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Age of Conan: Funcom CFO Resigns
Szark
News ManagerMember Posts: 4,420
Funcom's CFO Olav Sandnes has resigned after the company reported large losses in its fourth quarter financial results.
Funcom has reported its financial results for the fourth quarter, revealing an operating loss of USD 23.3 million, caused by a depreciation of USD 22.8 million due to the lagging performance of Age of Conan.
The poor performance is compounded by the announcement that the company's chief financial officer, Olav Sandnes, has resigned from the position.
"Funcom is a company with a substantial potential based on a unique combination of skill sets in a fast growing global market. I wish Trond Aas and the rest of the organisation all the best in realising the full potential of the company," commented Sandnes.
Read more here.
Comments
<grabs bucket of popcorn>
This just proves to me canceling my account was the right move.
The game had way to much of a linear feel to it.
Not to mention I will not invest my time or money on a sinking ship.
economic recession aside, who didnt see this coming? i'm positive we'll see more.
i do hope they pull through this downturn. It would be sad to see a large company like Funcom (and most likely a becon of hope for emerging north European game developers) crash and have hundreds of people loose their jobs.
MMO wish list:
-Changeable worlds
-Solid non level based game
-Sharks with lasers attached to their heads
CFO quitting isn't whats interesting in the article.
"While Funcom's cash position remains robust at USD 39.4 million, the company reported a full-year net loss of USD 33.8 million. According to estimates by DnB NOR Markets, subscriber levels for Age of Conan are below 100,000, reports E24. "
A NET loss of 33.8m. At this rate the company will be bankrupt by the end of this year.
Article goes on to say that the subscription peek was at 400k, now below 100k as the game suffers from "shorter than average subscription period."
I wish you AoC fans well, the financial message on the walls say REDRUM to FUNCOM.
I don't know why you bother to even write anything. Why don't you just draw an Arrow and aim it at your Forum Picture. Doing that would negate anyone having to even read anything you write, the point would be made.
Moving past Negative Nancy now...
Goodluck to you, Funcom... I personally thank you for trying to entertain us. AoC's coming along great too, hopefully it'll make some of this lost money back.
Read more here.
Why is it every time you report "news" here, it's always after there have been tons of threads about it days before? I'm starting to think your "news" comes from scanning the forums here, waiting a day or two ( or three ), and then comingout with the "news".
If they survive until the end of the year is going to be a miracle!! AOC had a enormous potential. If the launch were smooth, with no crashes , and the game were complete they would be insane rich. Maybe the other companies look at this mess and try to launch a complete product, because if they dont...well... look at FUNCOM now...
IMO it was another case of a game releasing with graphic requirements far above what the average user had or was willing to upgrade to. In game issues failed to keep the player base. The world is in the great recession and MMO's are in their first depression....nothing around worth playing and especially not worth paying for.
23m came from the fourth quarter! At this rate they wont last another 4 months.
Something has to give. They are either going to have to sell AoC and try to get their other projects off the ground or sell the other projects and lay off the staff that is working on them.
With the subs under 100k (estimates are at 70k), funcom cannot keep both projects going and stay in business. They simply dont have the capitol. I bet they keep AoC and sell whatever virtual property they have in the other projects to keep AoC alive.
Good riddens. I hope AoC closes soon. Another lame theme park game bites the dust.
Bleh, old news. Szark, you really need to get up-to-date with your info, this was already reported. And to be honest, whats the point of these news articles? We are not investors, sorry to say, but are 50 bucks is only that. News to me is the game closing down, not some financial officer leaving the company. And since the game is still running, this is only another news thread people will flame to death. So from the bottom of my heart, I thank you Szark, for not only being late on your news reporting, but also contributing to flame wars. When will this site ever get back to just talking about games, and not financial crap! I know, I know, some people do care about this crap. God forbid stock falls down a dollar in WoW or AoC right, your items might get deleted!
I specially want to thank MMORPG.COM for telling the actual facts about the state of the company. Thats what MMO gamers need to know. The Funcom version in the 4th Q report and presentation sounded nice - but it still tried everything to hide the fact that company had a huge loss. But thats Funcom for you - PR through and through
Now they are forming their PR team for next MMO. Now its up to the custimors of Funcom to let everyone know what the company stands for. And yes... that includes their games never breaking NDA. All need to know that.
This has nothing to do with Funcom,the whole economy is losing everywhere.Banks and i mean many banks closed,many homes lost,if big important institutions cannot survive right now,what makes anyone think a gaming outfit has any better chance?This is a time of luck,lucky people will survive others will not.Heck the big 3 auto makers are in big trouble,does that mean they make bad cars?
Even the guys making money ,there profits are way down,about the only lucky dude was that guy who made that pile of junk game for the iphone lmao,made 600k in 2 months.Geesh the big guys spend years developing a game,then are lucky to make anything and this guy makes 600k on game that is worth about 5 bucks to make lol....pure luck.It is like every single fad,needs a push ,then it snowballs on itself,friends tell friends then tons more an then everyone is paying to play something so pathetic,but they do it because everryone else is.
Never forget 3 mile Island and never trust a government official or company spokesman.
This has nothing to do with Funcom,the whole economy is losing everywhere.Banks and i mean many banks closed,many homes lost,if big important institutions cannot survive right now,what makes anyone think a gaming outfit has any better chance?This is a time of luck,lucky people will survive others will not.Heck the big 3 auto makers are in big trouble,does that mean they make bad cars?
Even the guys making money ,there profits are way down,about the only lucky dude was that guy who made that pile of junk game for the iphone lmao,made 600k in 2 months.Geesh the big guys spend years developing a game,then are lucky to make anything and this guy makes 600k on game that is worth about 5 bucks to make lol....pure luck.It is like every single fad,needs a push ,then it snowballs on itself,friends tell friends then tons more an then everyone is paying to play something so pathetic,but they do it because everryone else is.
So, Funcom's current situation is Mr.Greenspan's fault, not their own?
Btw, nice example of the car industry. The biggest failing car industry atm is the american car companies. I hope you know that the entire rest of the world has refused to buy these cars for several years now?
Those big mighty SUV's didnt appeal to the world market at all.
Sold like hot chockolate though....in USA. Must have been the "patriotic" reason.
So we now go into the closing debate on Funcom....like i predicted, with the explanation of Funcom's horrible numbers are all because of the financial crisis.
Remember GG measured FC to steak and WoW to McDonalds? McDonalds now has a bigger value than the UK government.
While GG now might be found at some MC, i hope EE and Craig still can afford their steaks.
i wanted to buy a pizza last week but then spend the money on 1 month age of conan sub
hmm...
I was reading the original article, they had 700.000 subscribers at one time, and they are now down to less than 100.000.
Apparently the reason because AoC is failing is because subscriptions were short lived.
It doesn't take a genious to understand that once you hit level 80 (in any MMO) people get bored, so unless you are WoW which can offer tons of end game, players will move to something else.
When developers will understand that fast leveling is bad for the game and for their pocket.
Slow leveling is good for the game because the player actually has time to play all the content and take it easy so they can enjoy the game instead of rushing to lvl 80, like a marathon.
Same for WAR, EQ2, LOTRO and so on, lots of low to medium content constantly skipped just to get to level cap as fast as possible, then once you get there you got no other goal to achieve and give up.
Developers should be smarter.
Indeed it doesn't. I too wonder about that. lvl 80 is max in AoC.
As I've said in other posts, I re-subbed today (ducks) I had a 71 reaver who I managed to frustratingly grind to 72 this afternoon. I bimbled off to Thunder River and lo, new (green) quests were there for me. Excellent, I grabbed one called 'Lunn the Warmonger'...a piddling lvl 65 group quest.
This gets better.
Off I toddled, and further down the road I spied 'Lunn'. targetted, ran in, and POOF. Dead. One hit. I was.
A little bit later I spotted an LFG for 'Lunn the Warmonger', in a flash I joined 2 other players, a lvl 67 and a might lvl 80. Afore long we were a full six man group and we set out looking for this roving Lunn the Warmonger.
We found him.
I should mention that we were now mentored, ie- I was now an '80' with 65-70 armour, weps etc (which apparently doesn't matter in AoC as stats are not a big factor) and the others were also mentored. So here we are, 6 of us, 2 'real' lvl 80s and 4 made-up lvl 80s. In we go.
One-hitted I was.
One-hitted was another.
The other 4 tried hard, but couldn't get ol' Lunn down to less than maybe 60% before they too fell.
Lunn is a lvl 60 group quest. He'd wiped a lvl '80' in but a couple of minutes.
I'll be back to get Lunn tomorrow, the day after, day after that. until he falls. This is one thing AoC does offer players...A good kicking....And revenge.
Wow is next to Fall....cough, cough, hack, weeze....wth? Theya re still here, damnit! Ok, the Next WOW Killer is.....
23m came from the fourth quarter! At this rate they wont last another 4 months.
In accounting, a net loss does not necessarily (and usually does not) correspond to a loss of cash over the same period. Hence, Funcom's financial situation could be stronger than one might think simply by reading that one line from the press release.
A depreciation expense (in accounting) is typically a cost that has already been incurred for an asset. Rules (and principles) of accrual-based accounting allow companies to allocate that cost over time. So next year, Funcom will probably report additional depreciation expenses related to AoC; those expenses will represent costs they've already incurred, not costs they incurred during the reporting period.
This does not, of course, mean that circumstances are even close to rosy. It's just that it's easy for laymen to misunderstand the language used in financial press releases.
23m came from the fourth quarter! At this rate they wont last another 4 months.
In accounting, a net loss does not necessarily (and usually does not) correspond to a loss of cash over the same period. Hence, Funcom's financial situation could be stronger than one might think simply by reading that one line from the press release.
A depreciation expense (in accounting) is typically a cost that has already been incurred for an asset. Rules (and principles) of accrual-based accounting allow companies to allocate that cost over time. So next year, Funcom will probably report additional depreciation expenses related to AoC; those expenses will represent costs they've already incurred, not costs they incurred during the reporting period.
This does not, of course, mean that circumstances are even close to rosy. It's just that it's easy for laymen to misunderstand the language used in financial press releases.
Accounting dictionary: Net loss - The bottom line of the income statement when revenues and gains are less than the aggregate amount of cost of goods sold, operating expenses, losses, and income taxes (if the company is a regular corporation).
Of coruse there is an expensive that Funcom is taking, the operation of the game, new game develop, paying back any costs accured during development, etc. The fact is the net loss means that the company did not make enough revenue to cover these expenses.
Also you quickly jump to acural-based accounting, how do you know if this is cash or accural or whatever is allowed in that country. It doesn't matter if the company is taking into account deprectiated expenses. The fact remains that if they took no the debt (i.e. the devlopment for the code, the code rights, royalties, etc) and cannot make enough money in teh fiscal year to cover that debt.
In the end, when the market isn't buying your product and your losing more money than you can generate you are operationally bankrupt. Now can they turn this around, theroetcially yes, practically I highly doubt it without a huge overhaul.
What's this? Their dynamic, carpal tunnel inducing combat interface isn't enough to keep people playing their game? Big surprise there, heh.
With PvE raiding, it has never been a question of being "good enough". I play games to have fun, not to be a simpering toady sitting through hour after hour of mind numbing boredom and fawning over a guild master in the hopes that he will condescend to reward me with shiny bits of loot. But in games where those people get the highest progression, anyone who doesn't do that will just be a moving target for them and I'll be damned if I'm going to pay money for the privilege. - Neanderthal
23m came from the fourth quarter! At this rate they wont last another 4 months.
In accounting, a net loss does not necessarily (and usually does not) correspond to a loss of cash over the same period. Hence, Funcom's financial situation could be stronger than one might think simply by reading that one line from the press release.
A depreciation expense (in accounting) is typically a cost that has already been incurred for an asset. Rules (and principles) of accrual-based accounting allow companies to allocate that cost over time. So next year, Funcom will probably report additional depreciation expenses related to AoC; those expenses will represent costs they've already incurred, not costs they incurred during the reporting period.
This does not, of course, mean that circumstances are even close to rosy. It's just that it's easy for laymen to misunderstand the language used in financial press releases.
If you just took a loss equal to your cash on hand, it's well beyond over and you've known for a long time coming. Can't say it's a surprise, but I do feel sorry for people who enjoyed the game and soon won't be able to play. Never played it myself.
/rant
Which is why I said:
I believe you have some fundamental misunderstandings about financial reporting, misunderstandings that are very common among the general public. These misunderstandings were evident in your assumption that Funcom's reported net loss corresponded to a similar loss of cash over the same time period. I was gently attempting to provide some information that might enlighten you.
Accrual-based accounting is so ubiquitous that one can reasonably assume that any corporation that is publicly reporting financial results is using some variation of accrual-based accounting. The precise standards vary from country to country, but the standards used are irrelevant in considering whether your assumption is reasonable.
Funcom's report of depreciation expenses are indeed pertinent, and precisely the evidence one would need to assume that their net loss did not correspond to a similar loss of cash. In accrual-based accounting, a depreciation expense is an allocation of a cost already incurred; it is simply a way of matching the cost with the time during which the asset generates revenue.
Now once again, I am not saying that Funcom's financial results are "good." I am simply saying that a reported net loss does not necessarily correspond to a similar loss of cash, and that a company's cash flows are often quite different from their reported earnings.
I am starting to think AoC is going to bankrupt Funcom before its all over.