I know this is relatively old news by Internet standards but Cryptic announced that it had 1 million characters created on Champions Online. I’m sorry. “characters created”?!? As anyone knows, just about everyone eventually creates at least one more character. Sure they might not create it that early after the release of a game. But, then again, this is a game where the best part of it is creating that character.

Knowing that, it makes that statistic (and whoever their marketing person at Cryptic is) look stupid. It’s like when Funcom went nuts about its subscriber count when they were barely two months out from release. Now, how’s that subscriber count, Funcom? Well, they won’t say because they’re afraid to screw their stock prices. Funny that. You’d think that if they had a good number to throw back the conversation would’ve definitely included some numbers or better wording like “100k? That’s ridiculously low. I can’t go into details but I can tell you it’s well above that number.”

If you look at their quarterly numbers, you can guesstimate a range at least of potential subscriber numbers. First, you have to remember that Funcom has published a couple of adventure games (The Longest Journey)–which might be the inspiration for the upcoming Secret World MMO–and is still (yes, still) running Anarchy Online.

But, let’s take it to extremes for a sec. Their Q1 2009 revenue was $7.7 million. If we just take that and assume that’s 100% subscriber fees (no other games, no box sales), you’re looking at a max of 513k subscribers (assuming everyone’s paying the $14.99 subscriber fee).

Now, none of Funcom’s games were on the radar for retail PC game sales in January of 2009 (which I’ll assume continues into March). Also, you can grab a box for $9.99 or less these days so it’s doubtful box sales amount to much.

So, let’s ignore box sales revenue as negligible (remember, Eidos published the boxed game so they’re retaining some of those pennies from box sales).

Anarchy Online subs are in there but they’re using a tiered model for subscriptions (free for basic content, $5/mo for two of the expansions and $19.95/mo for the full content). However, if you look at Q1 2008′s revenue it’s at $928k. Q1 2008 was before AoC was launched and while AO was still running. And, since it’s doubtful AO saw a dramatic increase in revenue since then, we’ll just take that $928k out of the revenue figure.

That still leaves $6.7 million on the books for AoC. There’s also a note about $800k in royalties that are being applied in Q1 2009 but were carried over from 2008.  That brings us to a final figure of $5.9 million. There’s the potential that some of this revenue is deferred revenue resulting from the recognition of pre-paid subscriptions (quarterly, yearly or lifetime subs) but in the interests of simplicity, let’s just make that an asterisk on the final sub count.

That gives us a final sub count of 398k. Or a general range of 400-500k. Pretty sizable for an MMO that’s “dying” by some accounts.

Still, I can’t help but think that’s high for an MMO that gained initial popularity but had a slew of problems that took over a year to fix. The fact that they had their free weekend to entice people in tells me they’re not happy with their numbers either. If the 100k number that’s been thrown around is anywhere near true, their revenue numbers would be closer to $2 million.

So, unless they’re cooking their books some how or doing something a bit shady like recognizing box sales as deferred revenue over time, it looks like they’re holding on to a sizable subscriber base. Mind you, there is probably a portion of that revenue that represents “inertia” subscriptions like mine that I only recently canceled despite not playing the game for almost a year.  It’s the gym model: you lock in that monthly/recurring subscription in the hopes that the subscriber will hold on for a while before they realize they’re wasting $14.99 a month on a game they aren’t playing.

And, by the way, I realize I’ve been working on Q1 numbers despite Q2 numbers being available. All this does, though, is just show the trend and adjust the current subscriber numbers. Assuming $1.6 million is purely subscriber revenue, you’re talking about a 100k drop in subscribers. Ouch. Now, our estimates are at 300-400k subscribers.

In addition, you can see a significant drop in EBITA which is due to increased operating expenses. This is most likely from them ramping up The Secret World MMO development and marketing. Bad timing though. Your revenue is decreasing due to subscriber losses and while The Secret World sounds intriguing it’s likely to be a niche MMO like all your others.

Oh, and don’t forget that WoW Cataclysm is going to be coming out sometime in 2010 around the time your new MMO is coming out. Fubar sounds like the best way to describe it.

Good luck!

g afk

I don’t get it. Funcom shells out for a medium sized (read: nice sized) booth to plop a couple TVs showing gameplay for AoC, a teaser trailer for The Secret World and a statue or two and a couple of “surveys” that tell you what society you would belong to if you were playing the Secret World.

Huh? Why shell out the money? No wonder Funcom always seems to be failing and screwing up left and right despite being MMO developers for the better part of a decade. They even had a couple of employees sitting in the booth just talking amongst themselves and briefly chatting with anyone that came up to them. It’s such a poor management decision and the booth was so empty it looked pathetic.

Funcom needs to spend less time pretending they’re a professional MMO developer and spend more time thinking about what they do. If they keep this up, each new MMO they announce will be met with laughter.

g afk

Still, they’re working on a new title (very secretive which means it’s probably not that innovative since they’re afraid someone will steal it and develop it before they do) and it never hurts to give game devs jobs.

The question I have is, why the hell is that investor willing to invest their funds in Funcom so they can setup a new studio in Montreal? I mean, look at their track record. They’re well know for The Longest Journey which is niche and for Anarchy Online and AoC, both fringe/niche MMOs. They almost went bankrupt putting out AoC…you really think this time it’ll be any different? Especially if this time around it’s their own IP.

Ugh…more slosh for the MMO pit.

g afk

The scary thing? The company’s started working on a new MMO, The Secret World. I’m sorry guys but if you take your track record with Anarchy Online and this one, what’s the point? You’re gonna take a few years to get that new one out the door, it’ll cost you everything you’ve got, it’ll be more buggy than a rotting corpse and you’ll end up firing your CFO again. Maybe you should look at what you’re doing WRONG first and make it right? Just a thought…

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Gamasutra posted a news article about the Funcom CFO’s resignation in light of massive losses in the last quarter. Despite posting a 400k+ subscriber number a while back, the article touches on it but you also know that that number of regular subscribers is down substantially.

I guess the big question is, could they have realized how fubar their game was during development? Maybe being hidden away in Norway isn’t the best way to keep in touch with the bulk of the gamers out there. Considering the fact that European game developers have a track record of not giving a shit about their customer base after a game’s release, is it suprising?

I didn’t beta test the game (unless you count the play time post launch) so I can’t tell you if everything was last minute which might explain why no one told them or they never realized how broken the game was. Innovations aside, you can’t toss out the basics just because you’ve got some cool features (or what you consider to be cool features). It’s a hard lesson to be learned, unfortunately, but I guess it’s what happens when you don’t both rush a game and listen to the wrong people. Look at Vanguard. I’m surprised it’s still around at this point. Built for the hardest of hard core types and squeezed out way too early (because they needed the funds)…there’s no problem with building for the hard core MMOGer but just be ready to realize you’re going to cater to a small percentage of the market and thus will only make so much money…no pot of gold here.

Anyway, I expect Funcom to announce a shutdown of the game within six months. There’s no way they can lose that much money and consider it sustainable for much longer.

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