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Can Funcom Blame Falling Numbers on F2P Competition?

Editorial By Neilie Johnson on March 09, 2014

This week, mega-publisher Funcom announced its profits were down considerably, and one of its explanations for the drop was heavy competition among free-to-play MMOs. While there's certainly a lot of noise out there these days, with new consoles, mobile games and a new MMO appearing every five minutes, can the company really say competition is the reason it's not doing better?

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In a report to investors, (the entire report can be read here) Funcom listed a number of reasons for the company's downturn, among them "previously recorded deferred billings from TSW as well as weaker sales following increased competition as reported in 3Q13," "impairment charges on TSW and the underlying technology," and "investment in LEGO Minifigures Online and continuing investment in proprietary Dreamworld platform." It also cited the "increased competitive trend" among large-scale MMOs as being responsible for the lower numbers.

Behind-the-scenes business machinations aside, Funcom's idea to use the rationalization that the market is increasingly competitive feels like an attempt to divert attention from its real issues: that its titles, Age of Conan and The Secret World while unique, have always had their work cut out for them, not being as polished or heavily marketed as other MMOs. Oh, and how about the fact that Funcom's currently under investigation by Okokrim, the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (geez, what a mouthful), for insider trading? The company is of course, innocent until proven guilty, but...yikes.

The truth is, these days things aren't easy for game developers of any stripe, not just Funcom. Competition is heavy in every genre, and many publishers are struggling to stay afloat; they join Funcom in pointing to free-to-play as the source of their woes. As a result, a lot of them are chasing the magical micro-transaction (many to the detriment of their games), but can a monetization trend on its own be held responsible for a game company's failure or success? Every industry has trends, but embracing them doesn't mean the future of a new venture is assured. Gourmet cupcakes have been huge for some time now, but new businesses selling them go under every day, generally because of a combination of bad service, poor marketing and sub-standard product. Why should games be any different?

Perhaps I'm an optimist, but my view is that trends come and go and no matter how many MMOs exist, there will always be room for another one as long as it's good. Even with tons of competition, there are developers out there who have succeeded in making the free-to-play model work for them, mainly by making great games. Better still, the cleverest ones have made it work for players. They've realized the key to being heard above the noise is making outstanding games; the monetization is secondary.

Not that making great (especially free-to-play) games is easy. The majority of game makers, both indie and AAA,  achieve only mediocrity. As a critic and obsessive gamer, I can't count the number of horrible free-to-play games I've played. The free-to-play model seems to have given license to anyone with a little coding know-how and consequently, websites and app stores are packed with crappy free-to-play titles. Rather than embracing the free-to-play thing as more casual game makers have, MMO publishers have had free-to-play forced upon them. Their uneasy relationship with free-to-play isn't that surprising considering MMOs are infinitely more costly and difficult to make, and only a few short years ago the words “free” coupled with "MMO" automatically meant poor quality. I'm sure MMO publishers wonder every day how in blazes "free" came to represent the genre's standard.

In any case, though MMOs still seem less comfortable with the free-to-play model than more casual genres, and as such, are prone to off-putting mistakes, (LOTRO I'm looking at you) I still don't buy where Funcom blames competition for its dropping numbers. Why not point instead to Age of Conan's poor launch or slow climb toward you know, content? Or how about The Secret World's starting bugginess and multiplayer-clunkiness? Are they suggesting that if only there weren't better games out there, their numbers would be higher? It's a well-known fact that games only have one chance to make a good impression. If they blow it, well then free-to-play or not, better games will take their place.

Besides, real as it is, competition is just a drop in Funcom's bucket. The company's facing a combination of complex dilemmas but to its credit, it's putting a brave face on them and moving full steam ahead with LEGO Minifigures Online, a game that's embracing free-to-play from the get-go. Obviously, Funcom's banking on the popularity of the family-friendly LEGO license to carry the day on this one, and who knows? It just might.

Among other things, the free-to-play storm seems to have taken Funcom by surprise, and the next few years will show if the company succeeds in weathering it. Essential though, to survival throughout the game industry's shift is whether or not they can be honest with themselves about why their titles fail (or at least, fail to reach their full potential). At the moment, Funcom appears to be deceiving itself--or at least, hoping to deceive us. Relax, Funcom, no one's saying you should let competition make you run around like a headless chicken; but perhaps it should motivate you to spend more time making exceptional games instead of excuses.

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