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Funcom Financial Report Summary

Jon Wood Posted:
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Yesterday, Norwegian Game Developer Funcom released their Financial Report for Q1 2009. Funcom is the company responsible for Anarchy Online, Age of Conan and the recently announced MMO, The Secret World.

There was speculation amongst some MMO followers that this document would read more like an obituary for the company than a financial statement. This, as it turns out, does not seem to be the case. While it is difficult to argue against the fact that companies will always put the most positive spin on any public document, it is clear that on some level, things are looking up for Funcom.

Some Money Stuff

Funcom has provided a comparison of the company's financials for Q1 2008 and Q1 2009. It is important to note when discussing these numbers, that Age of Conan had not yet launched in Q1 of 2008. Logically, the Q1 2009 numbers were significantly higher than their counterparts from a year before. Funcom says as much by attributing the increase in company revenue to "subscription revenues and revenues from box sales from the Age of Conan game."

More telling perhaps than the Q1 comparisons is a chart that shows quarterly revenues from Q2 2008 until Q1 2009. The game launched in Q2 of 2008, but revenue was at its peak in Q3 with a significant drop (slightly more than 50%) in Q4 followed by a small nearly 11% drop between Q4 2008 and Q1 2009.

The statement tells readers that the company's financial position is strong and has even risen slightly between the end of 2008 and March 31st of 2009 and summarizes by saying that they have a "Stable and solid financial situation with close to 40 MUSD in Cash."

Age of Conan

Speculation that Funcom was currently running Age of Conan on a skeleton crew was put to rest when the company announced that they currently have 120 people excluding customer service, working on Age of Conan.


Conan Screenshots

The financial report does not disclose specific subscriber numbers as some may have hoped, but does give an indication of the subscriber base's relative status. According to the report, Age of Conan received an increase in new customers in Q1 of 2009, and notes that the number of new customers per month has been "significantly higher in 2009 than in late 2008 with early trial marketing as one contributor."

The words that Funcom uses to describe their customer base? Solid and stable. It is not clear at this time whether the report considers free trial participants to be customers or whether the free trial is partially responsible for obtaining more paying customers.

In terms of keeping subscribers, Funcom has had what they call "positive indications on subscriber retention" and mentions that customer loyalty has improved by way of an increase in the average subscription period for players.

"People tend to stay with the game longer," said Funcom Director of Communications Erling Ellingson, "the average subscription time is now longer. We've also seen a significant increase of activity in the game. We hope this can be attributed to the fact that the game has improved significantly over the past year, with more content, more features, and more technical stability."

When asked what factors he believes have contributed to the game's improved customer retention he responded that "One of the main reasons is the great work the development team has been doing on Age of Conan since we launched. They have managed to churn out numerous updates that have made significant improvements to the game. We've added tons of content, we've added new gameplay features, and the technical stability and frame rate has improved vastly. The best way for us to keep our current players and get new ones, is to simply make the game better. And that's what we've been doing."

What's Next for Age of Conan?

The dev team's focus over the next six months will cover updates in areas such as: an improved item system, expanded guild and social features, expanded content including three new dungeons and the House of Crom and of course graphical improvements.

The report also mentions that developers plan to broaden the distribution of the game's free trial and shrink the size of the trial's client as a long download can be a deterrent to some potential players.

"The download size of the client is currently eight gigabytes," said Ellingson in clarification. "You initially download an eleven megabyte installer, and then you download the remaining data through our updater. It's a very smooth process, that is working very well, but we are always looking at ways to make the download smaller to make it even easier to get into the game."

The Secret World

Funcom was pleased with the response to The Secret World's official unveiling at GDC this year, citing "positive feedback" from journalists and gamers and a reveal video that the studio estimates was viewed by 1 million potential customers.

The report also delivers some new information on the game's development status, making special mention of a number of game systems that are being worked on: combat (early stages), character creation, cut-scenes, mission system (early stages), the first underground playfield, 11 game areas in various stages of completion, and existing content development tools.

According to the report the development team currently working on The Secret World is only slightly smaller than Age of Conan's, clocking in with 100 employees.

"We will definitely reveal more on The Secret World this year," said Ellingson when questioned about the game. "What we will reveal and how we choose to do it is something that we want to keep under wraps for now, but we will certainly be spilling the secrets again this year!"


Jon Wood