Case3:13-cv-05837-SI Document20 Filed04/11/14 Page1 of 59

1 ROBBINS GELLER RUDMAN & DOWD LLP

2 SHAWN A. WILLIAMS (213113) MATTHEW S. MELAMED (260272)

3 Post Montgomery Center One Montgomery Street, Suite 1800

4 San Francisco, CA 94104 Telephone: 415/288-4545

5 415/288-4534 (fax) [email protected]

6 POMERANTZ LLP

7 JEREMY A. LIEBERMAN LESLEY F. PORTNOY

8 600 Third Avenue New York, NY 10016

9 Telephone: 212/661-1100 212/661-8665 (fax)

10 [email protected] [email protected]

11 Co-Lead Counsel for Plaintiffs

12 [Additional counsel appear on signature page.]

13 UNITED STATES DISTRICT COURT

14 NORTHERN DISTRICT OF CALIFORNIA

15 In re ELECTRONIC ARTS, INC. ) Master File No. 3:13-cv-05837-SI 16 SECURITIES LITIGATION ) ) CLASS ACTION

17 This Document Relates To: CONSOLIDATED COMPLAINT FOR 18 VIOLATIONS OF THE FEDERAL SECURITIES LAWS 19 ALL ACTIONS. DEMAND FOR JURY TRIAL 20 RYAN KELLY and LOUIS MASTRO, Individually and on Behalf of All Others 21 Similarly Situated,

22 Plaintiffs,

23 vs. ) ) 24 ELECTRONIC ARTS, INC., ANDREW ) WILSON, BLAKE J. JORGENSEN, PETER ) 25 ROBERT MOORE, PATRICK SODERLUND) and LAWRENCE F. PROBST III, ) 26 ) Defendants. )

27 )

28

929894_1

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page2 of 59

1 TABLE OF CONTENTS 2 Page 3 INTRODUCTION...... 1 4 I JURISDICTION AND VENUE ...... 6 5 PARTIES...... 6 6 I BACKGROUND TO THE CLASS PERIOD ...... 8 7 Description of the Company and the Battlefield Game Franchise ...... 8 8 Battlefield 4 Was Material to EA’s Business and Was Expected to Represent a Significant Portion of the Company’s Future Revenues ...... 9 9 Defendants Knew that Battlefield 4 Would Have to Work on Next-Generation 10 GamingConsoles ...... 10 11 Defendants Publicly Acknowledged Failures and “Lessons Learned” from Prior Disastrous Game Launches ...... 11 12 EA Demonstrates Battlefield 4 Graphics and Action Sequences to Strong Reviews ...... 15 13 DEFENDANTS’ FALSE AND MISLEADING STATEMENTS AND OMISSIONS OF 14 MATERIALFACT ...... 18 15 Defendants Falsely Represent EA Has “De-Risked” the Technology Challenges of Transitioning to the Next-Generation Consoles ...... 18 16 Reasons Why Defendants’ May 7, 2013, June 12, 2013 and July 23, 2013 17 Statements in ¶¶62, 69 and 74 Were Knowingly or Recklessly False and Misleading: ...... 23 18 Battlefield 4 Executive Director Addresses Development Challenges and Reveals 19 that EA Considered Delaying Launch ...... 25 20 Battlefield 4 Launches for Existing Consoles and Defendants Falsely Represent That They Have Avoided Problems Facing Competitors In Preparing Games to 21 Launch on Next-Generation Consoles ...... 27 22 Reasons Why Defendants’ October 29, 2013 Statements in ¶¶83-86 Were Knowingly or Recklessly False and Misleading: ...... 29 23 Gamers Begin to Play Battlefield 4 and Are Confronted by Debilitating Defects 24 that Made the Game Virtually Unplayable ...... 30 25 Defects with Battlefield 4 for Next-Generation Consoles Begin to Become Known, Defendants Concede Some Problems but Stock Price Remains 26 ArtificiallyInflated ...... 34 27 Reasons Why Defendants’ December 3, 2013 Statement in ¶103 Was Knowingly or Recklessly False and Misleading: ...... 38 28

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - i -

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page3 of 59

1

2 Page

3 Defendants Admit the True Extent of Battlefield 4 ’s Defects and Stop Production 4 on All New Products Until the Game Is Fixed; Artificial Inflation is Removed

fromStock Price ...... 38

5 Post-Class Period Revelations Underscore and Confirm Inference of Knowing

6 Falsity...... 40

7 DEFENDANTS’ SUSPICIOUSLY-TIMED INSIDER STOCK SALES ...... 43

8 COREOPERATIONS ...... 46

9 THE PSLRA SAFE HARBOR DOES NOT APPLY ...... 46

10 CONTROL PERSON ALLEGATIONS...... 47

11 LOSS CAUSATION/ECONOMIC LOSS ...... 48 12 CLASS ACTION ALLEGATIONS AND THE FRAUD-ON-THE-MARKET

PRESUMPTION...... 49

13

COUNTI ...... 51

14 For Violation of Section 10(b) of the 1934 Act and Rule 10b-5 Against All

15 Defendants...... 51

16 COUNTII ...... 52 17 For Violation of Section 20(a) of the 1934 Act Against the Individual

Defendants...... 52

18

PRAYER FOR RELIEF ...... 53

19

JURYDEMAND ...... 54

20

21

22

23

24

25

26

27

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - ii - Case3:13-cv-05837-SI Document20 Filed04/11/14 Page4 of 59

1 Court appointed co-lead plaintiffs Ryan Kelly and Louis Mastro (together, “plaintiffs”),

2 I individually and on behalf of all others similarly situated, by plaintiffs’ undersigned attorneys, for

3 I plaintiffs’ complaint against defendants, allege the following based on personal knowledge as to

4 I plaintiffs and plaintiffs’ acts, and upon information and belief as to all other matters based on the

5 I investigation conducted by and through plaintiffs’ attorneys, which included, among other things, a

6 review of Securities and Exchange Commission filings by Electronic Arts, Inc., as well as media and

7 analyst reports about Electronic Arts, Inc. and conference call transcripts. Plaintiffs believe that

8 additional evidentiary support will exist for the allegations set forth herein after a reasonable

9 opportunity for discovery.

10 INTRODUCTION

11 “All games have bugs, but not all games are broken upon release.”

12 1. This is a securities class action on behalf of all persons who purchased or otherwise

13 I acquired the publicly-traded securities of Electronic Arts, Inc. (“EA” or the “Company”) between

14 May 8, 2013 and December 5, 2013, inclusive (the “Class Period”) against EA and several of its

15 officers and executives for violations of the Securities Exchange Act of 1934 (“1934 Act”) and U.S.

16 Securities and Exchange Commission (“SEC”) Rule 10b-5 promulgated thereunder. Defendants are

17 EA; Chief Executive Officer (“CEO”) and director Andrew Wilson (“Wilson”); Chairman and,

18 during part of the Class Period, Executive Chairman Lawrence F. Probst III (“Probst”); Chief

19 Financial Officer (“CFO”) and Executive Vice President Blake J. Jorgensen (“Jorgensen”); Chief

20 Operating Officer (“COO”) Peter Robert Moore (“Moore”); President of EA Labels Frank D. Gibeau

21 (“Gibeau”); and Executive Vice President of EA Studios Patrick Söderlund (“Söderlund”).

22 2. EA develops, markets, publishes and distributes game software content and services.

23 I During the Class Period, EA was the third-largest gaming company in the world in terms of

24 revenues. One of its most popular game franchises is Battlefield, which was developed by EA’s

25 I wholly-owned game development studio DICE.

26 3. During the Class Period, defendants made knowingly or recklessly false statements

27 I perpetuating the misleading impression that, in preparation for the development of Battlefield 4 and

28 games for the next-generation gaming consoles, EA had “de-risked” the technology problems that

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 1 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page5 of 59

1 had caused past botched game launches and console transitions. 1 Defendants also made knowingly

2 or recklessly false and misleading statements once Battlefield 4 launched on existing gaming 3 I consoles about the game’s quality and readiness for its launch on next-generation launches two and 4 I three weeks later. Finally, defendants made knowingly false and misleading statements after 5 I Battlefield 4 launched on next-generation consoles that EA’s development teams were already 6 I thinking about future innovations. In fact, just one day later EA ordered DICE to halt all future 7 projects until Battlefield 4 ’s massive defects were fixed, a project that took DICE at least four 8 II months. 9 4. In the year before the Class Period, the Company had performances that failed to

10 meet or came in at the lower end of EPS and revenue guidance ranges and a series of games that had

11 underperformed or contained serious usability defects, which led to its stock price remaining

12 stagnant or growing slowly. In spite of the past and then-current poor performance, the Company

13 and investors entered 2013 optimistic about EA’s future prospects due to two major, related 14 developments: the planned launches of (1) the Company’s Battlefield 4 game and (2) Sony’s and 15 Microsoft’s next-generation gaming consoles.

16 5. The Company acknowledged the importance of Battlefield 4 to EA’s business and 17 I expected sales of the game and related content to represent a significant portion of its revenues. 18 Defendants stated that Battlefield was “vitally important to us.” Securities analysts concurred,

19 reporting that Battlefield 4 was so important “it could make a difference for EA’s valuation in the

20 stock market.”

21 6. The anticipated launches in fall 2013 of next-generation gaming consoles from Sony 22 I and Microsoft were also crucial to the Company’s financial condition. Defendants stated that the 23 next-generation consoles represented a “significant opportunity” for EA to drive a period of “strong

24 growth.” A securities analyst reported that “With nearly two-thirds of EA’s business derived from

25 consoles, . . . EA appears well positioned to benefit from [anticipated] growth in the next product

26 cycle.”

27

1 28 Battlefield 4 is also referred to as “BF4.”

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 2 - Case3:13-cv-05837-SI Document20 Filed04/11/14 Page6 of 59

1 7. Defendants planned to develop Battlefield 4 simultaneously for both existing game-

2 playing platforms and the next-generation consoles, Sony’s PlayStation4 (“PS4”) and Microsoft’s

3 Xbox One. The two events, Battlefield 4 ’s launch and the release of next-generation consoles, were

4 I linked by the Company and analysts alike. The Company planned to launch Battlefield 4 in fall

5 2013 so the game would be available on next-generation gaming consoles when they launched, and

6 I also so that it would be available for the Christmas selling season and beat the next version of

7 Battlefield ’s biggest competitor, Call of Duty , to market. A securities analyst reported that “With . . .

8 key upcoming catalysts that include next-gen consoles and Battlefield 4, we anticipate strong 2 9 profitable growth for the company in FY2014.”

10 8. While investors were excited about the launch of Battlefield 4 and the next-generation

11 I console transition, some were worried about the Company’s history of disastrous game launches.

12 Recent game launches had featured game-breaking defects so pervasive that the Company pulled one

13 game from being sold for months before re-launching it and Amazon stopped selling another game

14 until its defects were fixed. As one reviewer commented regarding one of the Company’s botched

15 game launches, “it was a launch in the sense that people could buy the game, but less so in the sense

16 that they could play it.”

17 9. Investors were therefore concerned about EA’s ability to successfully launch

18 I Battlefield 4 , especially for next-generation consoles. Securities analysts noted that “EA has

19 increasingly struggled with large [game] franchises.” The potential risks associated with a botched

20 launch were heightened by the Company’s “fewer, bigger, better” strategy. “The company’s ‘Fewer,

21 Bigger, Better’ strategy . . . will not work if the games are, in fact, not ‘Better.’”

22 10. Defendants represented that they had learned “valuable lessons” from their botched

23 I launches. They represented that they had made “architectural changes” to handle heavy demand on

24 EA’s servers, that they had “created for all our games an infrastructure . . . to focus on performance

25

26 2 EA reported on a fiscal year that ran from April 1 to March 31. As used herein “FY” stands for fiscal year. Thus, FY14 means EA’s fiscal year 2014, which ran from April 1, 2013 to March 31, 27 2014. Specific quarters are designated by the quarter number followed by the letter Q. For example, 1Q14 indicates EA’s first quarter in fiscal year 2014, which ran from April 1, 2013 to June 30, 2013. 28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 3 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page7 of 59

1 I and reliability” before launch, and that they understood that gameplay “‘can lead to a wider variety

2 I of scenarios we need to test for!’”

3 11. Against this backdrop, defendants made knowingly false and misleading statements

4 I starting on May 7, 2013, in anticipation of Battlefield 4 ’s release, representing on occasions in May,

5 June, and July 2013 that EA had successfully “de-risked” the technology platform, which made for

6 I low-risk game development. In fact, later admissions indicate that the complexity of developing

7 Battlefield 4 simultaneously for multiple platforms led the Company to consider delaying the game’s

8 release, that the purportedly “de-risked” technology platform was being employed to write high-risk

9 code that led to crashes and other game defects, and that the testing protocol for the game was

10 insufficient to even “get close” to ensuring that the game was “de-risked” before launch.

11 12. On October 29, 2013, the date that Battlefield 4 launched for existing platforms and

12 I just before it would launch on the next-generation consoles, defendants perpetuated earlier

13 misleading representations about the game’s high quality, among other things comparing it to EA’s

14 ace pitcher being sent out to win the World Series and saying that they were going to “nail” the

15 console transition. In fact, Battlefield 4 ’s launch, even on existing platforms, had already proved to

16 be a disaster, with customers identifying and complaining about numerous game-breaking defects

17 within hours, and journalists to whom EA had provided access to Battlefield 4 on next-generation

18 consoles for review suffered game-breaking crashes in those versions of the game, too.

19 13. On November 15, 2013, Sony’s PS4 console and Battlefield 4 for PS4 launched. On

20 I November 22, 2013, Microsoft’s Xbox One console and Battlefield 4 for Xbox One followed. Both

21 launches were infested with game-breaking bugs. On December 3, 2013, defendants made

22 knowingly false and misleading representations about the high level of quality EA’s next-generation

23 game launches had met and that its development teams were turning their focus to future innovation.

24 In fact, not only were the next-generation launches of Battlefield 4 massively defective, but just one

25 day later the truth came out: EA ordered DICE to halt all future projects, including the development

26 of two other highly-anticipated games, to fix Battlefield 4 .

27 14. Defendants’ false and misleading statements artificially inflated EA’s stock price. On

28 I May 7, 2013, the day before the Class Period, EA’s stock price closed at $18.41 per share. By the

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 4

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page8 of 59

1 close of trading on May 8, 2013, the price had increased 17% to $21.56. The price continued to rise 2 in reaction to defendants’ false and misleading statements, reaching a Class Period high of $27.99 on

3 September 4, 2013, and trading between $24 and $27.99 from mid-July 2013 until November 15, 4 2013, when Battlefield 4 launched on PS4. The stock price began to slide on that date as reports

5 circulated that Battlefield 4 was plagued by game-breaking defects and sales of the game were 6 slower than expected. When defendants revealed that Battlefield 4 ’s issues were so severe that the 7 Company was suspending DICE’s development of future projects, EA’s stock price fell an additional 8 6% on December 5, 2013 to close at $21.01, as the artificial price inflation was removed. 9 15. During the Class Period, defendants Wilson, Moore, Gibeau, and Söderlund took

10 advantage of the Company’s artificially inflated stock price by selling a total of 816,959 shares of 11 EA stock for total proceeds of $19,867,347. The sales represented 85% of Wilson’s, 36% of 12 Moore’s, 48% of Gibeau’s and 45% of Söderlund’s total stock and vested options during the Class 13 Period, and 74%, 74%, 85% and 41%, respectively, of all stock sales by Wilson, Moore, Gibeau, and 14 Söderlund from January 1, 2008 through the end of the Class Period, December 5, 2013.

15 Electronic Arts (EA) vs Peer Group (Peer) 160 16 7125/13-7130113 lEA I Wilson sells 10/31/13 75, 9OO shares Peer Moore and Gbeu Defendants Admit True 17 7123113 269,874 shares Extent of PF4 Proberrs, Defendants Represent Halt Future Projects (fler 150 - market close) De-Riskeci Technology EribIed Low-Risk 18 5/-5t2fl Development Wilson, Moore, Gibeeu andS4e,ind sell 19 432.065 shares 140 - 8112113 Sodarlurid 5/21/13 ifs 40,000 shares 20 0 BF4 Launch Dates 0 Announced 1 G12/ 3 II 130 BF4 Launches 21 ôiB/1 3 C) ( Defendants Represent No Problems / Class Period Preparing for Next-Gen Launch 0 C1 11/15/13 / 22 J BF4 Lauche on PS4. 120 23 CL 517/13 I Deferdants I Represent 6I13 Next-Gen I '::13 ' ' Defendants Represent 24 Development BF4 Launches on Xbox Or/ They Learned from Past, 110 De-Risked (after Defendants Address BF4 12151 market close) Transition De-Risked Problems But Conceal True Class Ends 4. Extent 25 12I3f3 Defendants Represent 26 100 They Are starting to Focus on Future

27 Class Period No Ir 90 28 04101/2013 06/2712013 09/25/2013 12/23/2013 0511412013 08112/2013 1110712013 929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 5 -

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page9 of 59

1 JURISDICTION AND VENUE 2 16. Jurisdiction is conferred by §27 of the 1934 Act. The claims asserted herein arise

3 under §§10(b) and 20(a) of the 1934 Act and SEC Rule 10b-5. 4 17. Venue is proper in this District pursuant to §27 of the 1934 Act. Most of the false

5 and misleading statements, omissions and fraudulent conduct occurred and originated in this District. 6 EA has a substantial presence in California, and its principal executive offices are located in 7 Redwood City, California. 8 18. In connection with the acts alleged herein, defendants, directly or indirectly, used the 9 means and instrumentalities of interstate commerce, including, but not limited to, the mails, 10 interstate telephone communications and the facilities of the national securities markets.

11 PARTIES 12 19. Court appointed co-lead plaintiffs Ryan Kelly and Louis Mastro purchased Electronic 13 Arts common stock during the Class Period and were damaged by the conduct alleged herein. 14 20. Defendant EA, headquartered in Redwood City, California, develops, markets,

15 publishes and distributes game software content and services. During the Class Period, Electronic 16 Arts had more than 300 million shares of common stock outstanding. The shares traded on the 17 NASDAQ under the ticker symbol “EA.” 18 21. Defendant Andrew Wilson is, and was throughout the Class Period, an executive of 19 EA. Wilson assumed the positions of CEO and a director of the Company effective September 15, 20 2013. Prior to that date, Wilson had been the Executive Vice President of the EA SPORTS

21 operating division of EA since August 2011. In that role, Wilson had responsibility for the product 22 development, worldwide product management, and marketing for all packaged goods and online

23 offerings for EA SPORTS. 24 22. Defendant Lawrence F. Probst III was appointed to serve as EA’s Executive 25 Chairman on March 18, 2013, after the Company’s former CEO John Riccitiello’s resignation. 26 Between Riccitiello’s resignation and Wilson’s appointment as CEO, Probst assumed the day-to-day

27 operational leadership role in the Company. Probst has served as Chairman of EA’s Board of 28 Directors since 1994 and was the Company’s CEO from May 1991 to April 2007.

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 6 - Case3:13-cv-05837-SI Document20 Filed04/11/14 Page10 of 59

1 23. Defendant Blake J. Jorgensen is, and was throughout the Class Period, EA’s CFO and

2 Executive Vice President. The Board of Directors hired Jorgensen for those roles in September

3 I 2012. From July 1, 2009 to August 17, 2012, Jorgensen worked in the same capacities at Levi

4 Straus & Co. From June 4, 2007 to July 1, 2009, Jorgensen was CFO of Yahoo! Inc. Before

5 I working at Yahoo!, Jorgensen co-founded Thomas Weisel Partners LLC and served as its COO.

6 24. Defendant Peter Robert Moore is, and was throughout the Class Period, EA’s COO.

7 In that role, Moore provides strategic leadership to EA’s global operations that enable EA to bring

8 products to market via retail and digital direct-to-consumer channels, including publishing, sales,

9 media, central development, and channel management. Moore also oversees EA’s global marketing

10 organization. Before being named EA’s COO, Moore was President of EA SPORTS from

11 I September 2007 to August 2011. Before then, in reverse chronological order, Moore was Corporate

12 Vice President of the Interactive Entertainment Business of Microsoft Corp., President and COO of

13 SEGA of America, and Senior Vice President of marketing at Reebok International Ltd.

14 25. Defendant Frank D. Gibeau is, and was throughout the Class Period, President of EA

15 I Labels. He was promoted to that role on August 4, 2011. In that role, Gibeau leads the Company’s

16 development activities, including product development, worldwide product management of

17 packaged goods and online offerings. Gibeau was Senior Vice President of North American

18 Marketing of EA from 2002 to September 2005, when he was promoted to Executive Vice President

19 and General Manager of North American Publishing of EA. He served in the latter role until he was

20 promoted to President of EA Labels.

21 26. Defendant Patrick Söderlund is, and was throughout the Class Period, Executive Vice

22 I President of EA Studios. In that role, Söderlund leads EA development teams, including the DICE

23 development team from Stockholm, Sweden, and oversees relationships with EA Partners

24 development studios. Before serving as Executive Vice President of EA Studios, Söderlund was

25 Executive Vice President of EA Games Label, where he oversaw operations for all EA Games

26 studios (including DICE); before that, he oversaw EA Games Europe. Söderlund founded DICE,

27 which EA acquired in October 2006.

28

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 7 -

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page11 of 59

1 27. Wilson, Probst, Jorgensen, Moore, Gibeau and Söderlund are collectively referred to 2 I herein as the “Individual Defendants.” 3 BACKGROUND TO THE CLASS PERIOD

4 Description of the Company and the Battlefield Game Franchise 5 28. EA is a multinational developer, marketer, publisher, and distributor of video games. 6 It was founded and incorporated on May 28, 1982, and focuses on the development and distribution 7 of games for home computers. EA is currently the world’s third-largest gaming company by 8 revenue after Nintendo and Activision Blizzard (“Activision”) 9 29. Prior to and during the Class Period, EA developed and published games under 10 I several “labels” and owned and operated numerous gaming studios. Among the studios EA owned 11 was DICE, which was founded in 1992 and is based in Stockholm, Sweden. DICE was the studio

12 responsible for the ongoing development of Battlefield, one of EA’s two most lucrative game 13 franchises.

14 30. The Company’s Battlefield franchise is a series of first-person shooter video games 15 I that was enormously popular with gamers. By 2012, the series – including 11 games and 12 16 “expansion packs”3 – had reached more than 50 million players. The first Battlefield game, 17 Battlefield 1942 , was released in 2002 and was designed to be played on computers running 18 Microsoft Windows or Apple OS X (collectively referred to herein as PCs). Battlefield 2. Modern

19 Combat, which was released in 2005, was the first game in the franchise to be developed and sold 20 for users on gaming consoles PlayStation 2 and Xbox, which were manufactured by Sony and 21 Microsoft, respectively. Battlefield. Bad Company 2 , released in 2010, was the first game in the 22 franchise to be developed and sold for Sony and Microsoft gaming consoles and PCs. 23 31. According to EA, Battlefield 3 garnered 3 million pre-orders before its release on 24 I October 25, 2011, making it, at that time, the biggest first-person shooter launch in EA history. 25 Within one month, it had sold 8 million copies. By June 29, 2012, Battlefield 3 had sold 15 million

26 3 Expansion packs are additions to existing games, which can involve new game areas, weapons, objects, or storylines to complete the already-released games. Expansion packs usually consist 27 solely of additional content and require the original game in order to play. Expansion packs cost substantially less than the original game. 28

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 8

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page12 of 59

1 I copies and had reportedly captured market share from Activision’s first-person shooter game Call of 2 I Duty, Battlefield ’s primary competition in the first-person shooter game market.

3 Battlefield 4 Was Material to EA’s Business and Was Expected to Represent a Significant Portion of the Company’s Future Revenues

4 32. From June 2012 through late January 2013, the Company’s stock price hovered

5 mostly between $12 and $15 per share due in part to a series of poor results and problematic product

6 launches. For example, on July 31, 2012, EA announced that its 1Q13 revenues were negatively

7 affected because the Company’s game The Secret World did not meet its anticipated 1Q launch date.

8 On October 30, 2012, EA reduced FY13 EPS guidance by $0.05 due to weakness associated with the

9 botched production of the Company’s game Medal of Honor. On January 30, 2013, EA announced

10 3Q13 revenues below expectations and guidance, “a result primarily of a miss with our Medal of

11 Honor title.”

12 33. On January 30, 2013, during an earnings conference call to discuss EA’s 3Q13

13 results, defendants acknowledged that the Company had failed to meet analysts’ expectations but

14 then-CEO John Riccitiello (“Riccitiello”) assured investors that the coming console transition was a

15 “significant opportunity,” that EA was investing in next-generation console technologies and

16 content, and that EA was already working on the next editions of its two biggest franchises, of which

17 Battlefield 4 was one.

18 Console transitions are difficult, but historically they initiate periods of strong 19 growth, and for the companies ready to step up, these transitions represent significant opportunity.

20 * * *

21 Beyond Q4, we see a bright light at the end of the tunnel. . . .

22 * * *

23 We’re also investing in Gen 4 console technologies and content. We’ve 24 signaled that we are working on the next editions of our two biggest franchises in Battlefield and FIFA, and we look forward to discussing these programs and many 25 others with you when we provide our fiscal 2014 guidance in May. 26 34. Moore emphasized that “Battlefield, along with FIFA, is now in position to become

27 one of the top two or three game franchises in the industry.” Riccitiello called Battlefield a proven 28 I blockbuster: “We have the biggest brands. FIFA and Battlefield are proven blockbusters. They just

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 9 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page13 of 59

1 I keep growing and getting better. I believe that in the next four years both will be among the top 2 I franchises that define the industry across all platforms and geographies . . . .” 3 35. An analyst on the January 30, 2013 call asked whether just two of EA’s franchises, 4 I Battlefield and FIFA, “represent substantially all, if not more, of the profit of the Company at least 5 over the last year or two.” Riccitiello agreed and called the games “vitally important” to EA: 6 [Y]ou are correct that titles at the scale of FIFA and Battlefield are what drive the profitability inside of EA , and they are doing so increasingly for precisely the 7 reasons Blake just outlined. 8 * * * 9 We think Battlefield and FIFA are going to help us lead as we move into the next set of technology opportunities and platform opportunities and continue to get 10 bigger. 11 So you are right to believe that FIFA and Battlefield are vitally important to us.

12 36. Securities analysts reported that EA’s future profitability depended on Battlefield 4

13 and the next-generation console transition. For example, on January 31, 2013, BMO Capital

14 Markets issued a report stating: “With a portfolio of strong franchises and key upcoming catalysts

15 that include next-gen consoles and Battlefield 4, we anticipate strong profitable growth for the

16 company in FY2014.” On the same date, Cowen and Company also focused on the importance of

17 Battlefield to EA’s growth. “FY14 [is] likely to enjoy growth driven by the next ‘Battlefield’ title.”

18 Also on January 31, 2013, Wedbush Securities quantified the anticipated impact of Battlefield 4 .

19 “Battlefield 4 should account for $400 million or more of revenue growth by itself, and EA can hit

20 our revenue estimate even if the rest of the lineup sees sales down 20% compared to FY:13.”

21 Defendants Knew that Battlefield 4 Would Have to Work on Next-Generation Gaming Consoles

22 37. Key to the development of Battlefield 4 was defendants’ knowledge that it had to be

23 designed and developed to perform not only on existing platforms but also on next-generation

24 gaming consoles from Sony and Microsoft. Defendants and investors were focused on the

25 importance of next-generation consoles to EA’s projected revenues and profits. Sony unveiled the

26

27

28

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 10 - Case3:13-cv-05837-SI Document20 Filed04/11/14 Page14 of 59

1 I PS4 on February 20, 2013. Microsoft unveiled the Xbox One on May 21, 2013. Both were 4 2 I scheduled to be available in the fall of 2013.

3 38. Not only did defendants highlight the “significant opportunity” next-generation

4 I consoles presented (¶33), but analysts also emphasized the importance of the next version of

5 I Battlefield working on the next-generation consoles. On February 6, 2013, a Sterne, Agee & Leach,

6 Inc. (“Sterne Agee”) analyst report upgraded EA from neutral to buy on the basis of its anticipated

7 ability to take advantage of the next-generation consoles. “EA is leveraged to the next generation

8 console cycle. With nearly two-thirds of EA’s business derived from consoles, . . . EA appears well

9 positioned to benefit from growth in the next product cycle.”

10 39. A March 19, 2013 Janney Capital Markets report summarized the importance of the

11 I next-generation transition and Battlefield 4 to EA’s FY14 prospects.

12 All eyes on transition and BF4. “A clean slate for FY14”. With the stock up 30% YTD (and up after hours), investors are squarely focused on the potential

13 positive lift from the next gen console cycle. Recent CFO commentary suggests that EA expects a smoother transition namely from (1) cheaper build costs for PS4 and its

14 more “pc-like” architecture and (2) lower R&D costs required to transition to next consoles given significantly fewer SKUs and game engines. EA has a potential key

15 product catalyst in 2H with the expected launch of Battlefield 4 against an easy Medal of Honor comp[arison] yet there is other key competition with GTA and Call

16 of Duty .

17 Defendants Publicly Acknow Failures and “Lessons Learned” from Prior Disastrous Game Launches

18 40. While analysts, media, and customers were excited by the prospect of Battlefield 4

19 and the next-generation consoles, they were concerned about EA’s lengthy history of disastrous

20 game launches, which led to Riccitiello’s resignation on March 18, 2013.

21 41. Medal of Honor: For example, on January 31, 2013 defendants blamed the earlier

22 3Q13 earnings and guidance miss in large part on the “miss with our Medal of Honor title.” On

23 February 12, 2013, gaming website Rock, Paper, Shotgun published an article about an interview

24 with EA’s Chief Creative Director Rich Hilleman in which he described “execution” problems that

25

26

27 4 Sony’s PS4 was expected to be and was released on November 15, 2013. Microsoft’s Xbox One was expected to be and was released on November 22, 2013. 28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 11

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page15 of 59

1 I led to Medal of Honor’s inability to live up to the Company’s, investors’, and customers’ 2 I expectations. 3 Electronic Arts has come out to say Medal of Honor: Warfighter failed to make a mark due to “execution” problems during its development, including not 4 having the necessary production talent. Speaking to Rock Paper Shotgun, EA chief creative director Rich Hilleman said the game’s problems stemmed from EA’s 5 production of the game and not any external factors . 6 “We don’t think it’s a genre problem,” he said. “ It’s an execution problem . We don’t think Medal of Honor’s performance speaks to any particular bias in that space 7 against modern settings or World War II or any of that. It’s much more that we had some things we should’ve done better .”

8 42. Hilleman also explained that EA’s “Fewer, Bigger, Better” strategy meant the

9 Company was even more reliant on the success of Battlefield 4 . “‘What we think right now is that,

10 for the next couple years, we can just have one great thing in that space,’ he added. ‘So we’re

11 choosing for it to be Battlefield.’” On February 12, 2013, in a post titled “EA explains why [ Medal

12 of Honor: Warfighter] came up short” that discussed the Rock, Paper, Shotgun article, a Battlefield

13 customer responded, warning “They better not rush Battlefield 4 [just] because the new Call of Duty

14 will be out around the same time!”

15 43. Analysts’ concerns about EA’s history of failed game launches became more acute in

16 the wake of the Company’s adoption of the “Fewer, Bigger, Better” strategy. On January 31, 2013,

17 a Wedbush Securities report focused on the fact that this strategy opened the door to “a handful of

18 misses” having “a large impact on top-line growth and profitability.”

19 The company’s “Fewer, Bigger, Better” strategy for its key packaged goods 20 releases will not work if the games are, in fact, not “Better.” The strategy entails a more streamlined packaged goods release slate with higher quality games that 21 generate revenue growth from increased sales to cost-conscious consumers. . . . As the importance of each release to financial results is heightened by this strategy, a 22 handful of misses can have a large impact on top-line growth and profitability. 23 44. On January 31, 2013, Kotaku published an article titled, “The Most Obvious Thing 24 I Anyone Can Say About EA Needs To Be Said Anyway.” The “most obvious thing” was that “EA’s 25 ‘Fewer, Bigger, Better’ strategy for its key packaged goods releases will not work if the games are, 26 in fact, not ‘Better.’” The article continued to say “it’s not all bad” and proceeded to list some “top- 27 shelf” and “winner” EA games, but concluded by saying that Battlefield 4 better be amazing. “EA 28 does make some clunkers. But it’s not all bad. Not by a long shot. EA’s FIFA is considered top-

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 12 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page16 of 59

1 shelf. NHL ’s a winner. Need for Speed: Most Wanted was amazing. . . . Battlefield 4 better be.

2 You can do it, EA! Right?”

3 45. The Simpsons: Another example of a failed EA game launch was The Simpsons

4 I Tapped Out (“The Simpsons ”). The Simpsons launched for iOS (Apple mobile) devices on March 1,

5 I 2012. At launch, users overwhelmed servers and reported a large number of serious defects. EA

6 I pulled the game from the iOS App Store on March 5, 2012 and did not re-launch it for several

7 I months.

8 46. On February 26, 2013, EA Chief Technology Officer (“CTO”) Rajat Taneja

9 I addressed the failed launch of The Simpsons at the Morgan Stanley Technology, Media & Telecom

10 Conference. Taneja explained that in response to the botched launch, the Company had learned how

11 to test and launch games and had created an infrastructure to test games on performance and

12 reliability at scale:

13 [Analyst:] You mentioned The Simpsons. . . . I remember The Simpsons coming out and having – a lot of people tried to play the game, and then I think you had to

14 pull it because of technical issues . Can you maybe talk about how you overcame that? . . .

15 [Taneja:] Absolutely. The Simpsons Tapped Out was – the launch of that game

16 was a character-building exercise for us . . . . * * * 17

18 And we had a couple of mistakes in the launch . One was we didn’t cater to the sort of demand that game would generate, so our infrastructure itself was not geared for

19 the kinds of daily active users, and, more importantly, the concurrency of usage that would take place . So, there has been a lot of learnings we have had in not just

20 making sure that we build the right infrastructure for every game, but how do we handle elasticity and spikes of game play and share those resources, compute

21 resources, storage resources, database resources, across our entire surface area of our data centers. And we are making architectural changes on the very fundamental

22 level around that .

23 We also learned a lot about the way we launch our games, the way we test them and the way we get ready to launch the games. And we have created for all

24 our games an infrastructure now where we run it through its paces for several weeks before it goes live to focus on scale, to focus on performance and reliability,

25 to stress that – and to see all the impacts that would happen in game play at the level of demand that we are now expecting to get .

26 47. SimCity: Yet another failed launch, this time of SimCity5 (“SimCity ”), occurred just

27 before the Class Period. Prior to SimCity ’s March 5, 2013 launch, EA and the game’s development

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 13 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page17 of 59

1 I studio Maxis made numerous statements similar to those that defendants would later make about 5 2 Battlefield 4. But the launch was a “disaster,” with Amazon pulling the product from its website

3 I until EA had addressed SimCity ’s technological deficiencies. According to numerous reports, the

4 I failed SimCity launch was the proximate cause of Riccitiello’s forced resignation as EA’s CEO on

5 I March 18, 2013.

6 48. According to a March 18, 2013 article on gaming website Kotaku titled “Your

7 I Complete Guide to the SimCity Disaster” explained that when EA first announced it was reviving

8 SimCity , EA stated that it was focused on preventing the “debacle” suffered by its competitor

9 Blizzard when it launched an online game from affecting SimCity . “‘EA is an online company.

10 We’re definitely watching what’s going on at Blizzard, and we’re putting in backstops and checks to

11 try to prevent those kind of things from happening.’”

12 49. The March 18, 2013 Kotaku article also recounted that EA lauded SimCity ’s

13 I technological platform in the run-up to its release. The article quoted current EA Senior Vice

14 President Lucy Bradshaw (“Bradshaw”) as saying, “This is easily the most ambitious game in the

15 franchise and we’ve taken great care to make sure that every line of code embodies the spirit of the

16 series. To do this, we knew we had to make sure we put our heart and souls into the simulation and 6 17 the team created the most powerful simulation engine in its history, the GlassBox Engine.”

18 50. SimCity launched on March 5, 2013. But, as an April 9, 2013 article at online game

19 website Geekosystem recounted: “[I]t was a launch in the sense that people could buy the game, but

20 less so in the sense that they were able to play it.” According to the March 18, 2013 Kotaku article,

21 despite EA’s pledge that it would prevent the problems that afflicted Blizzard’s online launch, the

22 same problems had occurred with SimCity .

23 51. On March 7, 2013, Amazon pulled SimCity from its website, preventing would-be

24 I buyers from purchasing the game until EA fixed it.

25

26 5 Maxis, like DICE, is a development studio owned by EA.

27 6 At the time, Bradshaw was General Manager of Maxis. On October 2, 2013, EA announced that she had been promoted to Senior Vice President and would report directly to CEO Wilson. 28

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 14 - Case3:13-cv-05837-SI Document20 Filed04/11/14 Page18 of 59

1 52. On March 9, 2013, Bradshaw stated that “many of our issues were related to how

2 GlassBox managed the vast amount of simulation data through its database.” SimCity ’s launch

3 I “brought with it unexpected demand and unforeseen technical challenges. . . . [P]layer capacity per

4 server wound up being lower than anticipated in a live environment.” Bradshaw listed “ valuable

5 lessons” learned from the disastrous launch, including that “‘ online launches are very complex and

6 a game that is an open sandbox simulation can lead to a wider variety of scenarios we need to test

7 ’”

8 53. It took almost a week after launch before customers could play SimCity , and even

9 I then EA had to disable numerous game features in order to get the game running properly.

10 According to a March 18, 2013 report on Kotaku, the SimCity launch was a “Disaster.” The report

11 detailed that even once EA was able to get the SimCity servers working properly, the game remained

12 “fundamentally broken in a lot of different ways.” The GlassBox Engine, which EA had lauded as

13 “‘the most powerful simulation engine’” in the Maxis team’s history, “had some issues.” As the

14 report concluded, SimCity was “a beautiful-looking piece of work,” had “a lot of interesting

15 simulation ideas,” great music and incredible sound design; “It’s just too bad about that other stuff.”

16 54. A March 20, 2013 article titled “Electronic Arts: Your Next Move” published on

17 TheStreet.com focused on the need for EA to up its game on quality control to make up for its

18 history of poor performance:

19 It is going to take another ground-breaking game franchise to pull this company back up to its former glory. That means Electronic Arts needs to focus on

20 getting good people on research and development, to make sure that the game has mass appeal. It also means that Electronic Arts is going to have to attract the top

21 talent in the industry, to make sure that the game looks and functions like a true blockbuster.

22 Electronic Arts is going to need to up its game on quality control as well,

23 and possibly up its entire value proposition, if it is going to make up for its recent poor performance .

24 EA Demonstrates Battlefield 4 Graphics and Action Sequences to Strong Reviews

25 55. On March 26, 2013, EA introduced Battlefield 4 at an invite-only event, during the

26 Games Developer Conference in San Francisco, California. All of EA’s top executives attended the

27 unveiling, as did Riccitiello only one week after being forced to resign as CEO. The unveiling was

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 15 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page19 of 59

1 I simulcast in Stockholm, where DICE was headquartered and comprised a 17-minute live

2 I demonstration of the game’s “campaign” ( i.e. , single-player) mode.

3 56. On March 26, 2013, VentureBeat lauded the demonstration and stated that Battlefield

4 4 is “so important that it could make a difference for EA’s valuation in the stock market,” but

5 I cautioned that if EA “messes the game up,” it would lose in the battle for consumers.

6 Battlefield 4 represents a huge investment by EA in a video game that feels like a next-generation experience . . . . This kind of game – coming this fall – is so

7 important that it could make a difference for EA’s valuation in the stock market .

8 If EA messes the game up, as it did with last fall’s Medal of Honor: Warfighter first-person shooter last year, then it will lose another battle for

9 consumers with rival Activision Blizzard. But if it pulls Battlefield 4 off flawlessly, it could sell millions more units than its predecessor did and take some market share

10 from rival Call of Duty.

11 VentureBeat went on to quote Söderlund, who said about Battlefield 4 : “‘This could be really

12 I freaking big.’”

13 57. On March 27, 2013, securities analysts at Piper Jaffray summarized the unveiling:

14 Our Takeaways from the Demonstration. EA and DICE (the wholly owned studio responsible for Battlefield) gave a 17-minute gameplay demo of the single player

15 mode of Battlefield 4. Our impression of the graphics and action scenes were extremely positive. We acknowledge that demonstrations of this nature are highly

16 polished and not necessarily representative of the final product. However, it is clear that DICE is aiming to build off of the success of previous Battlefield titles with

17 continued emphasis on graphics, story and memorable moments. The graphics of the demo were surprisingly strong and certainly a level above what we have seen from

18 existing first person shooters. It remains to be seen how the final product will look and feel, but we are confident in DICE’s ability to execute given the studio’s strong

19 track record of developing high quality titles including Battlefield 3.

20 I Piper Jaffray upgraded EA “with the belief that new management, new consoles, expanding op

21 I margins and the launch of Battlefield 4 this holiday represent positive catalysts that should offset

22 I ongoing risks related to the console transition.”

23 58. On April 1, 2013, UBS Research issued a report focusing on EA’s history of

24 I problems launching games, specifically listing some of the Company’s most recent “miscues on

25 some of its core franchises,” including SimCity .

26 In recent years, Electronic Arts has been riddled with operational miscues on some of its core franchises and in attempts to launch new globally scaled IP into the

27 marketplace. * * * 28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 16 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page20 of 59

1 Struggles with Franchises; Good Start on Where Gaming is Heading

2 In the past 18 months, EA has increasingly struggled with large franchises (unlike its main competitor) and those miscues clearly resulted in the recent change at the

3 CEO position. Below, we recap a few of the larger miscues and where those franchises are heading:

4 * * *

5 SimCity – While early signs point to a successful launch to the next iteration of The

6 Sims franchise, the launch itself was mired with very negative press and user experiences as EA seemed ill-equipped to handle the levels of server traffic

7 generated by the early days of game play . * * * 8

9 These recent miscues led to the resignation of Mr. Riccitiello in March and the lowered guidance expectation from the company. . . .

10 UBS listed as an investment risk the Company’s potential failure “to release successful titles for the

11 new console cycle,” which may negatively impact results. 7

12 59. As EA fed the hype for Battlefield 4 , the Company also announced a deal with Disney

13 that made EA the exclusive provider of future games based on the Star Wars series. EA assigned

14 DICE to work on the next Star Wars title, which was provisionally slated for release in 2015. On

15 May 7, 2013, Benzinga.com published an article titled “Will Disney and ‘Star Wars’ Save Electronic

16 Arts?” in which it stated: “That’s not to say that EA’s games are flawless. Medal of Honor, for

17 example, has taken a backseat (a very crowded, painful and almost invisible backseat) to

18 Activision’s (NASDAQ: ATVI) Call of Duty franchise. If it weren’t for the Battlefield franchise,

19 EA would not even be able to compete in the action/war genre anymore.”

20 60. Thus, by the beginning of the Class Period, defendants knew that: (1) Battlefield 4

21 would provide a significant amount of EA’s future revenues and profits; (2) Battlefield 4 would need

22 to launch successfully with the next-generation consoles; (3) EA had numerous problems launching

23 7 EA’s history of failed game launches was a significant part of what led Consumerist’s readers to 24 vote EA the Worst Company in America in 2012 and 2013. On April 5, 2013, Moore responded to EA receiving the 2013 “award.” 25 Are we really the “Worst Company in America?” I’ll be the first to admit that 26 we’ve made plenty of mistakes. These include server shut downs too early, games that didn’t meet expectations, missteps on new pricing models and most recently, 27 severely fumbling the launch of SimCity . We owe gamers better performance than this. 28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 17

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page21 of 59

1 I games successfully in the past; and (4) investors were concerned about whether the Company’s past 2 I problems launching games would continue with Battlefield 4 . 3 DEFENDANTS’ FALSE AND MISLEADING STATEMENTS AND OMISSIONS OF MATERIAL FACT

4 Defendants Falsely Represent EA Has “De-Risked” the Technology Challenges of Transitioning 5 to the Next-Generation Consoles 6 61. False and Misleading Statement: On May 7, 2013, the Company issued a press 7 release announcing its 4Q and FY13 results. Revenue came in at $1.040 billion, below the midpoint 8 of the Company’s guidance range of $1.025 billion to $1.125 billion, and EPS was $0.55, below the 9 guidance range of $0.57 to $0.72. 10 62. After market close on May 7, 2013, defendants hosted EA’s 4Q13 and FY13 earnings 11 I conference call for analysts and investors. Probst, Jorgensen, Gibeau, Moore and V.P. of Investor 12 Relations Rob Sison represented EA on the call. During the call, analysts inquired about the 13 Company’s transition to the next generation of gaming consoles. Probst stated that it was important 14 for EA to get out of the blocks quickly with new games to drive market share and Gibeau falsely

15 represented that the botched gaming launch problems of the past had been addressed and corrected 16 because the technology side of the transition had largely been “de-risked.” Gibeau referenced the 17 two technology platforms EA had invested in to “de-risk” the development and launch process: 18 Frostbite, which was being used to develop Battlefield 4 , and the Ignite engine for EA SPORTS,

19 which was being used primarily for the Company’s sports game offerings. 20 [Analyst:] So one quick one for Larry. Larry, you’ve gone through several transitions in this business. The technology leap we are about to see, that you 21 mentioned, how does that compare to what we’ve seen in the past? . . . 22 * * * 23 [Probst:] . . . As I said in my earlier comments, we think it’s really important to get out of the blocks quickly with a portfolio of products that will drive market 24 share for us, and hopefully delight our consumers. . . . 25 * * * 26 [Gibeau:] Yes, . . . in comparison to last transition, we’re in a much better state as a company in terms of our development. . . . [O]ur investment in Frostbite 27 and EA SPORTS over the last year has really put us in a position where the technology side or the engine side of this transition has largely been de-risked .

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 18 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page22 of 59

1 63. On May 7, 2013, the Wall Street Journal reported that EA’s “current quarter looks to

2 I be a tough one” but noted that the Company’s projections for FY14 profits sent the stock up “8% in

3 I after-hours trading.” The article reported an interview with Jorgensen, who stated “that part of the

4 I company’s bullish outlook was driven by strong demand for its latest war-simulation shooting game,

5 I ‘Battlefield 4,’ which the company unveiled last month. ‘Pre-orders are through the roof,’ he said.”

6 64. On May 8, 2013, the Wall Street Journal cited the heightened importance of

7 I Battlefield 4 and the next-generation consoles to EA’s future prospects.

8 Its strategy of focusing on a few proven franchises, such as FIFA and Battlefield, means it will go to only making 11 games in fiscal 2014 from making 70 to 80 a year

9 five years ago. Fewer games means fewer people needed to make and market them.

10 Of course, that means EA also has fewer gaming eggs in its basket. And it also has to hope that the new round of consoles don’t flop with gamers.

11 65. Following EA’s May 7, 2013 investor conference call, investors boosted EA’s stock

12 price from a close of $18.41 on May 7, 2013 to a close of $21.56 on May 8, 2013, an increase of

13 17%, in spite of the Company’s poor FY13 results and continued weak near-term outlook.

14 66. On May 21, 2013, EA announced that Battlefield 4 would be released for existing PC,

15 XBox 360, and PlayStation3 platforms on October 29, 2013 and would be available on the next-

16 generation consoles from Sony and Microsoft when they launched.

17 67. Between May 9, 2013 and May 29, 2013, Wilson, Gibeau, Moore and Söderlund sold

18 a total of 432,085 shares of EA stock for total proceeds of $9,869,261. ¶123.

19 68. On June 10, 2013, EA demonstrated Battlefield 4 on the next-generation Xbox One at

20 the Electronic Entertainment Expo (“E3”) Conference in Los Angeles, California. EA first

21 demonstrated Battlefield 4 ’s single-player mode during Microsoft’s media briefing introducing the

22 Xbox One and later hosted a live demonstration of multi-player mode, with 64 players in one

23 location playing a limited version of the game over a local network, which garnered “the biggest

24 reaction at EA’s event.”

25 69. False and Misleading Statement: On June 12, 2013, EA hosted an investor breakfast

26 at the E3 Conference. Representing EA at the breakfast were Jorgensen, Gibeau, Moore, Taneja,

27 and Sison. An audience member asked whether EA had learned from past console transitions

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 19

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page23 of 59

mistakes making bets on which platform would succeed. Moore responded that it was technology,

2 not picking the wrong platform, that had tripped up EA in the past and represented that would not 3 I happen this time because EA had “de-risked” the technology component of the transition. 4 [Audience Member]: One of the things that tripped you guys up a little bit during the last console transition was ultimately making bets on which consoles were going 5 to succeed, and which weren’t. It seems like you’re doing a little bit of that again with Titanfall and making that exclusive on Microsoft. I guess, if you can, talk a 6 little bit about the decision-making process, making that an exclusive game and what assumptions you’re making, if any, with regards to sort of how the manufacturer, 7 how the console battle is going to play out with next gen. 8 [Moore]: I’ll start on that. I might characterize the last transition slightly differently, which is I think we made mistakes in technology management that put us 9 a little bit behind where we wanted to be. We tried to deploy a different kind of technology at the time called RenderWare that didn’t work. And we learned from 10 that, and for this cycle, we have started early on Ignite and on Frostbite 3, and derisk the technology engine component of making the transition .

11 So from the standpoint of picking the wrong platforms, I think we did a 12 good job there but we’ve mismanaged the technology. That’s not happening this time around .

13 70. On July 23, 2013, EA issued a press release announcing its 1Q14 financial results.

14 The press release quoted Probst, who stated that “‘We are also executing on a clear set of goals for

15 leadership on mobile, PC, current and next generation consoles,’” and highlighted that Battlefield 4

16 won 21 awards at E3, including Game Spot ’s Best of E3 award.

17 71. Later the same day, defendants hosted EA’s 1Q14 earnings conference call for

18 analysts and investors. Probst, Jorgenson, Moore, Gibeau, and Sison represented EA on the call.

19 During the call, defendants again reflected on their excitement regarding the development of

20 Battlefield 4 . In response to a question about some of the positive data points on preorders for next-

21 generation games, Moore responded by highlighting consumers’ anticipation of the next-generation

22 consoles and the strength of preorders for Battlefield 4 :

23 I think consumers anticipate getting the new hardware. We certainly came out of E3 24 with renewed enthusiasm for new hardware, and I think that has been reflected in current gen preorders. The only difference being that we are actually seeing strong 25 preorders for Battlefield 4 versus where we were on Battlefield 3 at this time prior to launch.

26 72. In response to analyst questions about EA’s expectations for Battlefield 4, Jorgenson,

27 Gibeau, and Moore took turns responding with unqualified excitement.

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 20

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page24 of 59

[Analyst:] Thanks for taking my call. Couple of questions on Battlefield. Blake, you talked at E3 about Battlefield basically being the X factor in terms of getting to 2 your guidance for the year. I guess a couple of questions. Is Battlefield being roughly flat with 2011 still what you need to get to your $1.20 number, or is it maybe 3 a little bit easier than that, given the first quarter beat? Is there anything that you saw at E3 or within the quarter that makes you feel any better or any worse about the 4 likelihood of Battlefield 4 meeting or exceeding Battlefield 3? And I guess just finally, if you care to give us any update in terms of the total sales to date of 5 Battlefield 3, just as an idea of install base, so to speak, as we get closer to Battlefield 4.

6 [Jorgensen:] Let me start and then Frank can get you – will probably give you a 7 little bit more color on what is going on with Battlefield, or Peter as well. We’re very optimistic, based on what we saw coming out of E3. The excitement that was on 8 the floor, the excitement around our press conference, the fact that we had 64 players playing virtually nonstop every hour the booth was open, was a very big positive, not 9 to mention all of the nominations we got for awards. All of that continues to help us signal that we should be able to do what we did in Battlefield – for Battlefield 3 in 10 the year in which it shipped, or fiscal ‘12. I don’t want to speculate today if we’re going to ship more or less than that. I think we’re still sticking with the guidance that 11 we provided. And a big Battlefield is obviously important to us. But we’re very focused on that, and the marking for it is still very much in gear. I don’t know if 12 Peter or Frank want to add to that. 13 [Gibeau:] I would just add that we were, the DICE team was very encouraged and excited by the reception at E3. We will be publishing the game across five 14 platforms this Christmas. And we’re excited about how we’re matching up against the competition. And what the generation 4 technology on Xbox One and 15 Playstation 4 is going to enable us to do. We have a lot of innovation happening in the multi-player game and in new online features, but in addition to that, the single 16 player experience has gotten even more epic than in Battlefield 3. So we feel like it is a generation ahead of Battlefield 3. We believe that we will exceed expectations, 17 and it is very exciting around here right now in terms of the teamwork that we are putting against Battlefield 4.

18 [Moore:] And James, one more point for me, as I mentioned earlier, our 19 preorders are stacking up well versus Battlefield 3. We came off a very strong E3. As I travel the world and speak to retailers, there is incredible optimism and 20 anticipation for this title. And Frank and his team, and in particular the DICE team, has done brilliantly coming out of E3. I think we’re well-positioned versus our 21 competition in this segment, and our 15 million target, which is where we ended up and what we currently have at Battlefield 3, feels very achievable. We’re feeling 22 good there.

23 73. Also on July 23, 2013, GamesBeat published an interview with Gibeau titled “EA 24 exec Frank Gibeau: Betting on next-gen consoles, mobile, and doing right by consumers.” Among 25 I other things, Gibeau stated that he had been working intensely on the slate of games shown at the E3 26 conference, including Battlefield 4 for both current platforms and next-generation consoles, over the 27 I past two years.

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 21 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page25 of 59

74. False and Misleading Statement: Gibeau falsely represented that EA had created a

2 I “low-risk” environment for technology development. Gibeau explained that in past development

3 I processes the Company had relied on a technology platform, RenderWare, that was not mature or

4 I complete, resulting in poor performance and failed product launches. This time, Gibeau falsely

5 I represented, EA was not going to blow the transition.

6 GamesBeat: It seemed like there was a strategy before to do a common, universal engine. It didn’t work so well with Criterion, but it seems to have come together

7 with Frostbite.

8 Gibeau: I was around for that. I was on the publishing side of the business when we bought Criterion. The idea was that RenderWare would power all of our

9 games in the last transition. The problem was that it wasn’t ready for prime time. It hadn’t shipped any games. The tools, the pipelines, the tech just weren’t mature or

10 complete. Then I took that learning because in my role as the head of the studios, I had to make sure we understood how we were going to manage the technology.

11 We understood the architecture of these machines was very different from

12 last time. Looking at the opportunities there, we went after Frostbite [Battlefield] and Ignite [for EA Sports]. We created two technology paths and invested early and

13 got them to the point where we were able to ship games on them. We weren’t fighting the engines as we were developing. In the last cycle, the engines weren’t

14 done. Guys were fighting the tools. They weren’t spending any time polishing the games while we were starting new [intellectual property]. So we wanted to de-risk

15 the technology piece as much as possible.

16 That was the key learning. You nailed it – we blew the last transition because we relied on RenderWare. It didn’t work. It set us back for multiple years.

17 I was not going to repeat that mistake. * 18

19 Frostbite has been the core difference. When you have a proven technology base with tools that work and you’re able to move teams around,

20 because they’re all trained on the same engine, it makes for efficient and low-risk development. That was a critical decision, to invest in that early on and put the

21 resources in . It causes stress in other parts of the business because a lot of our top guys were working on next-generation behind the scenes. . . .

22 75. Following EA’s July 23, 2013 investor conference call, and Gibeau’s false assurances

23 regarding the purported “de-risking” of the development process and the institution of “proven

24 technology” to “de-risk” the technology development, EA’s stock price increased 6.6%, from a close

25 of $23.83 on July 23, 2013 to a close of $25.41 on July 24, 2013.

26

27

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 22 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page26 of 59

76. On July 28, 2013, The Examiner Newspaper published an article reviewing next-

2 I generation games. The article stated that there was no reason to doubt that Battlefield 4 would be the

3 I best of the lot, due in part to the new Frostbite engine.

4 All of the Battlefield games have been good. Great even. And from what everyone has seen and read about Battlefield 4 there’s no reason to doubt it will be the best of

5 the lot.

6 . . . Battlefield 4 will launch earlier on the PS3 and Xbox 360, however, there will be a PS4 version available on launch.

7 DICE has developed a new engine for B4, in what they say is the most

8 human, dramatic and believable game yet. It will run at a stunning 60 frames a second. Electronic Arts has limited the amount of gameplay footage it has released

9 so far.

10 77. Between July 25 and July 30, 2013, Wilson sold 75,000 shares of EA stock at prices

11 as high as $26.27 for proceeds of $1,906,850. ¶123.

12 Reasons Why Defendants’ May 7, 2013, June 12, 2013 and July 23, 2013 Statements in ¶¶62, 69 and 74 Were Knowingly or Recklessly False and Misleading:

13 78. The statements in ¶¶62, 69 and 74 were knowingly or recklessly false and misleading

14 when made and perpetuated the false impression that EA had fixed the problems that had caused

15 botched game launches and transitions in the past. At the time they made the statements in ¶¶62, 69

16 and 74, defendants knew or recklessly disregarded each of the facts set forth below:

17 (a) First, Frostbite 3 – the very platform that defendants represented had “de-

18 risked” the technology side of game development – had been used to develop high-risk game code

19 for Battlefield 4 that made it more likely, not less, to crash than prior games. ¶¶114-116. According

20 to a DICE developer who worked on the game, Battlefield 4 had been developed on the Frostbite 3

21 platform to take advantage of the multiple processors available in the next-generation consoles (PS4

22 and Xbox One) and powerful PCs. ¶114. According to the developer, however, running code across

23 multiple processors created massive timing risks that could cause the game to crash and other game-

24 breaking bugs. 8 ¶¶115-116.

25

26 8 Because Battlefield 4 was a first-person shooter game, timing was crucial to the gaming experience. Delays caused by network lags and other bugs would lead to problems like rubber 27 banding and crashes. Rubber banding occurs in online gaming when network latency causes players to appear to move in one direction but then suddenly “teleport” back to another location where they 28 were a short time before. A successful multi-player experience required the synchronization of each

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 23 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page27 of 59

1 (b) Further, the additional complexity introduced developing Battlefield 4 for

2 I multiple platforms at the same time was largely conceded by Battlefield 4 ’s Executive Director

3 I Patrick Bach, who revealed that EA contemplated delaying the game’s release. ¶80. Before

4 I Battlefield 4 was released on existing platforms or next-generation consoles, Bach also admitted that

5 I the complexity of developing Battlefield 4 – already “itself [] a really complicated game” – was

6 I significantly increased due to the fact that the Company was developing Battlefield 4 simultaneously

7 to run across five platforms, “two of which” – PS4 and Xbox One – reportedly “ha[d]n’t even had

8 their technical specifications finalised for the majority of the project.” ¶¶79-80.

9 (c) These known risks were exacerbated by a testing protocol that was so short on

10 time and poorly designed that only a tiny handful of projected gamer setups, connection speeds, and

11 gameplay scenarios could be tested before Battlefield 4 went live. As detailed by a DICE developer,

12 the multi-processor code was highly timing dependent and needed to run smoothly across different

13 hardware and different internet connections not only so that the code would run, but also to provide a

14 successful multi-player experience without “rubber banding” and synchronization issues that could

15 cause crashes and other bugs. ¶¶115-116. Despite that, the developer admitted that during the

16 testing processes for Battlefield 4 , DICE developers used similar machines that could not reliably

17 address all different versions of timing. ¶116. Another DICE developer who also worked on

18 Battlefield 4 described that the sheer number of hours available for QA testing was nowhere near

19 sufficient to replicate more than small number of the gameplay scenarios and gamer setups available.

20 ¶94. EA did not and could not even “get close” to the testing necessary to “de-risk” Battlefield 4

21 before its release. Id. Moreover, the developer stated that the time pressure from EA to release

22 I Battlefield 4 on pre-ordained launch dates exacerbated the testing challenges. Id.

23 (d) As detailed in ¶¶91-92 and 96, the deluge of customer complaints about game-

24 crashing defects in Battlefield 4 immediately on its release confirm falsity and knowledge. In fact,

25 Battlefield 4 ’s defects were so severe that EA ordered DICE to halt all future projects and the game-

26 participating player’s movements and actions, and the game environment, in real time. Shooting at 27 an object or person that appears on the screen in one place but has already moved, or been destroyed, or otherwise altered by another player ruins a customer’s experience of the multi-player game. 28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 24 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page28 of 59

1 I breaking defects remained present for months. ¶¶106, 119. As an article recounted, since buying

2 I Battlefield 4 , some customers had “dressed up for Halloween, eaten dinner with our families on

3 I Thanksgiving, opened our Christmas gifts, wrapped arms around friends and lovers and sung Auld

4 I Lang Syne, and watched the Winter Olympics in Sochi” during which time the game remained

5 I “amazingly broken.” ¶120. EA had not “simply released a broken game. They ha[d] cracked the

6 I foundation of the brand and driven a wedge between themselves and a loyal fan base.” Id. The

7 magnitude of game-breaking bugs creates the strong inference that defendants knew or recklessly

8 disregarded that the technology platform was not “de-risked.”

9 (e) The strong inference that the magnitude and significance of these defects were

10 I known or disregarded by defendants is further supported by EA’s QA testing protocol. EA

11 maintained a QA testing protocol that utilized an A-D rating system for bugs found during the

12 testing and debugging process. The ratings proceeded from least significant to most significant in

13 reverse alphabetical order. For instance, D ratings would be assigned to issues such as misspelled

14 words, C ratings to color or texture issues, B ratings to issues of game-play quality ( e.g. , rubber-

15 banding), and A ratings to any bug that stops the progress of a game, including but not limited to

16 game crashes, freezes, and the loss of the ability to save game progress. If a tester found an A-rated

17 bug, not only was she required to enter it in the bug-tracking software, she was also required to call

18 the game’s developers to inform them of the issue over the phone. Games could not be released with

19 any known A-rated bugs. That Battlefield 4 for PS4 launched with a known game-breaking error

20 indicates defendants knew or recklessly disregarded that it could not have been “de-risked” as of

21 May 7, 2013, June 12, 2013, or July 23, 2013. ¶¶93, 97. A reporter from gameinformer found “it

22 hard to believe that the issues facing Battlefield 4 were a surprise to EA and DICE.” ¶109.

23 Battlefield 4 Executive Director Addresses Development Challenges and Reveals that EA Considered Delaying Launch

24 79. In an interview published on October 17, 2013 by GamesIndustry International,

25 Battlefield 4 Executive Producer Patrick Bach, the person responsible for overseeing the day-to-day

26 development of Battlefield 4, explained that “We see Battlefield at its core as a multiplayer

27 game. It’s been a multiplayer game and it will still be a multiplayer game, that’s where we put the

28

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 25 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page29 of 59

hours in,” and that “Battlefield itself is a really complicated game.” In the same article, the

2 interviewer discussed “just how hard it is to create a game across five platforms, two of which

3 I haven’t even had their technical specifications finalised for the majority of the project.”

4 80. Bach also confirmed the business significance of launching Battlefield 4 for the next-

5 generation consoles simultaneous with their release. Nevertheless, EA had considered delaying

6 I Battlefield 4 ’s launch for next-generation consoles due to the complexity of the development

7 I process.

8 [Question]: The schedule for the launch of the next generation isn’t quite as busy as you might think, especially with Watch_Dogs getting delayed. [9] That’s

9 potentially a good thing for you, leaving it open for you to become a really big early seller. What are your expectations?

10 [Bach]: Well we’ve been very aggressive with Battlefield 4 in that we want to

11 be out at launch with the next gen consoles. I think people might not grasp how hard that is, to develop a game at the same time as the hardware . We’ve been

12 struggling quite a lot to keep up with the changes we’ve seen – both sides need to adapt and you end up being late. Everything is very complicated. Battlefield itself

13 is a really complicated game, so it doesn’t make our lives any easier .

14 So we knew we’d set ourselves a tough challenge, but people on the outside seem to think that because there are going to be launch titles, it’s easy. What are we

15 spending all our time doing? They don’t understand how hard it is! Talking about Watch_Dogs, I don’t blame them, there are times when we’ve considered doing the

16 same thing [delaying the game’s release] – luckily we’ve overcome those hurdles and thought about what the game actually is on the next gen. We’ve had an

17 excellent team working that out at the same time as the game itself, which is a big struggle . We can see that a lot of the next gen games coming are, arguably, lesser

18 when it comes to the scope of features because of this problem.

19 81. In response to another question about what EA had learned from launching the game

20 as an open beta – i.e. , making a non-final version available to customers to test in order to gain

21 feedback – Bach also said that “in the first hour of the beta we got more playtesting than we’d have

22 [sic] previously during the entire project. The feedback you get is huge.” He stated that the focus of

23 I the beta was “about testing the back end so that you don’t end up in a . . . situation where the game

24 doesn’t actually work on day one. We’ve been in that situation previously . . . where you’re

25

26 9 Watch_Dogs is an open world action-adventure game developed by Ubisoft. Though originally 27 scheduled to launch with the next-generation consoles in November 2013, it is now due to be released on May 27, 2014. 28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 26

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page30 of 59

expecting one scenario and then it turns out to be completely different – it’s really, really hard to 2 I cater for that.”

3 Battlefield 4 Launches for Existing Consoles and Defendants Falsely Represent That They Have Avoided Problems Facing Competitors In Preparing Games to Launch on Next-Generation 4 Consoles

5 82. After market close on October 29, 2013, EA hosted its 2Q14 earnings conference call. 6 I The call was held the same day that Battlefield 4 launched for the three extant platforms: PC, XBox 7 360, and PS3. The PS4 and Xbox One console launches were two and three weeks away, 8 respectively, and Battlefield 4 would be available on each the day it launched. In prepared remarks 9 at the start of the call, Wilson paused to recognize the launch of Battlefield 4 , during which he 10 I represented that game was “not only . . . the pinnacle of this console generation, but one that is also a 11 defining title for the next gen consoles launching in November.” 12 [L]et’s take a moment to recognize the launch of Battlefield 4 in North America today, the culmination of efforts by the incredible teams at our DICE studios. Patrick 13 Söderlund and his team have done a spectacular job to deliver a game that not only represents the pinnacle of this console generation, but one that is also a defining title 14 for the next gen consoles launching in November.

15 83. False and Misleading Statement: Jorgensen, during prepared remarks, summarized the 16 I Company’s financial position by misleadingly comparing the coming 3Q14 to the World Series and 17 Battlefield 4 to the ace pitcher EA was sending to the mound to clinch victory. 18 Q3 represents more than 40% of our total non-GAAP revenue, and 98% of our annual EPS. Similar to the World Series, where the remaining game or two will 19 determine the season for Peter Moore’s beloved Boston Red Sox, the next few months will determine the success of our fiscal year. Our team is battle-tested and 20 ready, and today, we are sending our ace, Battlefield 4, to the mound . 21 84. During the question and answer session, an analyst asked whether Battlefield 4 was in 22 I line with EA’s quality expectations and about the impact of the next-generation cycle on EA’s 23 direction. Söderlund and Wilson responded by representing that the Company had been resolute in 24 I ensuring they did not suffer the same problems that had plagued prior console transitions. 25 [Analyst:] Congratulations on the good quarter. First off, just to the launch of Battlefield, wonder if you would comment on some of the initial feedback, and if the 26 game has ended up in line with your own quality expectations. 27 *

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 27

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page31 of 59

[Söderlund:] I’ll start, it’s Patrick, I’ll started on the Battlefield question first. It’s very early, and we launched the game yesterday in North America, it’s coming out in 2 a couple days in Europe. Early fans were positive, the reviews are strong.

3 *

4 . . . Peter can probably comment more on market dynamics, but from a product perspective, we’re very pleased with it.

5 *

6 [Wilson:] And certainly to answer the question around next gen and the strategy 7 for the Company, I’d start by saying this is my third major transition at this Company, and so I’ve had the great benefit to see the good, the bad and the ugly, as 8 we have come through transitions. And certainly, coming out of the last transition, we were resolute in our desire to ensure we didn’t have that kind of challenge again.

9 So as we approach this transition, I would say we started work earlier than we 10 ever had done before, and we worked more closely with both Microsoft and Sony throughout the entire process, and the end result is, we have a launch slate of games 11 that are the best transition games that I’ve ever seen come out of this Company . And so as I take that and look forward, I think we are starting this console generation 12 far stronger than we’ve done before, and the platform and the foundation that we have built, I believe, is going to serve to ensure that we can deliver great games to 13 gamers for many, many years to come.

14 85. False and Misleading Statement: Another analyst asked about the importance of next- 15 generation consoles to the Company’s revenues on its biggest game franchises, including Battlefield. 16 Instead of answering the question directly, Moore falsely represented that EA had not experienced 17 I the problems faced by competitors in preparing quality titles for the next-generation consoles: 18 [Analyst:] Quick question, looking at next gen consoles, what’s your thought as to the relative significance that we will see out of next gen consoles for revenues for 19 properties such as FIFA, Madden, Battlefield, this year? How do we gauge what to expect on those, over the last, call it, five months of the year?

20 * * *

21 [Moore:] We’ve not had some of the problems some of our fellow publishers 22 in the industry have in getting our quality titles ready for next gen. We feel, as we have said on previous earning calls, we’re well ahead of this transition, and we’re 23 going to nail it . 24 86. False and Misleading Statement: Another analyst asked whether defendants’ opinion 25 I regarding the impact of next-generation consoles had changed based on the games scheduled to be 26 I available when the consoles launched. Wilson’s response reached beyond the question asked to 27 I falsely represent that EA’s launch software was head and shoulders above where it was during the 28 I last transition and falsely tout EA’s execution on developing games for next generation consoles.

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 28 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page32 of 59

1 [Analyst:] One bigger picture, longer term question for you on the management team. Have you forecast and look out in the next generation, I know that previously

2 a lot of people were thinking this coming generation is going to be perhaps slightly small letter than last gen. As you now think about everything you know, the titles

3 that are coming out, the number of units, et cetera, in terms of consoles, has your opinion shifted at all one way or the other?

4 Are you incrementally more bullish, are you thinking the next cycle is going

5 to be similar, bigger, smaller? Just curious how you think about the next five years or so.

6 * * *

7 [Wilson:] [W]hen you look at the success of a console generation, it’s the

8 combination of two things. Great consoles and great software. And as I talked about earlier, I think that our launch software this time is head and shoulders

9 above where we were last time, and certainly, will I believe, satiate the appetite for gamers, and actually grow the industry over time. So we are certainly bullish as

10 we come into this platform generation, particularly as well as we have executed .

11 87. Following EA’s October 29, 2013 earnings release and investor conference call,

12 I analysts and media issued positive reports on the Company partially in response to defendants’ false

13 I representations concerning Battlefield 4 . Investors sent EA stock soaring 7.7% by market close on

14 I October 30, 2013.

15 88. For example, on October 29, 2013, Morningstar Credit Research issued a report

16 I stating that EA has “shed the majority of its lower-profile titles and has injected new life into its

17 larger franchises – particularly FIFA and Battlefield – by utilizing its new development engines, EA

18 Sports Ignite and Frostbite 3, which reduce redundant coding and streamline work for

19 programmers.” The report concluded, however, with the warning that “EA cannot afford the type of

20 launch hiccups that it delivered last year with Medal of Honor and SimCity.”

21 89. On October 31, 2013, Moore and Gibeau sold a total of 269,874 shares of EA stock

22 for total proceeds of $7,019,237. ¶123.

23 Reasons Why Defendants’ October 29, 2013 Statements in ¶¶83-86 Were Knowingly or Recklessly False and Misleading:

24 90. The statements in ¶¶83-86 were knowingly or recklessly false and misleading when

25 made and perpetuated the false impression that EA had successfully launched Battlefield 4 for

26 existing platforms and was prepared to launch the game successfully for the next-generation

27 consoles. At the time they made the statements in ¶¶83-86, defendants knew or recklessly

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 29 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page33 of 59

disregarded each of the facts in ¶78. In addition, defendants knew or recklessly disregarded that the

2 I existing platform launch of Battlefield 4, which occurred on October 29, 2013 before the earnings

3 I call during which they made the false and misleading statements, had been met by a deluge of

4 customer complaints regarding game-breaking issues. ¶¶91-92. Together, these facts create the

5 strong inference that defendants either knew or recklessly disregarded that their statements in ¶¶83-

6 86 were false and misleading.

7 Gamers Begin to Play Battlefield 4 and Are Confronted by Debilitating Defects that Made the Game Virtually Unplayable

8 91. As soon as customers began to play Battlefield 4, they encountered widespread game-

9 breaking issues. On October 29, 2013 and immediately thereafter, customers flocked to forums,

10 including but not limited to one hosted by About.com and another hosted by Reddit, to identify the

11 game-breaking bugs they discovered while attempting to play or playing Battlefield 4 . Generally,

12 the bugs identified included (a) bugs that prevented any gameplay, (b) bugs that caused crashes or

13 freezes during gameplay, (c) bugs that caused server connectivity issues, (d) bugs that caused broken

14 gameplay, and (e) bugs that caused lost gameplay. 10

15 (a) Unable to Play

16 • “Preloaded just fine but won’t install. Does nothing. No errors or anything. Just

17 won’t install.”

18 • “downloaded fine overnight, wont install today. No errors, nothing . . . just acts like its going to load for about 3 seconds and then just stops.”

19 • “do not get this game. buggy as hell. loading screen freezes and nothing happens. I 20 am on PS3 and never had this happen with a game. DO NOT BUY THIS GAME. Bugs all over the place.”

21 • “Soo i just went [through] 2 used xboxs with 2 new BF4 games and received an error 22 message saying it cant read disc each time. soo i went out and bought a new xbox and new copy of BF4 but still am getting the same error message. WTF is all i can

23 think lol. ANY HELP??”

24 10 The About.com forum, “Battlefield 4 Bugs, Problems and Known Issues,” is available at http://compactiongames.about.com/b/2013/10/29/battlefield-4-bugs-problems-and-known-issues.htm 25 (last visited Apr. 11, 2014). The Reddit forum, “Official Battlefield 4 bug/help thread,” is available at http://www.reddit.com/r/battlefield_4/comments/1pe4il/official_battlefield_4_bughelp_thread/ 26 (last visited Apr. 11, 2014). Spelling and grammar in the excerpted comments are as they appear in the original. Reddit is an entertainment, social networking and news website where registered users 27 can create forums and submit content. The Pew Research Internet Project reported in 2013 that 6% of all adult internet users use Reddit. 28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 30

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page34 of 59

1 . “I can’t even join a match, right before being loaded to the deployment screen, I am always met with a “Battlefield 4 has stopped working . . .”

2

. “Game wont even start.”

3

• “Game stuck on ‘initializing’ (campaign) or ‘joining server’ (multiplayer) another 4 window never opens game never loads. I have already: tried on multiple browsers, downloaded pluggins, installed latest drivers, unplugged all usb equipment, repaired 5 install, and restarted client. anyone have any idea how to make this 63$ paperweight work?”

6 (b) Crashing/Freezing During Gameplay

7

• “Been getting ‘Battlefield 4 has stopped working’ a lot. . . . just been freezing and 8 crashing :(“

9 • “My game randomly freezes completely, and is just stuck repeating the same sound over and over. . . . I[t] happens completely random, sometimes 2 minutes after game 10 start, and sometimes after 20-30 minutes.”

11 • “During the last few games it has crashed with the text box saying “Battlefield has stopped working”.

12 o [In response:] “Same here. . . . Kinda wish I could play the game I paid for.”

13

• “Crashing to desktop after about 10 minutes of play. Glitches and rubber banding 14 everywhere.”

15 • “My game freezes and i can’t even use ctrl+alt+del, i have to hard reset my computer. . . . It’s completely unplayable, it’s worst than the Beta. . . .”

16

• “I can’t stay connected to a game for longer than 5 minutes. “Battlefield 4 has 17 stopped working” keeps appearing.”

18 • “Game crashes in middle of [multi-player] matches”

19 • “game crashing after about a minute or two of in game playtime??? help?”

20 • “Massive rubberbanding and crashing. Every server I have been on gets too rubberbandy to play within about an hour of being restarted. And every server I have 21 played crashes (for everyone on it) about every other map. I maintain 80+ FPS, but the rubberbanding/hitching that happens every 1.5 to 3 seconds non-stop is 22 unbearable.”

23 • “The random freezing/crashing is making it unplayable.”

24 ~ “Sniper rifles shoot through guys and nothing happens (Campaign), the game constantly freezes. . . . I am seconds away from taking this pile of steaming crap 25 back!!!”

26 • “Has the game been crashing for anyone? I’ll be playing just fine without any problems and then out of the blue within about 5 minutes my game freezes and then 27 crashes, please HELP!”

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 31 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page35 of 59

1 • “My computer will completely lock up (can’t run any programs, can’t ctrl+alt+del to open task manager, can’t right click taskbar to open task manager – nothing. I

2 HAVE to use the power button to turn my computer off. Everything is unresponsive.”

3 o [In response:] “Same s*** here.”

4

• “My game always freezes/crashes whenever I use the repair tool for more than 15 5 seconds.”

• “~10 minutes into Siege of Shanghai game, crashed. Frozen game covered the error 6 message, but it appears to be a “device has hung” directx error.”

7 • Massive rubber banding issues, random crash to desktop with looping sounds, unstable servers.” 8

• “Getting all kinds of crashes, from kernelbase.dll crashes, to bf4.exe crashes.” 9 (c) Connectivity Issues 10

• “Can’t play online with friends on Xbox Live. Getting this error msg when trying to 11 join their server ‘the joined game is running an incompatible version.’”

12 • “Sorry, an error has occurred: Unable to connect to EA servers to activate BF4. Yet another EA game I cant play because of connection/server issues. I think I am done 13 with EA games.”

14 • “Me and my friend can’t get past the “Connecting” stage when trying to join a server. It gets past the “Logging In” and “Joining Server” but won’t get to the “Loading 15 Game” screen.”

16 • “every time I try to join a server it gives me this error: ERROR Your game session has expired, please log out and then log in again” 17

• “Server crashing and game crashing. Very frustrating when you’ve been on a server 18 for 45 minutes, it crashes and then you find out that all the points you just got have been erased.” 19 (d) Broken Gameplay 20

• “during the campaign it constantly jumps and loads like it were to have scratches and 21 when i was on the deck of the sinking air craft carrier it was treating me like i was inside a wall???? i couldnt see anything.” 22

• “Can’t move in the game. I just run in place.” 23

• “players become invisible with no ability to retrieve weapons and having to restart 24 game as it freezes.”

25 • “My game keeps stuttering. I notice good framerate (45-60) but suddenly the game stutters. It drives me nuts. This coupled with the server ruberbanding, then the no 26 sound, plus the crashes every other map, all makes for the worst launch I’ve ever been in.” 27

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 32 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page36 of 59

1 ~ “The game never loads the map, it brings up the screen as if i was loading into the game, but it sits there forever”

2 (e) Lost Gameplay 3

~ “After coming back the next day my entire campaign progress has been deleted. I

4 am so frustrated that I might trade it in. Spending $60 on a piece of plastic is already frustrating in itself. Fix the damn game before it comes out you impatient greedy

5 mfers.”

6 • “After closing the single player, it appears none of my progress has saved.”

7 • “Woo, save file corrupted, nothing I could do, just lost 4 hours campaign progress. Hope save files can be transferred because that’s a pain in the ass.” 8

• “Constant crashing every few games or rounds. Really irritating when i get in the

9 groove and lose everything.”

10 • “If you die, the game freezes entirely. Any attempts to reload also freeze, thus hinting at a corrupt save. I’ve had to replay the mission twice now and both times 11 my save has been corrupted. The only solution being to restart the mission.”

12 92. One customer summarized by warning potential customers not to buy Battlefield 4 : 13 I “DO NOT GET THIS GAME TOO MUCH STUFF WRONG WITH IT I CANT JOIN A GAME .” 14 I Another potential customer commented “afraid to buy BF4 after viewing this thread,” to which 15 someone who had already purchased the game responded by telling the potential customer not to

16 I buy: “All games have bugs, but not all games are broken upon release .” 17 93. On October 30, 2013, before Battlefield 4 launched on next-generation consoles, a 18 I game reviewer for Joystiq, who was provided access to Battlefield 4 on PS4 at EA’s office, 19 published his review of the game in which he described a repeatedly occurring “game-crashing” CE- 20 34878-0 Error. He noted that other reviewers received the same error. 21 94. In an e-mail conversation that occurred on or before November 6, 2013, a DICE

22 I developer who worked on Battlefield 4 revealed that EA was in fact incapable of testing the product 23 in a way that could simulate real world usage “on so many different set-ups we couldn’t get close 24 to!”

25 [Question:] Hey man, . . . Now, I got a few confidential questions. I will not [spill] the beans on names or this conversation even taking place. I just want to ask: 26 How did bugs like the no sound at all, no third person on jets with Hydra’s and the constant server crashing pass QA ? I would really, really be interested to hear what

27 went down as the BETA seemed more stable than this . 28 * * *

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 33 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page37 of 59

1 [Answer:] First we have a company culture that always wants more and more in the game until the very end of the project which puts an enormous strain on QA to

2 test everything.

3 Then you have EA that wants us to release 2 weeks before [Call of Duty] to avoid competition.

4 The biggest thing is [the] time it takes to test . Imagine the number of

5 combinations of vehicles/weapons/gadgets and accessories. We do test EVERYTHING we really do. But let’s say we test the Spas-12 with silencer in June

6 before we release. Then a sound guy makes a change in July which breaks it. Do you test everything again? Do you forbid anyone to do work on the Spas-12 after

7 we’ve tested it? . . . * * * 8

9 Also when it comes to testing there are just so many test cases and some are really hard to solve while others are not thought of completely.

10 Imagine we are 300 people at DICE, imagine we test the game 1000 hours

11 per person. That’s 300,000hrs of testing.

12 Then imagine we release the game and 5million people buy it and play for one hour. That’s 5million hours tested in the first hour the game is released and 11 13 on so many different set-ups we couldn’t get close to!

14 Defects with Battlefield 4 for Next-Generation Consoles Begin to Become Known, Defendants Concede Some Problems but Stock Price Remains Artificially Inflated

15 95. On November 15, 2013, PS4 went on sale and with it EA launched the next-

16 generation version of Battlefield 4 for PS4. EA’s stock price began an immediate slide on

17 suggestions that sales of Battlefield 4 for next-generation consoles were softer than expected and

18 reports that the game had numerous defects. That day, EA posted a message blaming PS4 for

19 “crashing/freezing and non-responsive connections between the player’s console and their TV

20 screen.” EA quickly removed the message and said that it had been posted in error. The stock price

21 closed at $24.06 on November 15, 2013, down 7% from the day before, on high volume of more

22 than 11.1 million shares.

23 96. Immediately after November 15, 2013, on Reddit’s PS4 page, users created numerous

24 forums regarding Battlefield 4 ’s launch on PS4 whose very titles revealed game-crashing defects,

25 including “Battlefield 4 – Unplayable on PS4 (CE-34878-0)”; “Has anyone had battlefield corrupt

26

27 11 Conversation posted at http://bf4central.com/2013/11/ea-pushed-battlefield-4-quality-control (last visited Apr. 11, 2014). Spelling and grammar are as they appear in the original. 28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 34 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page38 of 59

1 I your game save and constantly crash”; “What’s up with the servers on Battlefield 4?”; “Battlefield 4

2 I [Single Player] crashed and my data was corrupted”; “Is Battlefield 4 still messed up?”; “Battlefield

3 4 Crashing Constantly”; “Anyone else having issues with battlefield 4 crashing and corrupting

4 I data?”; and “Battlefield 4 still not working?” A selection of conversation threads included the 12 5 I following:

6 • “I can’t play at all. Crashes as soon as I get past the main menu”

7 • “I’ve deleted the game data and reinstalled it twice. It lets me into one game and then crashes and then everything’s corrupt.”

8

• “I can’t get to the campaign/mp menu. Tried every possible fix.”

9

• “Every single game mode I try playing I [] immediately get disconnected from

10 server. Games [] completly unplayable.”

11 • “Mine was working decently there for a while, but the last 2 days or so I have one of two things happen. I either get into a game and play for around 30 minutes or so

12 then get booted from the server randomly back to the blue PS error screen (which is the most frustrating losing 30 minutes worth of exp, etc.) or when I join a game it

13 goes through the load screen and then tells me I got disconnected. I’d rather not get into a game than waste 30+ minutes only to lose it all multiple times in a night.”

14

• “Lots of crashes when trying to load the game. You can get dropped randomly from

15 some of the medium-sized modes.”

16 • “now i cant even get past the first screen. when it says press option to continue i do that and the game freezes there.”

17

• “I don’t crash I keep getting connection to ea servers lost”

18

• “I’ve played Obliteration mostly and have had intermittent issues: save file

19 corrupted, no Conquest obviously, crash from main menu multiple times in a row before I can get into the multiplayer menu.”

20

• “I was booted like 5 times last night. That was the worst it has been since launch”

21

• “I cant even connect to the EA server :(“

22

• “I can’t play the single player because the next day, when I go into the game it resets

23 as if I never played it. I even tried it again with the latest patch and nope. Damn thing deleted my save game. I’m done trying. The [single player] for Battlefield

24 always blew anyway.”

25 97. On November 18, 2013, International Business Times reported that the PS4 version

26 I of Battlefield 4 “has been experiencing a serious issue wherein players are greeted with a ‘CE-

27 12 Available at www.reddit.com/r/PS4/comments/1r2993/battlefield_4_still_not_working (last visited Apr. 11, 2014). Spelling and grammar are as they appear in the original. 28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 35 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page39 of 59

1 34878-0 Error.’” On November 22, 2013, gamer website CVG reported that “Since release on

2 I November 15, the PS4 version of BF4 has been plagued with numerous critical issues that incite

3 I frequent crashes, the loss of campaign saved data and a complete inability to connect to the 64-

4 player Conquest servers.”

5 98. Xbox One went on sale on November 22, 2013, and so did Battlefield 4 for Xbox

6 One. It quickly became clear that bugs plagued the Battlefield 4 release for Xbox One, too.

7 Between November 14 and November 22, 2013, EA’s stock price fell $2.82, as some of the artificial

8 inflation was removed from EA’s stock price.

9 99. After market close on November 22, 2013, Wilson released a statement on his official

10 I EA blog with the headline, “The Wild First Week of the Next Generation.” In it, Wilson

11 acknowledged “stability issues” and the problems that affected “some players” when playing

12 Battlefield 4 .

13 We’re only one week into a new era in gaming, and what a wild few days this has been. I’d almost forgotten how intense console transitions are . . . almost. The

14 hardware hits shelves and anticipation turns to excitement; the reviews come in for the consoles and the games; our live service teams start working to optimize fan

15 experiences; and we’re actively listening to the community for their feedback. * * * 16

17 But we’re not celebrating. In fact, we’re still working hard. We have had our challenges with stability issues on Battlefield 4, and the DICE team is 100

18 percent focused on understanding and resolving the problems that some players have been having . We won’t rest until we get things fixed . . . .

19 100. On November 26, 2013, DICE announced it had deployed a series of patches aimed at

20 fixing crashing issues, most that occurred across the gaming platforms on which Battlefield 4 was

21 released. It described the patches in a blog post.

22 -Fixed common crashes that could occur when changing weapons or maps

23 -Reduced the probability of a corrupted save file in the single player campaign -Fixed a crash occurring when resuming the single player campaign

24 -Fixed a bug where accessing PlayStation Plus subscription resulted in a connection error

25 -Improved performance when shooting at destroyed Levolution objects.

26 101. On November 29, 2013, Destructoid published a review of Battlefield 4 for next-

27 generation consoles. The reviewer wrote:

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 36

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page40 of 59

The Xbox One and PS4 editions are attempting full feature parity with the PC game, bringing the count back to a rightful 64, with some enhanced visuals in tow. 2 But the “next-gen” consoles also have some nasty stability issues despite the fact that the experience is upgraded in almost every way possible.

3 4 When it works, that is.

5 102. In total, EA’s stock price fell from $25.96 on November 14, 2013, to $21.54 on 6 I December 3, 2013, as some of the artificial inflation due to defendants’ earlier false and misleading 7 I statements was removed. 8 103. False and Misleading Statement: After market close on December 3, 2013, Wilson 9 I and Jorgensen presented at the Credit Suisse Technology Conference. In response to an analyst’s 10 question about how game development teams could take advantage of the opportunities presented by 11 the recently-released consoles, Wilson responded by falsely lauding the “level of quality at launch” 12 that EA had achieved with games for next-generation consoles. He also falsely represented that 13 EA’s teams were already starting to think about future investments and innovation: 14 [Analyst:] So you undoubtedly spent a lot of time with your development teams to focus on what can be done with the new hardware. Setting the graphics step up to 15 one side, your engineers must be telling you there are all kinds of other things that they can do with the hardware. So as you look out over the next 5 years, how will 16 the game play for the likes of Madden and FIFA and Battlefield change? 17 [Wilson:] I think it’s a really good question. The reality is, you know, our teams are already starting to work on new innovation for our products. So one of the 18 nuances here is that this transition, so this console cycle, both Sony and Microsoft platforms have simplified their architecture and simplified their toolsets. So in the 19 last transition we spent the first two to three years actually just trying to figure out how to get the most out of the boxes, and particularly because the two boxes were 20 very different .

21 So the good news now is I think that we have reached a level of quality at launch that we didn’t get to last time, and our teams are already starting to think 22 about investment in new innovation for the future . 23 104. Investors reacted by pushing EA stock back up 3.7% by market close on December 4, 24 2013, helping it to recover some of the artificial inflation that had been removed starting on 25 November 15, 2013.

26

27

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 37

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page41 of 59

1 Reasons Why Defendants’ December 3, 2013 Statement in ¶103 Was Knowingly or Recklessly False and Misleading:

2 105. The statement in ¶103 was knowingly or recklessly false and misleading when made

3 and maintained the false impression that EA had successfully launched Battlefield 4 for the next-

4 generation consoles. At the time they made the statement in ¶103, defendants knew or recklessly

5 disregarded each of the facts in ¶¶78 and 90. In fact, the next day defendants ordered DICE to halt

6 all future projects until Battlefield 4 was fixed and one week later DICE released publicly a “Top

7 Issues Tracker” confirming the existence of numerous game-breaking bugs. ¶¶106; 112-113. These

8 facts alone, not to mention all of the other facts in ¶¶78-90, creates the strong inference that

9 defendants knew the level of quality at launch was in fact poor and DICE was not already starting to

10 think about “new innovation for the future.” ¶103.

11 Defendants Admit the True Extent of Battlefield 4 ’s Defects and Stop Production on All New 12 Products Until the Game Is Fixed; Artificial Inflation is Removed from Stock Price 13 106. On December 4, 2013, defendants acknowledged the full extent of Battlefield 4 ’s 14 I defects for the first time and stated that “our #1 priority” is fixing the game. As a result, EA 15 announced that DICE would cease development of any future projects or Battlefield 4 expansions

16 until it had fixed all of the issues with Battlefield 4 . 17 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 18 absolutely our #1 priority . The team at DICE is working non-stop to update the game. Since Battlefield 4 China Rising expansion pack was already in the final 19 stages of development by the time issues began with Battlefield 4, we decided to fulfill our promise to deliver it this week, but we’re not moving onto future projects 20 or expansions until we sort out all the issues with Battlefield 4 . We know many of our players are frustrated, and we feel your pain. We will not stop until this is right.

21 107. IGN Entertainment ran an article about the announcement later the same day. It

22 quoted a representative for EA who stated that DICE is “‘not moving onto future projects or

23 expansions until we sort out all the issues with Battlefield 4 .’” When asked about “how this affects

24 the future of other DICE games, such as Star Wars Battlefront and Mirror’s Edge,” the EA

25 representative responded, “‘We haven’t announced a ship date for Battlefront but right now the team

26 is focused on fixing Battlefield 4.’”

27

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 38 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page42 of 59

108. After market close on December 4, 2013, Forbes published a report bringing the issue

2 to investors’ attention. The report, “EA Halts DICE Projects Pending ‘Battlefield 4’ Fixes,” stated

3 I that EA likely did not want to delay Battlefield 4 ’s launch date because doing so would “hand

4 I victory” to Call of Duty :

5 After weeks of connectivity issues, server limitations, and various other problems plaguing EA’s cross-gen shooter Battlefield 4, the publisher has decided

6 to halt all future projects from developer DICE until fixes can be worked out . * 7

8 EA did not lay out a time-table for the fixes, however, but this does mean that future BF4 [downloadable content] and Star Wars Battlefront 3 are on hold .

9 * * *

10 I suspect that EA didn’t want to hand victory over to Activision and Call of

11 Duty: Ghosts by delaying the game, possibly even beyond the holiday shopping season.

12 109. On December 4, 2013, GameInformer published a report titled “EA Halts DICE’s

13 Future Projects Pending Battlefield 4 Repair.” The reporter indicated his belief that EA and DICE

14 were aware of the problems earlier but chose to launch the game despite its serious defects.

15 I find it hard to believe the issues facing Battlefield 4 were a surprise to EA

16 and DICE. While I’m hopeful that Battlefield 4 will eventually be the $60 promise EA sold, right now it isn’t .

17 110. In reaction to the revelations, investors sent the price of EA stock down from $22.34

18 on December 4, 2013, to $21.01 at market close on December 5, 2013, on unusually high trading

19 volume of 12.8 million shares (more than 2.5 times the average daily volume for the preceding five

20 trading days).

21 111. On December 5, 2013, Forbes published an article titled, “Electronic Arts Tanks

22 After Hitting Reset on Battlefield 4” covering investors’ “understandable” reaction to the news.

23 The reaction from Wall Street was understandable, given not only extensive

24 problems with one of EA’s signature games, but also the ripple effect it could have through their lineup. DICE, a Swedish subsidiary, is responsible for development

25 of other big titles like Star Wars Battlefront and Mirror’s Edge – both of which are now put on indefinite hold .

26 * * *

27 It will take time to fix the myriad of connectivity issues, server limitations,

28 and other problems Battlefield 4 gamers have experienced. During that time DICE

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 39

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page43 of 59

1 will not be working on any additional expansion packs, other downloadable content for the game (a significant revenue source), or the next versions of their 2 other hit games . No launch date had previously been announced for either the next Star Wars Battlefront or Mirror’s Edge titles.

3 Post-Class Period Revelations Underscore and Confirm Inference of Knowing Falsity

4 112. Additional revelations about the extent to which Battlefield 4 was “broken” continued

5 to follow. On December 10, 2013, DICE publicly released the “Battlefield 4 Top Issues Tracker.”

6 Its purpose was to provide “the latest updates in regards to some of the top issues we are going to fix

7 and fan feedback we’re implementing in the game.” DICE revealed that this public tracker was

8 similar to trackers that it “always work[s] with” internally, which enable timely bug tracking and

9 fixes. The tracker had never been made public before.

10 113. Among the top issues listed on the December 10, 2013 Top Issues Tracker were:

11 “Game freezes, resulting in a sound loop”; “One-hit kill bug where players sometimes take damage

12 twice from the same bullet”; “Bug accounting for a quarter of the crashes on PS4”; “Bug accounting

13 for a majority of crashes on next-gen/PC”; “Loss of [single player] progress that can happen after

14 quit and restart on PS4”; “Players sometimes get stuck in kill cam after revive”; “Players sometimes

15 get stuck in revive screen”; “Server browser filters are not fully functioning”; “Players sometimes

16 become spectators while still alive in Defuse mode”; “The ‘Sound Loop Crash’”; “Desynchronized

17 game world where objects have different states for different players”; “Bug accounting for a large

18 amount of crashes on X360”; “Hit markers and crosshairs sometimes disappear”; and “Rubber

19 banding issues for some players with solid Internet connections.”

20 114. On December 20, 2013, PCGMedia published an article titled “DICE employee

21 explains why Battlefield 4 is ‘buggy,’” which translated an interview that the titular DICE employee,

22 a developer who worked on Battlefield 4, gave to Swedish gaming site www.fz.se . The developer

23 explained that Frostbite 3 – the very technology defendants represented “de-risked” the

24 technology side of game development for next-generation games – had been used in Battlefield 4

25 to create code that was inherently riskier than that used in earlier games . The DICE developer

26 explained that in contrast to earlier EA games, Battlefield 4 ’s code was designed to run on multiple

27

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 40 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page44 of 59

processors, in order to take advantage of the new hardware possibilities offered by more powerful 2 PCs and next-generation consoles.

3 He explains that the coding is very different from BF3 (Frostbite 2) and BF4 (Frostbite 3) and that one of the reasons for the big changes are that they want to use 4 the new hardware better by squeezing out the maximum capacity of multi-core PCs and nextgen-consoles. All the coding now run on multiple processors instead of one.

5 115. Running code across multiple processors created risks, however, that did not exist in

6 prior games where code ran through a single processor. According to the DICE developer, “‘When a

7 code that’s not ‘thread-safe’ executes on multiple sources, it’s a coincidence if it works or if it

8 crashes. All the codes become ‘timing dependent’ and different hardware combined with different

9 background processes and OS’s have different timing.’”

10 116. Moreover, the DICE developer said that risks of crashing were also higher because

11 Battlefield 4 is a timing-dependent game. The author explained further: “Unfortunately, if you have a

12 certain CPU and you run a certain OS and at the same time you run a certain background process,

13 you could get ‘bad timing’ more often than other people, [t]iming that will cause the game to

14 crash or other bugs .” But the DICE developer stated that “‘At work, we all have pretty similar

15 machines and it’s pretty hard to cover all the different versions of timing .’” In response to the

16 DICE developer’s explanation, a reader commented, “In other words, the beta test should’ve been

17 tried on a broader spectrum of machines before release. As in: ‘ We needed more time .’”

18 117. On January 14, 2014, DICE posted on the official Battlefield 4 blog that it would be

19 stress testing the PS4 servers in order to make potential performance improvements. A customer

20 asked, “[S]houldn’t this kind of stuff have been done BEFORE the game released?”

21 [DICE]: This weekend, we’ll be stress testing the PS4 servers to make 22 potential performance improvements in the future. If you want, hop on and help us! There’ll be a couple DICE developers on the servers if you fancy playing with them.

23 [Comment]: I hope this helps, but shouldn’t this kind of stuff have been done 24 BEFORE the game released? 25 118. On January 28, 2014, EA reported its 3Q14 results and hosted an earnings conference

26 call. Wilson, Jorgensen, Moore, Söderlund, and Sison represented EA on the call. Defendants 27 I addressed the problems with Battlefield 4 ’s launch, blaming “a complex effort” and “a massive game 28 I packed with innovative new features”:

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 41

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page45 of 59

[Moore:] I will cover Battlefield 4, and I will quickly touch on what happened, what we’ve done, and how we are learning from it. So on the first segment, the what 2 happened part, is when Battlefield 4 launched, it was a very complex game, launching on two entirely new console platforms, as well as current-gen and PC. We 3 were pushing innovation heavily and were delivering 60 frames per second gameplay for 64 players, plus the ability to connect via mobile tablet as a commander into the 4 product. Coupled with those things, some very innovative features in the gameplay side.

5 119. On March 3, 2014, a report on iDigitalTimes noted that DICE was finally able to turn

6 its focus to the development of Star Wars: Battlefront 3 after all future projects had been put on hold

7 for the prior four months to fix Battlefield 4 .

8 The last few months there hasn’t been much to report on [ Star Wars] since DICE had 9 all-dev[eloper]s-on-deck to deal with Battlefield 4 ’s many technical issues. . . . This was bad news for Star Wars: Battlefront fans because it meant that DICE Stockholm, 10 the studio tasked with rebooting the beloved franchise, had to divert resources from Battlefront to fix Battlefield 4.

11 120. On March 7, 2014, game reviewer Scott Tucker published an article titled “127 days

12 later, and Battlefield 4 is still amazingly broken.” The article starts, “While it’s still a little early in

13 the life of Battlefield 4 to hold a postmortem, you can certainly consider this a pre-postmortem.”

14 Among other observations, Tucker wrote:

15 Battlefield launched on October 29th in the US on PC, followed by the PS4 16 release roughly 2 weeks later, and the Xbox One 2 weeks after that. To call it a rough launch would be an understatement; on PC, crashes to desktop were a 17 disappointingly frequent occurrence, and the Playstation 4 version was rendered nearly unplayable thanks to “blue screen” crashes. . . .

18 *

19 If DICE had a QA team working on Battlefield 4, it wasn’t obvious . . . .

20 * * *

21 “EA and DICE haven’t simply released a broken game. They have cracked 22 the foundation of the brand and driven a wedge between themselves and a loyal fan base.”

23 *

24 Some of us have now owned Battlefield 4 for 127 days. Some of us have 25 purchased Premium for our game. Some of us have double dipped and bought BF4 for both console and PC. We have dressed up for Halloween, eaten dinner with our 26 families on Thanksgiving, opened our Christmas gifts, wrapped arms around friends and lovers and sung Auld Lang Syne, and watched the Winter Olympics in Sochi. In 27 this time frame, can we say that DICE has delivered with their continued support of Battlefield 4? In my opinion, the answer is a resounding “no”.

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 42 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page46 of 59

While many new pieces continue to work very well, such as mobile integration with Battlelog, commander mode, spectating, and beyond, many more

2 basic issues persist. Player models still get stuck on simple ground clutter geometry like broken cardboard boxes, kill cam issues (from wrong health displays to even

3 showing the wrong player and weapon) still abound, and the ever-talked-about “netcode” continues to be a significant downgrade from Battlefield 3. Many servers

4 are consistently suffering from rubber-banding and many players have uploaded GIFs of emptying entire clips into enemies without so much as a hit marker.

5 *

6 After the last 4 months, it’s hard to have much faith in DICE’s future

7 projects, let alone their long term support of Battlefield 4. It’s clear that EA is driving the ship, and DICE is getting the whip cracked over their backs and being

8 told to row harder. With news that the Battlefield franchise will have a new entry yearly, with DICE and Visceral Games alternating years, it’s easy to glean what EA

9 sees in the Battlefield franchise: a field full of suckers eager to throw their money at broken products. Star Wars Battlefront 3 and Mirror’s Edge 2, once much begged

10 for titles, now have the taint of Battlefield 4 attached to their names. DICE has arrived at a crucial moment in their operation, and to me, this is the make or break

11 time for them. To restore consumer faith in DICE as a competent developer that deserves our money in the future, they have to first resolve the lingering issues with

12 Battlefield 4.

13 121. On March 7, 2014, Wilson responded to a question he received on Twitter about what

14 I he’d learned from EA’s continued launching issues. He replied that pushing innovation leads to

15 I missing other things.

16 [Question]: @EA @sxsw What have you learnt from the BF3/BF4/SimCity launching issues? #andrewea

17 [Wilson A]: “Building games is very hard. . . when you push innovation, you miss

18 other things. We’ve changed our process” – A. Wilson #AndrewEA @LorinKemp

19 DEFENDANTS’ SUSPICIOUSLY-TIMED INSIDER STOCK SALES

20 122. The Individual Defendants were highly motivated to keep EA’s stock price inflated

21 throughout the Class Period. According to SEC Forms 4 filed by EA, four of the Individual

22 I Defendants made EA stock sales that were suspicious in both timing and amount. During the Class

23 I Period, Wilson, Moore, Gibeau, and Söderlund together sold a total of 816,959 shares of EA stock,

24 I reaping proceeds of $19,867,347 in sales patterns that deviated strongly from their prior trading

25 practices. None of Wilson’s, Moore’s, Gibeau’s, or Söderlund’s Class Period insider sales appear to

26 I have been made pursuant to 10b5-1 trading plans.

27

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 43 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page47 of 59

1 123. The following chart lists, according to their Forms 4, Wilson’s, Moore’s, Gibeau’s,

2 and Söderlund’s Class Period stock sales by date, shares sold, price and the proceeds, as well as the 13 3 percentage of each individual’s total stock and vested options sold during the Class Period.

4 5/9/13 32,085 $21.42 $687,261 5 7/25/13 20,000 $24.64 $492,800 7/26/13 40,000 $25.50 $1,020,000 6 7/30/13 15,000 $26.27 $394,050 CLASS PERIOD 107,08 $2,594,111 85% 7 MOORE DATE SHARES PRICE PROCEEDS % SO 5/28/13 125,00 $23.14 $2,892,500 8 10/31/13 50,000 $26.49 $1,324,500 CLASS PERIOD 175,00 $4,217,000 36% 9 GIBEAU DATE 5/24/13 $22.77 10 10/31/13 219 $25.90 $5,694,737 CLASS PERIOD $10,248,737 48% 11 SÖDERLUND DATE PROCEEDS

5/29/13 75 $23.14 $1,735,500 12 8/12/13 40 $26.80 $1,072,000 CLASS PERIOD 11 $2,807,500 45% 13 CLASS PERIOD (TOTAL) $19,867,347

14 124. The Class Period stock sales deviated strongly from prior trading practices. The table

15 below details Wilson’s, Moore’s, Gibeau’s and Söderlund’s insider trades from January 1, 2008

16 through the start of the Class Period according to their Forms 4.

17

18

19

20

21

22

23

24

25

26 13 The percentage of each individual’s total stock and vested options sold during the Class Period is calculated based on information in the Company’s Proxies and Forms 4. The 27 percentages do not account for any additional options that vested during the Class Period.

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 44 - Case3:13-cv-05837-SI Document20 Filed04/11/14 Page48 of 59

2

3

4

5

6

7 125. Thus, according to their Forms 4: 8 • Wilson’s Class Period sales represented 74% of all shares of EA stock he 9 sold from January 1, 2008 through December 5, 2013 ;

10 • Moore’s Class Period sales represented 74% of all shares of EA stock he sold from January 1, 2008 through December 5, 2013 ; 11 • Gibeau’s Class Period sales represented 85% of all shares of EA stock he 12 sold from January 1, 2008 through December 5, 2013 ; and

13 • Söderlund’s Class Period sales represented 41% of all shares of EA stock he sold from January 1, 2008 through December 5, 2013 . 14 126. Other EA insiders made Class Period sales of EA stock that generated an additional 15 $7,750,497 in proceeds. 16 Chief Technology Officer Rajat Taneja sold 39,573 shares of EA stock on May 28, 17 2013 at $23.30 per share and 15,000 shares of EA stock on August 19, 2013 at $26.98 per share. In total, Taneja’s Class Period sales generated $1,326,751 in 18 proceeds.

19 General Counsel Stephen G. Bene sold 25,000 shares of EA stock on May 10, 2013 at $22.40 per share; 7,802 shares of EA stock on May 17, 2013 at $21.58 per share; 20 8,323 shares of EA stock on May 20, 2013 at $22.03 per share; and 6,761 shares of EA stock on May 21, 2013. In total, Bene’s Class Period sales generated $1,058,910 21 in proceeds.

22 Officer Gabrielle B. Toledano sold 9,141 shares of EA stock on May 15, 2013 at $22.65; 10,000 shares of EA stock on May 15, 2013 at $22.70; 10,859 shares of EA 23 stock on May 24, 2013 at $22.70; 20,000 shares of EA stock on July 30, 2013 at $25.99; 10,000 shares of EA stock on $27.00; 25,000 shares of EA stock on 24 November 4, 2013 at $25.50; and 30,000 shares of EA stock on November 12, 2013 at $26.49. In total, Toledano’s Class Period sales generated $2,902,543 in proceeds. 25 Officer Joel Linzner sold 10,000 shares of EA stock on May 14, 2013 at $22.12 per 26 share; 15,000 shares of EA stock on May 24, 2013 at $22.80 per share; 15,000 shares of EA stock on May 30, 2013 at $23.25 per share; 30,000 shares of EA stock at 27 $26.15 per share; and 4,409 shares of EA stock on August 21, 2013 at $26.47 per share. In total, Linzner’s Class Period sales generated $1,813,156 in proceeds. 28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 45

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page49 of 59

1 Officer Kenneth A. Barker sold 27,848 shares of EA stock on May 30, 2013 at $23.31 per share. In total, Barker’s Class Period sales generated $649,137 in 2 proceeds.

3 CORE OPERATIONS 4 127. Each of the Individual Defendants was a top executive involved in EA’s daily

5 operations and had access to all material information regarding the Company’s core operations. 6 ¶¶21-26. Each, therefore, is presumed to have had knowledge of all material facts regarding 7 Battlefield 4 ’s development and launch. 8 128. As detailed herein, prior to and during the Class Period defendants were aware that 9 Battlefield 4 was key to the Company’s expected revenues and profitability (¶¶33-36, 56-57, 63-64, 10 71-73, 76, 82-84, 88); were aware of the importance of the next-generation consoles to EA’s future

11 revenues and prospects (¶¶38, 62, 70-71, 80, 84, 86); and were aware of and focused on remedying

12 prior game launch failures (¶¶41-54, 58, 62, 69, 74, 81, 85, 88). 13 129. Given the acknowledged centrality of Battlefield 4 and the next-generation consoles 14 to EA’s future operational and financial success, as well as the acknowledged importance of

15 overcoming EA’s recent history of failed product launches, the Individual Defendants are presumed 16 to have had knowledge of all material facts regarding false and misleading statements detailed

17 above. 18 THE PSLRA SAFE HARBOR DOES NOT APPLY 19 130. The Private Securities Litigation Reform Act of 1995 (“PSLRA”) “Safe Harbor”

20 warnings that accompanied defendants’ forward-looking statements issued during the Class Period

21 were ineffective to shield defendants from liability for their false and misleading statements and

22 omissions of material fact. 23 131. To the extent that the false and misleading statements related to existing facts or

24 conditions, the Safe Harbor does not apply. Moreover, where known trends should have been 25 included in the Company’s financial reports prepared in accordance with GAAP, they are excluded 26 from protection under the PSLRA. 27 132. To the extent that the false and misleading statements are forward looking, defendants

28 are still liable. Defendants knew at the time they spoke or failed to speak fully that each of their

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 46 - Case3:13-cv-05837-SI Document20 Filed04/11/14 Page50 of 59

1 I forward-looking false and misleading statements were false and misleading. Defendants’ false and

2 I misleading forward-looking statements were authorized or approved by an executive officer or

3 I director of EA, who knew that the forward-looking statements were false. The forward-looking

4 statements were contradicted by existing, undisclosed material facts that were required to be

5 I disclosed so that the forward-looking statement would not be misleading. And the “Safe Harbor”

6 I warnings were themselves misleading because they warned of “risks” that had already materialized

7 or failed to provide meaningful disclosures of the relevant risks.

8 CONTROL PERSON ALLEGATIONS

9 133. As alleged herein, the Individual Defendants acted as control persons of EA within

10 I the meaning of §20(a) of the 1934 Act. By virtue of their high-level positions, participation in and

11 awareness of the Company’s operations and intimate knowledge of the false statements and

12 omissions made by EA and disseminated to the investing public, the Individual Defendants had the

13 power to influence and control, and did influence and control, directly or indirectly, the Company’s

14 decision-making, including the content and dissemination of the various statements that plaintiffs

15 contend are false and misleading.

16 134. The Individual Defendants participated in conference calls with investors and analysts

17 I and interviews with media, and were provided with or had unlimited access to copies of the

18 Company’s reports, press releases, public filings and other statements alleged by plaintiffs to be

19 misleading, prior to and/or shortly after the statements were issued, and had the ability to prevent the

20 issuance of statements or cause the statements to be corrected.

21 135. Each of the Individual Defendants had direct and supervisory involvement in the day-

22 to-day operations of the Company and had and exercised the power to control or influence the

23 product development giving rise to the securities violations alleged herein. Furthermore, throughout

24 the Class Period, defendants had consistent and constant access to information about the

25 development and testing of Battlefield 4 .

26 136. As set forth above, defendants violated §10(b) of the 1934 Act and Rule 10b-5 by

27 I their acts and omissions. By virtue of their positions as controlling persons, the Individual

28 I Defendants are liable under §20(a) of the 1934 Act. As a direct and proximate result of the

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 47

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page51 of 59

1 Individual Defendants’ wrongful conduct, plaintiffs and other members of the Class suffered 2 I damages in connection with their purchases of the Company’s publicly-traded securities during the 3 I Class Period. 4 LOSS CAUSATION/ECONOMIC LOSS 5 137. As set forth above, defendants’ deceptive conduct, misrepresentations, and omissions 6 I of material fact were a significant cause of the artificial inflation of EA’s stock price throughout the 7 Class Period. On May 7, 2013, the day before the Class Period, EA’s stock price closed at $18.41 8 per share. After the market closed, EA announced its 4Q13 and FY13 results and hosted an earnings 9 conference call at which defendants made misrepresentations regarding the “de-risked” platform for 10 developing Battlefield 4 . After these misrepresentations EA’s stock price increased 17%, from 11 $18.41 at close on May 7, 2013 to $21.56 at close on May 8, 2013, on heavy volume of more than 22

12 million shares. 14 13 138. On July 23, 2013, defendants presented EA’s 1Q14 results and hosted an investor 14 I conference call. During the call, defendants continued to make misrepresentations regarding the 15 “de-risked” technology platform and the efficient and low-risk development of games for the next

16 generation consoles that resulted from the “de-risked” technology platform, and that they were not

17 repeating the mistakes from the past. On June 24, 2013, EA’s stock price increased 6% on heavy

18 volume of more than 15.6 million shares, from $23.83 to $25.41. 19 139. On October 29, 2013, defendants presented EA’s 2Q14 results and hosted an investor 20 I conference call. During the call, defendants made several misrepresentations regarding the 21 successful launch of Battlefield 4 for extant platforms and its readiness for launch on the next-

22 generation consoles. On October 30, 2013, EA’s stock price increased 7.7% on heavy volume of

23 more than 12.9 million shares, from $24.13 to $26.00. 24 140. On November 15, 2013, customers reported that Battlefield 4 for PS4, which 25 I launched that day, was plagued by bugs, and analysts noted that EA had not, as expected, released 26 sales numbers for the game. In response to this company-specific negative news, EA’s stock price

27

14 28 Average daily volume during the class period was approximately 4.5 million shares.

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 48 - Case3:13-cv-05837-SI Document20 Filed04/11/14 Page52 of 59

1 I declined 7.3% by the close of trading on heavy volume of more than 11.1 million shares, from

2 I $25.96 to $24.06.

3 141. On December 3, 2013, after market close, defendants continued to make

4 I misrepresentations that they had avoided the pitfalls that had befallen prior launches and were

5 planning for future innovation. On December 4, 2013, EA’s stock price increased 3.7%, from

6 $21.54 to $22.34.

7 142. On December 4, 2013, defendants revealed that the severity of the bugs plaguing

8 I Battlefield 4 would require DICE to cease all future projects until the game was fixed. EA’s stock

9 price declined 6% on December 5, 2013, from $22.34 to $21.01 per share, on heavy volume of more

10 than 12.8 million shares. The stock price decline completed a 3% fall from the start of the Class 15 11 Period and a 33% fall from the Class Period high.

12 CLASS ACTION ALLEGATIONS AND THE FRAUD-ON-THE-MARKET PRESUMPTION

13 143. Plaintiffs bring this action as a class action pursuant to Rule 23 of the Federal Rules

14 of Civil Procedure on behalf of all persons who purchased EA securities on the open market during

15 the Class Period, and were damaged thereby (the “Class”). Excluded from the Class are defendants,

16 directors and officers of EA and their families and affiliates.

17 144. The members of the Class are so numerous that joinder of all members is

18 impracticable. During the Class Period, there were more than 300 million outstanding shares owned

19 by thousands of persons. Thus, the disposition of their claims in a class action will provide

20 substantial benefits to the parties and the Court.

21 145. There is a well-defined community of interest in the questions of law and fact

22 involved in this case. Questions of law and fact common to the members of the Class predominate

23 over questions that may affect individual Class members include:

24 (a) Whether the federal securities laws were violated by defendants;

25

26 15 EA’s stock price has recovered somewhat during the PSLRA 90-day limitation on damages. 27 Share price recovery, however, does not negate plaintiffs’ showing of loss causation. Rosado v. China N.E. Petroleum Holdings, Ltd. , 692 F.3d 34, 38-40 (2d Cir. 2012). 28

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 49 -

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page53 of 59

1 (b) Whether defendants engaged in fraudulent conduct and omitted and/or

2 I misrepresented material facts; 3 (c) Whether defendants’ statements omitted material facts necessary to make the

4 statements made, in light of the circumstances under which they were made, not misleading;

5 (d) Whether defendants knew or recklessly disregarded that their statements were

6 I materially false and misleading; 7 (e) Whether the prices of EA common stock were artificially inflated; 8 (f) Whether defendants’ fraudulent conduct, misrepresentations and omissions 9 caused Class members to suffer economic losses, i.e. , damages; and

10 (g) The extent of damage sustained by Class members and the appropriate 11 measure of damages. 12 146. Plaintiffs’ claims are typical of those of the Class because plaintiffs and the Class

13 purchased EA securities during the Class Period and sustained damages from defendants’ wrongful

14 conduct. Plaintiffs will adequately protect the interests of the Class and have retained counsel who

15 are experienced in class action securities litigation. Plaintiffs have no interests that conflict with 16 those of the Class. 17 147. A class action is superior to other available methods for the fair and efficient

18 adjudication of this controversy. A class action will achieve economies of time, effort and expense

19 and provide uniformity of decision to the similarly situated members of the Class without sacrificing

20 procedural fairness or bringing about other undesirable results. Class members have not indicated an 21 interest in prosecuting separate actions; none have been filed. The number of Class members and the

22 relatively small amounts at stake for individual Class members make separate suits impracticable. 23 No difficulties are likely to be encountered in the management of this action as a class action. 24 148. In addition, a class action is superior to other methods of fairly and efficiently

25 adjudicating this controversy because the questions of law and fact common to the Class

26 predominate over any questions affecting only individual Class members. Although individual Class

27 members have suffered disparate damages, the fraudulent scheme and the misrepresentations and

28 omissions causing damages are common to all Class members. Further, there are no individual

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 50 -

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page54 of 59

1 I issues of reliance that could make this action unsuited for treatment as a class action because all 2 I Class members relied on the integrity of the market and are entitled to the fraud-on-the-market 3 I presumption of reliance. 4 149. The market for EA’s securities was open, well developed and efficient at all relevant

5 times. EA’s stock met the requirements for listing, and was listed and actively traded on the 6 I NASDAQ, a highly efficient and automated market. As a regulated issuer, EA filed periodic public 7 reports with the SEC and the NASDAQ. EA regularly communicated with public investors via 8 established market communication mechanisms, including through regular disseminations of press 9 releases on the national circuits of major newswire services and through other wide-ranging public 10 disclosures, such as communications with the financial press and other similar reporting services. 11 150. As alleged herein, the change in the price of EA’s stock – compared to the changes in 12 I the peer group and NASDAQ – in response to the release of unexpected material positive and 13 negative information about the Company shows there was a cause-and-effect relationship between 14 the public release of the unexpected information about EA and the price movement in the 15 Company’s stock. Numerous analysts followed EA, attended the Company’s conference calls and 16 issued reports throughout the Class Period. Numerous National Association of Securities Dealers

17 member firms were active market-makers in EA stock throughout the Class Period. The Company

18 claimed that it was eligible to register securities on Form S-3 during the Class Period. 19 151. As a result of the foregoing, the market for EA common stock promptly digested

20 current information regarding EA from all publicly-available sources and reflected such information 21 in the Company’s stock price. Under these circumstances, all purchasers of EA securities during the 22 Class Period suffered similar injury through their purchases of EA stock at artificially inflated prices

23 and the subsequent revelations concerning declines in price, and a presumption of reliance applies.

24 COUNT I 25 For Violation of Section 10(b) of the 1934 Act and Rule 10b-5 Against All Defendants

26 152. Plaintiffs incorporate ¶¶1-151 by reference.

27

28

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 51 Case3:13-cv-05837-SI Document20 Filed04/11/14 Page55 of 59

1 153. During the Class Period, EA and the Individual Defendants disseminated or approved

2 I the false statements specified above, which they knew or recklessly disregarded were misleading in

3 I that they contained misrepresentations and failed to disclose material facts necessary in order to

4 I make the statements made, in light of the circumstances under which they were made, not

5 I misleading.

6 154. EA and the Individual Defendants violated §10(b) of the 1934 Act and Rule 10b-5 in

7 I that they (a) employed devices, schemes and artifices to defraud; (b) made untrue statements of

8 material facts or omitted to state material facts necessary in order to make the statements made, in

9 light of the circumstances under which they were made, not misleading; or (c) engaged in acts,

10 practices and a course of business that operated as a fraud or deceit upon plaintiffs and others

11 similarly situated in connection with their purchases of EA common stock during the Class Period.

12 155. Plaintiffs and the Class have suffered damages in that, in reliance on the integrity of

13 I the market, they paid artificially-inflated prices for EA common stock. Plaintiffs and the Class

14 would not have purchased EA common stock at the prices they paid, or at all, if they had been aware

15 that the market price had been artificially and falsely inflated by EA’s and the Individual

16 Defendants’ misleading statements.

17 COUNT II

18 For Violation of Section 20(a) of the 1934 Act Against the Individual Defendants

19 156. Plaintiffs incorporate ¶¶1-155 by reference.

20 157 Defendants Wilson, Probst, Jorgensen, Moore, Gibeau and Söderlund acted as

21 controlling persons of EA within the meaning of §20(a) of the 1934 Act as alleged herein. By virtue

22 of their high-level positions, participation in and awareness of the Company’s operations and

23 intimate knowledge of the false statements and omissions made by EA and disseminated to the

24 investing public, defendants had the power to influence and control and did influence and control,

25 directly or indirectly, the decision making of the Company, including the content and dissemination

26 of the various statements that plaintiffs contend are false and misleading. Defendants participated in

27 conference calls with investors and were provided with or had unlimited access to copies of the

28

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 52

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page56 of 59

1 Company’s reports, press releases, public filings and other statements, alleged by plaintiffs to be

2 misleading prior to and/or shortly after these statements were issued, and had the ability to prevent

3 I the issuance of the statements or cause the statements to be corrected. 4 158. Each of the defendants had direct and supervisory involvement in the day-to-day

5 operations of the Company and therefore had the power to control or influence the statements 6 regarding Battlefield 4 ’s development and launch and the prospects for EA’s game development for 7 next-generation consoles that give rise to the securities violations as alleged herein and exercised the 8 same. Furthermore, throughout the Class Period, defendants had access to bug-tracking information 9 and other internal reports regarding Battlefield 4 ’s development and to the DICE developers who

10 were tasked with preparing Battlefield 4 for its launch. 11 159. As set forth above, defendants violated §10(b) of the 1934 Act and Rule 10b-5 by 12 their acts and omissions as alleged in this complaint. By virtue of their positions as controlling

13 persons, defendants are liable pursuant to §20(a) of the 1934 Act. As a direct and proximate result

14 of defendants’ wrongful conduct, plaintiffs and other members of the Class suffered damages in

15 connection with their purchases of the Company’s publicly-traded securities during the Class Period.

16 PRAYER FOR RELIEF 17 WHEREFORE, plaintiffs pray for judgment as follows: 18 A. Declaring this action to be a proper class action pursuant to Federal Rule of Civil 19 Procedure 23; 20 B. Awarding plaintiffs and the members of the Class damages, including interest;

21 C. Awarding plaintiffs reasonable costs and attorneys’ fees; and 22 D. Awarding such equitable or injunctive, or other relief, as the Court may deem just and

23 proper.

24

25

26

27

28

929894_1 I CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 53 - Case3:13-cv-05837-SI Document20 Filed04/11/14 Page57 of 59

1 JURY DEMAND 2 Plaintiffs demand a trial by jury.

3 DATED: April 11, 2014 ROBBINS GELLER RUDMAN & DOWD LLP

4 SHAWN A. WILLIAMS MATTHEW S. MELAMED

5

6

s/ Shawn A. Williams

7 SHAWN A. WILLIAMS

8 Post Montgomery Center One Montgomery Street, Suite 1800

9 San Francisco, CA 94104 Telephone: 415/288-4545

10 415/288-4534 (fax)

11 POMERANTZ LLP JEREMY A. LIEBERMAN

12 LESLEY F. PORTNOY 600 Third Avenue

13 New York, NY 10016 Telephone: 212/661-1100

14 212/661-8665 (fax)

15 POMERANTZ LLP PATRICK V. DAHLSTROM

16 10 South LaSalle Street, Suite 3505 Chicago, IL 60603

17 Telephone: 312/377-1181

312/377-1184 (fax)

18 Co-Lead Counsel for Plaintiffs

19

20

21

22

23

24

25

26

27

28

929894_1 CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FED. SECS. LAWS - 3:13-cv-05837-SI - 54 - Case3:13-cv-05837-SI Document20 Filed04/11/14 Page58 of 59

1 CERTIFICATE OF SERVICE

2 I hereby certify that on April 11, 2014, I authorized the electronic filing of the foregoing with

3 the Clerk of the Court using the CM/ECF system which will send notification of such filing to the

4 e-mail addresses denoted on the attached Electronic Mail Notice List, and I hereby certify that I

5 caused to be mailed the foregoing document or paper via the United States Postal Service to the non-

6 CM/ECF participants indicated on the attached Manual Notice List.

7 I certify under penalty of perjury under the laws of the United States of America that the

8 foregoing is true and correct. Executed on April 11, 2014.

9 s/ Shawn A. Williams SHAWN A. WILLIAMS

10 ROBBINS GELLER RUDMAN & DOWD LLP 11 Post Montgomery Center One Montgomery Street, Suite 1800 12 San Francisco, CA 94104 Telephone: 415/288-4545 13 415/288-4534 (fax) E-mail:[email protected] 14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

929894_i CAND-ECF-

Case3:13-cv-05837-SI Document20 Filed04/11/14 Page59 of 59

Mailing Information for a Case 3:13-cv-05837-SI Kelly v. Electronic

Arts, Inc. et al

Electronic Mail Notice List

The following are those who are currently on the list to receive e-mail notices for this case.

• Mary K. Blasy

[email protected]

• Patrick V. Dahlstrom

[email protected]

• Lionel Z. Glancy

[email protected],[email protected] ,[email protected]

• Michael M. Goldberg

[email protected] ,[email protected] ,[email protected] ,[email protected]

• James Neil Kramer

[email protected] ,[email protected]

• Jeremy A Lieberman

[email protected]

• Matthew Seth Melamed

[email protected],[email protected] ,[email protected]

• Lesley F. Portnoy

[email protected]

• Robert Vincent Prongay

[email protected],[email protected] ,[email protected]

• Alexander K Talarides

[email protected]

• Robert P. Varian

[email protected],[email protected],[email protected] ,[email protected] ,[email protected]

• Shawn A. Williams

[email protected] ,[email protected] ,[email protected] ,[email protected]

Manual Notice List

The following is the list of attorneys who are not on the list to receive e-mail notices for this case (who therefore require manual noticing). You may wish to use your mouse to select and copy this list into your word processing program in order to create notices or labels for these recipients.

•(No manual recipients)

https://ecf.cand.uscourts.gov/cgi-bin/MailList.pl?616316769668524-L10-1 4/11/2014