Archive for August 15, 2008

Funcom financials

August 15, 2008 2 comments

Funcom has released the financial report for the second quarter of 2008. Given that the by far most common searches that WordPress reports for my blog is related to Age of Conan population, my guess is that there might one or two that are concerned with those numbers.

Funcom earn a bit over 13 million USD in their second quarter, about 11.5 million more than previous quarter. This likely includes income from the 800000 copies sold and possibly some subscription fees. They reportedly have about 415000 customers. A customer either someone who has bought the game and is still on their 30 first days or paid the subscription fee after the first 30 days.

So about half of the buyers of the game decided they would not continue to pay for the game. But even if all of the 11.5 million USD is from sold games, that only means about 14.40 USD per game on average. That does not sound like a large share of the box price.

Still, this was about 1 million USD higher than their financial guidance, so they expected to sell slightly less. From that point of view the numbers are good.

But how much did it cost them? The operating expenses for the same period are almost 15 million USD, which is more than they earned. So even if they earned a bunch of money, they spent even more. Part of that may be the 3 MMOs they are developing (The Secret World + 2 casual MMOs). Since they do not release any details per game it may be difficult to get an idea of how much they earn from a particular game. However the operating expenses for all of 2007 was a bit more than 12 million dollars, so a fairly large chunk of those recent expenses in the last quarter only are probably tied to Age of Conan.

The projected income for the next quarter is estimated to be between 16 and 20 million USD. Not all of that is Age of Conan, although most of it. Subscription prices are different for different regions so it is not easy to translate to subscription numbers – it will mainly be guesswork.

Reducing the numbers based on Anarcy Online estimates and do some split between Us and Euro fees my guess is that they estimate to roughly keep the subscription numbers they have in the report, perhaps slightly lower. If they manage to do that then the game in terms of subscription numbers is a quite big success.

Is it a financial success though? It should be, but their high operating expenses is a reason for concern there. Judging from the info contained in their financial report presentation, it seems that they think that the future for good profit may be in the casual games space and perhaps not as much in large scale traditional MMOs.

That seems to be were they want to go and I think that is the right way for them.

Categories: Age of Conan