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Funcom Q2 Financials: 5.73 Million USD Lost
briyan
Member Posts: 26
Funcom announced Q2 results today, after Age of Conan's launch in May, and the results were not pretty! I wrote up an article on the numbers we've seen in the past, and how the future appears bleak!
http://wowriot.gameriot.com/blogs/Epidemic-Obesity/Conans-Drowning-Could-Pull-Funcom-Under/
Comments
@ The two guys ahead of me: He cites all of his sources, care to claim that he is wrong (with sources) ?
Well... they got lucky though.. the losses are in dollars
Rofl! +1
"Censorship is never over for those who have experienced it. It is a brand on the imagination that affects the individual who has suffered it, forever." - Noam Chomsky
Much appreciated, Briyan ! Both for the news and writeup.
I had been expecting this report for a while~ I know it's going to be around this date -- it's just that I'm not sure w/ the timezone.
Out of 800,000 -- 415,000 customers are active. I wonder if the subscription + retail sales could make it up for the Server maintenances, let alone the resource you need to squash bugs, work on updates, expansions and porting to X360.
Revenue on Q208 is @ 13.010Million, which they projected to raise to 16-20Million, averaging @ 18Million. Thus 18-13 = 5Million, which still won't make up for Q208 loss of 5.730Million !
Though they have 36.392Million in cash (June 2008), I can see that it's actually bleeding. There was around 47Million back in March 2008, that's down 22% within 3 months.
*edit: typo
Means that they are actually investing in AoC developement, isn't it incredible. They have faith in their game and there is light at the end of the tunnel.
If that isn't sarcasm, it should be.
If it is, good job.
The 415k was at the end of June, that number is going to be drastically lower now and even lower in a week or so when the three month subs run out.
"Censorship is never over for those who have experienced it. It is a brand on the imagination that affects the individual who has suffered it, forever." - Noam Chomsky
Very true ghogiel.
I assume the Q3 guidance of 16-20 Million USD in losses is based on 415,000 subs * 15 USD * 3 months = 18.7 Million USD. Given what we know about the declining activity rate in the game, I don't see how they can offer this guidance in good conscience.
Remember, the 415,000 subscriber figure is from June 30, which is 1.5 months ago.
I predict yet another negative quarter in Q3, and the cumulative AoC development losses will soon approach the entirety of the 30 Million USD of private financing secured in Q3 2007.
To posters insulting me and claiming I am merely writing biased WoW-fanboy-drivel, I request that you read the article and note that I am just reporting the facts straight out of Funcom's past financial reports.
There is no spin here, the numbers are very clear.
They're just fanboys ;p.
Also I deffinitly think the numbers will be a lot lower now that the 1st month renewed subs have run out, and even lower after that.
But man losing 50% of your playerbase right at the start, ouch.
It is somewhat the way we discussed before.
Only approximately half of the sold boxes subscribed past the free month. That fact only is an indicator that theres something seriously off with the game.
Also, as said before, it is June the 30th data, which is 1,5 months ago, and 3 month subs end in August.
I'm not surprised. It is also funny how they are trying to wrap it in pretty paper with words like "The launch was very successful an was the largest MMO launch since world of Warcraft ..."
They keep on chanting that mantra on and on and on.
Huh?
When you launch an MMO, you incur a lot of costs. Publishing and distributing the boxes, buying and setting up servers as well as initial splash advertisement.
When you maintain a MMO, you don't incur those start up costs.
When comparing it to 2007, you also have to look at how the USD has fallen in value compared to the Norwegian Kroner.
Their operating expenses for the 2nd quarter of 2007 (when they supported 1 MMO and were developing a second) was $2.7 million. You can expect their operating expenses for Q3 and Q4 to be maybe double that, $5.4 million. If they maintain just 100,000 subscribers, just for Age of Conan that means revenues for quarter 3 are going to be $4.5 million. Their whole break even point, if they had no box sales and no AO income, comes to arround 115,000 subscribers.
This is a clear message to developers to stop designing instanced crap.
We won't tolerate it any more. We want large seamless worlds without any instancing whatsoever.
Lets see, they launched on May 15th right? One month free play, takes you to June 15th. 3 months after June 15th is, July 15th, August 15th, September 15th.
Math is hard.
Even saying that, it's grasping at straws. You have no idea how many people bought 3 month subscriptions. It could be 50% of subscribers, or it could be 2%. Based on the 'I cancelled' my account posts, it would seem that percentage is prety low.
I never said you lied about these numbers, I just stated that any info coming from that site regarding AOC its totaly bullshit. Any sane person can see that it's wow fanboy site and all these post you are making here is some personal vandetta or crusade against this game.
So sorry if I dont take you serious.
2.7 Million Operating Expense ?
Where did you get that from ? Here ?
It looks 6.1 Million to me, with -2.7 Million operating income.
I am not particular fond of this game anymore but lets look the numbers.
The 415k subscribers was YESTERDAY. Personally I am very surprised its this high when I look at the activity in-game (sub runs out in 9 days)
The -5.73 m dollars is because it was launch with the cost of setting up the game and the 50 or so server clusters.
If they keep subs in the 3-4 hundred k then the money will now roll in without added costs and the game will have generated an overall surplus within a year.
But FunCom is not safe, far from it. If they dont get their act together VERY fast then people will go play other games in the next months.
"You are the hero our legends have foretold will save our tribe, therefore please go kill 10 pigs."
Hopefully I've illustrated to you that the numbers are not very clear. Here's a quote from your article:
"When four+ years of focused work and sustained losses culminate in a record-selling game launch that still fails to turn a profit, it doesn't seem likely"
We'll probably never know for certain, but odds are that no MMO ever has 'made money' for their launch quarter with box sales and 2 weeks of subscriptions. It's not the business model for MMO's. The model is to recuperate your money with long term subscribers, not with box sales. To pretned otherwise is either willfully ignorant or intentionally misleading. Which one are you?
100K subscribers at $15 USD a month for a year is $18 million USD. Funcom's operationg expenses for 2007 was less than $13 million.
Lets see, they launched on May 15th right? One month free play, takes you to June 15th. 3 months after June 15th is, July 15th, August 15th, September 15th.
Math is hard.
Even saying that, it's grasping at straws. You have no idea how many people bought 3 month subscriptions. It could be 50% of subscribers, or it could be 2%. Based on the 'I cancelled' my account posts, it would seem that percentage is prety low.
very hard when you just woke up
Anyway I forgot to count the free month in but it doesnt really matter. In any case losing half of your subscription before the first reneval is rather steep downward trend wouldn't you say. And that was 1,5 months ago.
Its not yesterday, the data is on June 30th. It's a second quarter report that they released now.
415,000 on 30 June - LOL
that means
150,000 subs in early August given pretty much everyone has already quit the game, but as they say in their report "for marketing reasons" they won't release their actual subs number now
haha XD
The funniest part is the fanboys are screaming victory over the "415,000" number - how fast can you say "weapons-of-mass-destruction". On the official forums, the fanboys have already "edited" the report so they are saying "there are 415,000 subs as of August 14th", I mean why does Funcom PR keep bending the truth when fanboys will do it for free?
I'm shocked they are trying to fool people this way, using the 415,000 number from THE END OF JUNE, hello lol
2.7 Million Operating Expense ?
Where did you get that from ? Here ?
It looks 6.1 Million to me, with -2.7 Million operating income.
Reading financial reports can be confusing. The number you're looking at is for 6 months, not for 3.
'
2007-09-30
Period Length
6 Months
I got the $2.7 from their 2nd quarter 2008 report. That may be a little less confusing to use:
http://www.funcom.com/funcom/frontend/files/CONTENT/Funcom_Q208_report.pdf
I see the assholes are trying to find problems with that report as usual. Looks healthy to me, but what would i know? My guild is extremely active, my server is too, I cant complain.
Nice one funcom, imo thats a solid platform to continue building from, and just shows that the whiners and haters are those that end up on these pathetic boards.
Knights who say Ni website!
415,000 on 30 JUNE shows nothing of the current state of the game
Where has a 'fanboy' proclaimed victory over 415,000 subscribers?
This is just a shot in the dark, but maybe they used the end of June in their quarterly report, because that's when the quarter ends? That's how you do things in financial reporting. Read any other companies report and see if they post any numbers for the next quarter in it.