Funcom quarterly report reveals Age of Conan performance

by Adrian Bott Aug 15th 2008 at 12:30PM

Filed under: Fantasy, Age of Conan, MMO industry

We covered the NCsoft quarterly report two days ago; now it's Funcom's turn. Many gamers will be keenly interested to know what the truth of Age of Conan's performance really is, what with nay-sayers taking delight in talking it down and representatives and supporters talking it up. The game is either thriving, or dying on its backside. People are leaving in droves; whole guilds are untouched and continue to play on busy servers. AoC sucks; AoC rules. What do the figures say?

As it turns out, we have to distinguish between the report presentation - a colorful package that includes lots of celebratory marketing woo-woo material - and the financial report itself. If one looks at the report presentation as opposed to the financial report, it appears the game sold over 800,000 copies to date and currently (that is, 'per August 14') has 415,000 customers. That many subscribers would certainly be enough to keep the game alive and healthy. But there's a big twist around the corner.

As our readers may remember, Funcom were boasting around 400,000 subscribers back in May. Going by Funcom's own official figures, the game's population is growing slightly rather than shrinking..

We must make the caveat here that there are no server metrics included, making it impossible to assess the performance of any given server over any other. We thus cannot tell whether PvP servers are faring better than PvE, or whether the Culture PvP servers are the disappointment they are claimed to be by some players. Nor, more importantly, are Age of Conan's subscribers categorized by region. We only have the single customer figure to work with. It is therefore possible that Age of Conan could have performed weakly in the US, and strongly in Europe; or vice versa.

Nor, it seems, will we be seeing any server metrics in future; we may even be unable to see subscription numbers. We are only getting them this time because it's the first quarter after AoC's launch:

Funcom will, as previously stated, for marketing and competitive reasons in the future not on a regular basis disclose information about subscriber numbers and also not provide detailed financial guidance. Due to Q208 being the first quarter following the introduction of the Age of Conan game, the Company has decided to provide such information.

Furthermore, there's a possible ambiguity here concerning exactly what period the 415,000 subscribers relates to, which may throw our analysis above off completely. As stated, '415,000 customers per August 14' is the tally from the report presentation. The financial report itself (as opposed to the report presentation) which concerns events up to June 30 of 2008, states 'The game currently has more than 415,000 customers.'

Funcom thus seem to be claiming identical subscriber figures for June 30 and August 14, which strikes us as odd. One possibility is that the report presentation simply means 'per the Q2 2008 report of August 14', but this is merely our own attempt to make sense of what we see in front of us. We do note that if the figure of 415,000 customers really did pertain to August 14, it would contradict Funcom's own decision (see above) not to provide information about subscriber numbers other than for Q2 2008, which (as any investor knows) ends in June.

In related news, Funcom stock has dropped this morning; this is not the first time. We have also received word that the CEO of Funcom has sold 400,000 of his own shares, which represents 18.7% of his outstanding shares and exercisable options.

Some very mixed signals, then, are coming out of Funcom today. If the game really does have 415,000 subscribers right now, that's a healthy enough figure. However, confidence could be higher, the lack of solid figures doesn't help, and the CEO could have picked a far better time to sell off nearly a fifth of his own stock.

Tags: age-of-conan, aoc, funcom, quarterly, quarterly reports, QuarterlyReports

Reader Comments (Page 1 of 2)

Hades said on 1:07PM 8-15-2008

415 Customers means accounts that are still active, but not how many are still paying. Many of the PVP servers have had 75% - 100% of entire guilds canceling in August, the server forums are barren, instances are barren, and if you follow a lot of the "guild list" links you'll see a ton of them are preparing for Warhammer or WoW.

Unless AOC is a big hit in new markets, I think the next quarterly report is going to show the real effect of how many people have bailed on the game within the first 6 months. I don't know what servers have high populations anymore, but most are low to medium at best.

george said on 1:12PM 8-15-2008

Funcom has worst quarterly losses in a company's history...
http://forums.ageofconan.com/showthread.php?t=156638

george said on 1:15PM 8-15-2008

Check this out also.

Funcom CEO sells 18.7% of his shares
http://forums.ageofconan.com/showthread.php?t=156764

Anyone else scared to even play a game while it is on the merge of dying? I sure am...

Adronicus said on 1:20PM 8-15-2008

When an insider dumps stock following a financial report, the indication is certainly bearish for the company.

I'd also suggest it is common for an MMO to release general numbers guidance to investors. Failure to do so cannot be anything other than negative subscriber growth. When an MMO is growing, we see tons of marketing materials about the numbers. When it is shrinking, we don't see those numbers.

Steve_S said on 1:37PM 8-15-2008

My subscription finishes August 20th, haven't been in the game for two weeks now.

I bet you won't see numbers for September and November. Or especially after WAR and Wrath come out.

crsh said on 2:26PM 8-15-2008

Same here, which is incidently also the end of any 3-month subscription after the first "free" 30 days of buying the game at launch - it'd be interesting to see how many folks sub up for a 3-month package instead of a monthly one, perhaps indicating september will be when sub levels drop even lower.

Slogo said on 2:04PM 8-15-2008

It must be twisting the words to make it better than it is.

I vote for 415k subscribers in Q2.

There's no way NO WAY the game has an increasing population. The NA servers are barren wastelands now.

rinks said on 3:26PM 8-15-2008

Warhammer seems to have the best bet for success in the future (as much as a game can going against WoW). I've been really impressed by what I've seen, and much more eager to play that then I was with Conan.

BiggDawg said on 3:25PM 8-15-2008

If it is a Q2 financial report why would it have information from Q3? The report was published in August but the information is from April to June.

Drifter said on 4:58PM 8-15-2008

Age of Conan will become a repeat of Hellgate: London in the series of failed games.

Tasogare said on 6:09PM 8-15-2008

What are you talking about? They had stellar initial sales but that doesn't mean anything. THey're being extremely sketchy with the sub numbers that they're releasing and those numbers are STILL bad when compared to game box sales. Couple this with overwhelming player dissatisfaction and the fact that the CEO of Funcom sold 18% of his stock...

Something's up and it's not boding well for them. It's kind of crazy to accuse people of being Chicken Little without looking at the facts.

Tasogare said on 6:09PM 8-15-2008

TwistedBishop said on 7:04PM 8-15-2008

I'll assume you're addressing me and replied to Drifter by mistake.

To your points:

-They have released very precise active numbers. 415k of people either paying or in their free month.

-Retaining 50% of your box sales is bad? Vanguard retained 16%. Do you assume that WoW has only sold 11 milliion retail copies?

-"Overwhelming player dissastisfaction"? I don't know. Go to any currently running MMO's message board and see how many complaints you find. What I mainly see around here is a lot of FUD and trolling.

-The CEO did sell some of his stock. Executives often do. Why is this cause for alarm now? Oh, right, it's an AoC thread.

saiya said on 2:04AM 8-16-2008

Anyone played this game? any comments on why it is failing?

TwistedBishop said on 5:18PM 8-15-2008

So Funcom launches AoC. It has record sales, has an active subscriber base higher than any MMO out there that isn't named WoW, meets its own guidance for the quarter that takes into account launch-related expenses...and people are still claiming the sky is falling?

That's the internet for you.

sebban said on 3:04AM 8-16-2008

AoC is failing atm because they launched the game before it was ready. The gameplay itself is solid, the "active melee" is alot of fun IMO, but the game launched with too many bugs, too little content and imbalanced classes.

My sub ended last july, thy have fixed most of the bugs that annoyed me since then, now they just need to add some more content to the lvl 45+ range and they have a solid fun game.

I think I'll go back in 5-6 months and see how the game has evolved.

Dan said on 3:08AM 8-16-2008

They are just trying to keep their investors in the dark. Obviously, they don't play the game.

Rylah said on 2:33PM 11-10-2008

I's simple:

1) A retention-rate of 52% for a large scale mmo like AoC is horrendous.

2) If you take the accumulated losses of FC over the last years you have a quite exact number on the development cost of AoC: roughly 20 Mio. Dollar. Probably a bit more but let's take a lower range figure.

3) In spite of 1.2 million copies sold to the retailers with an (low) estimated revenue of 10$ per box they made 12 mio USD in revenue on launch alone. Compared to the record loss in Q2 of about 7 mio USD that means the launch and preparation was almost 19 mio USD in cost.

4) Regardless if the figure 415K pertains to end of june or mid of august:

Subs started around 23rd of may or a bit later for EA customers. So up to 30th of june only the customers who actually cancelled within their first "free" month went inactive until june 30th. It is debatable if EA customers who cancelled in the free month are already counted, since I am not sure if their subs ended on 1st or 2nd of july only. That would mean that roughly half of the customers cancelled in the first month already. When the figure should mean august 14th. It doesn't really look better. Since then only people who gave 1 other month and then cancelled would be included in the losses. But not the ones with 3 month sub neither the ones with a 60 day gamecard, since their subs ALL end after August 14th.

And since many guilds reported to have almost collectively cancelled now that means the impact of cancellations will hit end of august for gamecards and 1 month subs and end of september for 3 month subs.

5) At least in germany AoC fell out of the better chart controls (Media control) quite some weeks ago, only a one vendor chart (saturn) kept it in the top 10 until last week when it dropped out. In comparison both WoW battlechest and BC are still in the top 10 for both charts. So new customer aquisition is bad also so short after launch.

6) Combining the high debts and high running cost to a fast dwindling playerbase the break even for AoC is postponed VERY far. The debt service for the around 20 mio alone amounts to about 1 mio / month or about 100K subs (transfer costs and service cost already deducted).

This really doesn't look good.

TwistedBishop said on 3:38PM 8-17-2008

Funcom has no debt. They had unprofitable quarters, but they never took out loans (unlike Hellgate, who put their IPs up as collateral). Funcom has generated 60 million alone by going public and through private placement. Of which, they still have 36 million in cash. They're quite flush.

AoC is not going to sell like WoW forever. No one ever claimed it would. What it has done is sell exceptionally well for an MMO. The simple truth is, WoW is an aberration among the genre. Nothing sold like it before, or since. It's active subscriber base alone is orders of magnitude higher than anything else out there. You see this in console games, where things like GTA or Halo sell 10-15 million copies, but they don't stop the rest of the industry from considering 1 million sales as a tremendous success.

To your concern over their playerbase size as impacting competition: I played Everquest back in the day, which had around a 450k playerbase. There were many huge guilds on each server, numbering close to 200 players, and the competition was intense. Funcom likely does need to condense down their severs, though, since a lot of space is being wasted at the moment.

You really need to have some context before you complain that AoC has a fast-dwindling playerbase. Do you have anything to compare it to? Even WoW, which again is the aberration of the genre, doesn't retain as a player every copy it sells. Anyone who reads the PC 10 Top Sales chart every month can see WoW has a permanent spot high on the list. How many sales is that? And then how many sales is that per year? And THEN consider the chart is only for North American sales, while WoW's largest chunk of the playerbase comes from Asia.

Tom-AZ said on 5:40AM 8-17-2008

The game is dead. No point in even denying it anymore.

At this point, I am so pissed over the lies and deception by Funcom, that I want them to fail. I want the whole company to go bottom up; as a lesson to future gaming companies.

Don't lie to your customers.