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Funcom Looks Forward To Secret World Amid Q3 Losses

Funcom said Tuesday sales fell 68.5 percent during the fiscal third quarter, as earnings for the Age of Conan studio swung to a $9.6 million loss -- but it has high hopes for the upcoming MMO Secret World.
Funcom said Tuesday its sales fell 68.5 percent during the fiscal third quarter, as earnings for the Age of Conan studio swung to a loss compared to the same quarter a year ago. The Norwegian-headquartered company attributed the lower revenues to a tough comparison to Q3 2008, when the PC MMORPG Age of Conan launched. Age of Conan subscriptions are currently Funcom's main source of revenue. The firm also said that revenues for the game Anarchy Online are "slowly declining," which contributed to the decrease in revenues. Revenues were $5.6 million for the quarter ended September 30, 2009, down from $18.07 million from Q3 2008. Funcom said the quarterly revenues fell into its previously guided range of $5 to $6 million. Losses for the quarter were $9.59 million compared to a profit of $2.16 million a year ago. Funcom said earnings were negatively affected by "market cost, participation on exhibitions and provision for lease of offices." An impairment charge against Age of Conan also negatively impacted earnings. The company said it increased sales and marketing of Age of Conan during the quarter, which Funcom said led to an increase in customer levels and higher in-game activity. But the launch of competing products -- such as NCsoft's Aion and Atari's Champions Online -- "led to a subsequent decrease in customer levels." During Q3, Funcom revealed the first Age of Conan expansion, Rise of the Godslayer, which is slated to launch in the first half of 2010. Funcom said it will "continue to improve and tweak" its products in order to "extend subscriber life time." The studio also teamed up with Neowiz in Korea, where the operator is ramping up Age of Conan launch efforts. Funcom has also revealed the upcoming MMORPG The Secret World, which the studio claims is "tracking better than Age of Conan, Warhammer Online, Aion and others at similar stage of development." There are currently 90 people working on the project, Funcom said. Going forward, Funcom is also focusing on the free-to-play games market. Currently in prototyping are free-to-play games in the tactics, sci-fi, extreme sports, licensed brand game and database game genres. The company said its free-to-play games would cost $1-$3 million to make, and would take a team of 10-20 people to create a game in 12-18 months. One free-to-play Funcom game is the kid-targeted action RPG Pets vs. Monsters, which would take on online games such as Runescape, Dofus and Habbo. The game is currently in beta and is slated for a release in the first half of 2010. Overall, Funcom expects fiscal Q4 to bring in $4-5 million in sales.

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