact not in reviews,"

Because the review system is broken in some key ways. For one, for games that rely heavily on multiplayer a review done pre-launch is not going to get an accurate impression of what end users will experience.

I also think there is a good deal of bias when it comes to established franchises. A lot of reviewers don't want to give a big AAA game a scathing score for whatever reason. Maybe it's the 'no one wants to tell the emperor he has no clothes' effect.

George Stugard
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I played the Bf4 pre-release Beta free demo, and it was obvious that it was a nice game but far from ready.
So I didn't pay for the pre-release and decided to wait and see the post launch reviews, good call!
Since I'm already totally dissapointed with the Bf3 P2Win scam and the new useless also P2Win scam Bf4.
I've decided to sell my Xbox and play Arma and the likes on Pc.
Greed makes no fun.


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