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1Q 09 update from Olev Sandnes, Funcom CFO. And yes, the results are not good.
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I don't think Funcom will be dead anytime soon. The company has operated on a loss for years and that is not a problem, due to some of the financial backing they have. Their cash reserve is good at the moment, according to the statement and they have enough money to continue work on AoC as well as finish TSW and other games in development.
However, your statements are wrong in 2 respects:
- Funcom estimates 6 to 8 million revenue in Q1 2009. there has to be at least a ROUGH estimate of their Poland and Russia revenue included in that. Poland and Russia was announced a while ago, and so it HAS to be in the forcast for Q1 2009.
- as you mention the Korean enterprise has already paid 50% up front - this is a KNOWN figure and therefor HAS to be in the Q1 2009 forecast.
Considering this, and then looking at the fact that Funcom only forecasts about 6 to 8 million for Q1 2009 (with increased revenue from Anarchy Online due to new booster pack), it will mean that subscription numbers for AoC will be lower than Q4 2008, where revenue was 8.7 million USD (without money from Korea, Poland and Russia).
You are right though - you enjoy the game and that IS the most important thing to you. As it should be.
I think AoC will survive, i don't think Darkfall will have any impact at all - while it will appeal to some PvP fantatics, those PvP fantatics will have left AoC a long time ago, so i doubt there will be many people leaving when Darkfall opens up. Other than that, there is nothing else coming out that's a major competitor, so it really is down to the Funcom team to generate more content now and keep people interested in the game. If they retain upwards of 100k subscribers, the game will be profitable at some point (same as AO was).
And the horizon looks weak for a major MMO Fantasy. Aion will not pop until the fall, and anything else on the list has either a small following (Darkfall) or is being looked at suspiciously (TCoS...I mean...where the heck is this game?)
Thanks
I don't think Funcom will be dead anytime soon. The company has operated on a loss for years and that is not a problem, due to some of the financial backing they have. Their cash reserve is good at the moment, according to the statement and they have enough money to continue work on AoC as well as finish TSW and other games in development.
However, your statements are wrong in 2 respects:
- Funcom estimates 6 to 8 million revenue in Q1 2009. there has to be at least a ROUGH estimate of their Poland and Russia revenue included in that. Poland and Russia was announced a while ago, and so it HAS to be in the forcast for Q1 2009.
- as you mention the Korean enterprise has already paid 50% up front - this is a KNOWN figure and therefor HAS to be in the Q1 2009 forecast.
Considering this, and then looking at the fact that Funcom only forecasts about 6 to 8 million for Q1 2009 (with increased revenue from Anarchy Online due to new booster pack), it will mean that subscription numbers for AoC will be lower than Q4 2008, where revenue was 8.7 million USD (without money from Korea, Poland and Russia).
You are right though - you enjoy the game and that IS the most important thing to you. As it should be.
I think AoC will survive, i don't think Darkfall will have any impact at all - while it will appeal to some PvP fantatics, those PvP fantatics will have left AoC a long time ago, so i doubt there will be many people leaving when Darkfall opens up. Other than that, there is nothing else coming out that's a major competitor, so it really is down to the Funcom team to generate more content now and keep people interested in the game. If they retain upwards of 100k subscribers, the game will be profitable at some point (same as AO was).
You said you don't think Funcom is in trouble because they have been operating at a loss for the past few years. That is true, but what you failed to mention is that it paid it's bills the last few years by borrowing money against the release of AOC. That option is no longer available. It is highly unlikely that Funcom will be able to borrow more money for two reasons. First, they now have a history of two failed games (finanically)...banks will be very unlikely to think they will hit a homerun on their next game. Secondly, banks are strapped right now, much more than they were when Funcom was borrowing to make AOC.
Age of Conan is not a financial failure yet. The game has not even been out for a year. Is it underperforming? Certainly, no doubt about that - and everyone knows why that is (hype, launching before it was ready, massive bugs and cut/unfinished features).
But after the server merges, operating cost of the game will be reduced drastically and revenue from the game will be similar to what it was (maybe slightly lower), so as long as the game keeps a certain amount of subscribers it will eventually break even and then make a profit.
Look at AO. It took years to break even and make a profit, but it now DOES make a profit - which means all the debt and costs it accumulated have been paid off. Age of Conan can do the same - the less subcribers it has, the longer it will take, but it can (and i believe it will) break even and make a profit.
It is a massive shame that the game turned out the way it did and that not more people are playing it, but as much as people hate the game and hate some people behind the game, saying it is going to be a fincial failure is wrong.
It will certainly not be good news for Funcom and securing financing in these times will be harder, but it's not necessarily banks where the money for Funcom is coming from either.
AOC is down about 33M right now. I agree that the game may become profitable on a quarterly basis pretty soon, but it will never earn back the amount it cost to make... and it will ONLY become profitable on a quarterly basis if it continues to cut developers. In the financial report, they said their overall employees dropped from 318 to 302, but they also said TSW staff increased... this means the staff of AOC has been cut quite a bit... this means less content being added, buggier and at a slower pace.
Basically you are right.. they hope AOC will become like AO..... profitable on a quarterly basis, but never earning back the price it took to make the game.
If I spend 50,000 to start a restaurant and I make a profit of 100 per year.... is that good? Yeah, you are 'making' 100 per year, but you are never going to make back the 50,000 you spent to build the restaurant.
well i guess we have to disagree there. I think Age of Conan will make back the money it has cost to make
but i think that's fair enough - we don't have to agree on this
Interesting turn of events...
http://www.mmorpg.com/discussion2.cfm/post/2660203/thread/224601
CEO buys up stocks!
What I posted was not illegal...it was available to the markets when I posted it. If Olav posted it early (or mistook his fiduciary duty) that is not my fault.
However, he has resigned...perhaps there was some bad blood and some internal fighting? Shrug.
Anyways any detractors are obviously a bit silent right now as my information was bang on and indeed the news is not good. They can try and make it sound as good as they want, but in the end they are at a playing population of 120k or less as of now. Because there were at least 20k worth of subscribers who had signed up in July 08 who are obviously not going to come back.
Lit
I just read the report. It seems my prognostication regarding future revenue was 100% accurate (literally). Hate to say it but Funcom double speak has become easy to parse.
My subscription model worked perfectly. We can say with some confidence that AoC had 110-115k active players as of Oct-Dec last year and that that bleed has stopped substantially. Ultimately though the game is still anticipated to lose subscribers this next quarter.
In other words, Age of Conan is looking at less than 100k by the time of the next presentation. Full stop.
Lit
What I posted was not illegal...it was available to the markets when I posted it. If Olav posted it early (or mistook his fiduciary duty) that is not my fault.
However, he has resigned...perhaps there was some bad blood and some internal fighting? Shrug.
Anyways any detractors are obviously a bit silent right now as my information was bang on and indeed the news is not good. They can try and make it sound as good as they want, but in the end they are at a playing population of 120k or less as of now. Because there were at least 20k worth of subscribers who had signed up in July 08 who are obviously not going to come back.
Lit
What would 7M be in subscribers. I'm looking at it as about a 25% decrease...so around 90-100k subscribers.
I think we can all forget about the 300k number that Orion and Conza were throwing around as their 'insider' number.
I'm not sure what to make of Poland/Russia thing. While they launched a server in each of those regions, players from those regions were already playing the game on other servers. WOW did a similar thing a couple years ago, and I think it was more of a 'migration' than a 'launch'.
Also remember that TTH reported that 70% of Funcom staff, mostly from the customer service and quality assurance departments, were let go last year.
Spoils of War - The quickest way of ending a war is to lose it.
Ok - the 4th Q spin is out. Now lets change it into real numbers - (without DX10 !)
Funcom lost 30 million US dollars in the 4th quarter of 2008 (source)
Funcom wrote off 19 million US dollars DIRECTLY based on low return revenues of AOC. (source) In other words they have given up hoping that the game can turn in direct profit.
Big part of the debts acumulated during production and development of AOC have been written off and the assets of the company have been lowered by 22.8 million USD.
Total assest of the company is at the end of 2008 was 74 million dollars compared to 100 million dollars in end of 2007.
What it means to the future of AOC as a game should be pretty obvious to all.
But if not then lets put forward few points.
a) There is no mention of AOC beeing updated with Dx10 version in the future
b) there is no mention of Xbox version of the game beeing released in the short term future
c) There is no detailed information given about the future development of the game. This includes Expansion of the game.
d) 2009 will be focused on getting a working trial version of AOC on the market. This has been detailed in 4 phases that will focus on reducing the size of the trial client.
So basicly - If you love AOC - I hope you love it enough to play the same thing for the next 12 months. Unless you want to try out the resized trial client ofc
Basicly AOC is going the same route of Vanguard atm. Try to keep ppl paying and get the game to trial with minimum cost.
I want to make sure to highlight these two, and note...he is probably right.
Looking at all the marketing material, why was DX10 not included. Also, all the discussions on Xbox 360 development seemed to disappear. Of course this has not been on the previous reports either (except the first).
All I know is the game will probably move to an AO payment scheme eventually. It looks like the focus is off AoC for now, and more development is moving forward on Secret World. Thanks to the country tax write offs for future developments, it makes sense to leave the current products alone and get cracking on new stuff to get more government funds.
Also makes me wonder about the AO engine update...could that be the focus? It does seem weird that nothing was mentioned in any reports about AO development, yet they just released an addon just last week.
In so many words, we do not know anything, as all indications is it could happen or it could not..
I know, we could speculate some more though...tell ya what...you guys go ahead, and I am gonna go play AoC.
Cheers
I want to make sure to highlight these two, and note...he is probably right.
Looking at all the marketing material, why was DX10 not included. Also, all the discussions on Xbox 360 development seemed to disappear. Of course this has not been on the previous reports either (except the first).
Well, dang, there I go. Have to correct myself...ARGH
An interview released today with Craig Morrison
http://www.tentonhammer.com/node/64434
"DX10 is currently has been on the test server for a while now and it is getting close. Obviously it makes sense to not put it out for technical and safety reasons for the stability of patching it. We decided to not put it out with the main update but it will go to the live servers at some point during this series of updates. That's the plan we've communicated for a while and it is still looking good. We are at the stage now of just sort of trying to fine tune the experience for the players so it is smooth when they get to use it. It's very easy with new rendering technology to make things look pretty, but the key is to make it look pretty and run smoothly. "
Plus, the code is in for switching to DX10 in the main client, so looks like a patch and a switch to turn it on will do it.
This should bring in some very brave souls who wish to test their hardware...
AoC already paid most of it's production cost back in box sales, which were massive considering the state of the game. You'd be surprised how cheap an MMO is to run once initial development is complete. It means less content will be added at a slower pace. I doesn't mean it will be buggier.
simply not true. Funcom made between 15-20% of total box sales, which amounted to 8-10M which was almost entirely added in the 2nd quarter. It is a total myth that you can take the $50 box price and multiply it by 800,000 boxes and that funcom made almost 40M dollars from box sales. Retailers and publishers take most of the box sales.
That brings up a good point, if they lost 25 or 30 million this year with the massive box sales AoC had. Now that the games population is in the basement, how the hell are they going to survive the coming year? Trying to develop Secret World and while they are keeping AoC on life support and get it launched in 2 or 3 other countries while developing a version for the 360.
All I can say is they have a full plate and I would not want to be in their shoes.
I miss DAoC
Well just returned to AoC today so you can add 1 more subscription to their Q1 2009, as if I give a monkeys brass balls about figures and quarters, last time I checked this was a gaming forum not the Financial Times and before somone uses this post as some kind of Fanboi comment in defense of Funcom it isn't, if the game hasn't changed as much as I been reading them I'l cancel my account again and take my business elsewhere, I'm in this to have fun, not crunch bloody numbers all day to prove who or who isn't making money.
That brings up a good point, if they lost 25 or 30 million this year with the massive box sales AoC had. Now that the games population is in the basement, how the hell are they going to survive the coming year? Trying to develop Secret World and while they are keeping AoC on life support and get it launched in 2 or 3 other countries while developing a version for the 360.
All I can say is they have a full plate and I would not want to be in their shoes.
If you're going to fall, 'Fall big. Consider this:
If Funcom are going to be bankrupt Q4 2009 and is able to keep the spin up (They are pretty good with SPIN btw.), then why not gamle anything you have. "Relased it everywhere", even in Africa, they must have some high end machines there like Russia and Poland, *LOL*. Try to program/emulate it to every console there is. Just in hope that Funcom might will gain some few ekstra subs.
Spoils of War - The quickest way of ending a war is to lose it.
Ok first up. I'm a graphic artist at Funcom in Oslo and have worked on AoC.
Many of you seem to spend an unhealthy inordinant amount of time fixated with this game - creating and disseminating negative speculation about the state of affairs at Funcom - much of it so wide of the mark I might add. Since much of it comes from the 'usual suspects' and is the essentially the same assertions repeated ad nauseum the venom of the comments has tended to lose their initial impact all those months ago, especially when they often no longer reflect the state of the game now. Well the capacity for people to fixate on a single issue, and the internet's ability to facilitate this amazes me. At times the comments have left me feeling sad but I've never felt compelled to comment until now.
Regarding my own contribution to the game there's much I'm proud of and also much I'd certainly do differently if I had the chance. Equally, I'd readily admit that there were many good elements that whole team can be proud of, and a fair number of 'not-so-great' critical desicisions made during the course of development and ultimately the launch, and the immediate post-launch period of the game - decisions within management, marketing and other teams for instance that someone like me may have a personal opinion about but had no control or influence over their outcome.
What I can say is that the team is very commited to listening to the players, to addressing the issues and deficiencies - and I'm sure any fair-minded person here would agree that the game has improved leaps and bounds and will continue to do so. Clearly there are clear business imperatives for Funcm to improve the game but as developers we are very much motivated by pride and above all else, for the sake of those who pay and play. I personally take a lot of pride in my work even if I'm not always happy with the outcome - but then I learn form my mistakes (I hope) and I strive to improve. Many of the team have invested a lot into this game. Some have young familes they've spend days, weeks, and months barely seeing, others have come from the far side of the globe and have worked on the game for years, far from families and home.
I'm not saying any of this to garner any sympathy - I'm certainly not asking for it. After all, we who work here choose to pursue this line of work with all it's vagrancies and uncertainties. I'm simply saying this in the hope that people will engage something other than their angry internet forum persona when anonymously posting. Whatever your beef with AoC or Funcom, it's pretty disturbing and in poor taste to gleefully wish for Funcom's demise along with the loss of my job among many others. Why, especially given these difficult times would you want me to lose my job? Like many people I go to work, I do the best I can, and often work extra hours to get the job done to my satisfaction and in the hope that someone might stop and notice what I've made. If they also then all the better. And like many of you I also have personal and financial commitments.
Why too would you want the demise of a game simply because you don't like it? There are people that do and surely, it's ok for people to like different things - different strokes. While it's absolutely fair to post your criticisms and critiques, surely it's taking it too far when you feel that people should stop playing simply because you say so? I'm sure, behind the anonymity of your internet personas, that you're far better than all of this.
Back to working on material for upcoming patches and the expansion. I won't say anymore than that.
Peace.
EDIT spelling
car analogy since using funcom as an example doesnt seem to work;
you make a car, a new car. its a good car, something to be proud of in fact, state of art in some aspects.
but not a perfect car. you still didnt cover some features of it, well it doesnt have a functioning breaking system, windshields doent seem to work also.
for some reason (which we dont know, and dont really care actually) you decide to sell it the way it is. So your pr guys comes up tells us how awesome it is. tells us that it has 6 wheels and because of that grips better. he even shows us some videos.
well, we buy it. it is a good car, no doubt. but its not whats promised to us. we ask why breaks not working, your guy hangs up the phone. we ask windshields not working your guy tells us "it works but not when you want it, see there is a wiring problem" we ask him where is the extra 2 wheels, he shows us the baggage "here, see 2 extra, when your tire is flat with these it will grip better"
please just watch the first minute of this video and tell me he doesnt know he has no dx10 at that time.
www.tentonhammer.com/node/31496
i dont want anyone to lose their job, left homeless etc. AoC is something to be proud of, its presentation on the other hand is something to be ashamed of. dont hate us because we're pissed, hate the people who put the bad name to the game you had invested your hard work.
I need more vespene gas.
Whoever wrote that, hater or fanboy, is very sick btw...
Instead of going back to work you might want to go grab your local paper and search the "help wanted" section.
atmogat, your post is all about garnering sympathy. Unfortunately, I don't have any for you or your company. I'm sorry that you may lose your job and I don't wish any ill will towards you personally but the company you work for should be held accountable for those bad decisions you alluded to. I've yet to see any kind of sincere apology from the mouth pieces over there. In fact I see Erling continually attempt to re-write the facts of the game's disastrous launch and post launch.
Stealing my money to put bread on your table is unethical anyway you look at it. That is what your company is. An unethical business willing to abuse and cheat paying customers. I wouldn't be half as angry if you guys didn't already rip me off with Anarchy Online. You fooled me twice, and I will be damned if I'm going to keep quiet about that.
So the reality of the situation is your game was not ready for launch but you made the decision to move forward any way. You made your bed and now you have to lie in it. If your bankruptcy can be held up as a just example of consumer rights then I can't wait to see it proven.
When you rush a poorly developed game out for launch once, it's an unfortunate turn of events caused by outside pressures. When you do it twice it's a business practice. I have no sympathy for thieves.
I will never forget, I will never forgive.
Really? Does this mean Funcom doesn't have rules that prohibit you from doing PR's job? Not that I'm suggesting you're lying.
I'm not a nice person, I done smacked you twice and that is before I started cursing ;p Though I have been following AoC since release; it's been exciting and satisfied by business sense of what an under performing and unethical company can accomplish through marketing. As much of a fan of Machiavellian ethics - "the ends justify the means." the self induced anguish of Funcom was easy to see since it's release and not much has changed on the business side, if anything the spin of deception has gotten worse.
I'm a capitalist so put out or get out as opposed to socialism, thought my new president seems to be a socialist as was the last one. I bet I can predict FC's next moves......layoffs of developers! The numbers do not add up they can't develop and launch two games with current operating costs. Followed by a buy back free play campaign that will "LOSE" Funcom more working capital.
Funcom has reviewed all of its assets relevant for
impairment testing. This process has led to
recognition of an impairment loss of around
3,1 MUSD for Age of Conan due to a decrease in
numbers of subscribers for the game. Funcom Q4 10 report.
http://forums.ageofconan.com/showpost.php?p=2926123&postcount=7 500 mains/alts on Tyranny in past 30 days - instead of merge servers let's open a new PvP server, again! http://forums-eu.ageofconan.com/showthread.php?t=106427