Funcom CFO resigns as full-year losses hit $33.8 million

Executive exits as Age of Conan creator suffers $23 million fourth-quarter shortfall.

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One look at Funcom's year-end fiscal results, and it would be easy to think a raging barbarian had taken a barbed club to the Norwegian game company's profit genie. In reporting its earnings results today, Funcom revealed revenues of $39.9 million for the full year, thanks to sales of its massively multiplayer online role-playing game Age of Conan, which launched in May. However, Funcom also saw earnings after taxes dip to losses of $33.8 million in 2008, from a $2.16 million gain in 2007.

At primary fault for Funcom's plunging income was a $22.8 million impairment charge that the game maker suffered during its fourth fiscal quarter. In Funcom's words, the bulk of the charge was "to reflect the impairment of intangible assets, mainly on the Age of Conan asset to reflect lower level of revenues than anticipated at the time of capitalization."

During the October-December period, Funcom said revenues amounted to $8.66 million, though the aforementioned charge pushed its earnings after taxes to a loss of $30.8 million. Despite the disappointing results, the publisher said it remains in a secure cash position, with $39.3 million in the bank through December 31.

Along with announcing its dubious earnings today, Funcom said that it would be parting ways with its current chief financial officer, Olav Sandnes. The executive, who signed on with Funcom in 2006, will remain in his position until the company appoints a new CFO. According to Funcom, Sandnes plans to "take up a new position in a different industry."

Looking to the future, Funcom remains optimistic in light of its uneven 2008 performance, thanks to a heartening stabilization in Age of Conan's player base. While Funcom did not provide an update on Age of Conan's subscription levels (which stood at 415,000 as of August), it did say that the MMOG's player base has stabilized in 2009. The game maker also noted that average subscription periods have improved in the New Year, with player activity also on the rise.

Funcom notes, however, that Age of Conan's prospects for future growth remain "relatively uncertain," despite continued investment in the game. Excluding customer service, 120 people are currently at work on the MMOG, and Funcom has a number of in-game enhancements slated to be rolled out throughout the course of 2009. In a bid to lure in new players, the company also revealed plans to introduce a free trial period in the coming months. No mention was made of the status of the Xbox 360 version of the game.

In January, Funcom announced plans to consolidate Age of Conan's user base, slashing its total server count from 49 to 18. The MMOG also saw the departure of game director Gaute Godager, who resigned from his position after expressing irreconcilable "dissatisfaction" over portions of the game.

Discussion

24 comments
dreddmartyr
dreddmartyr

is there any new news on when age of conan is coming to xbox 360??

Kilta_ffxi
Kilta_ffxi

I don't think AOC will last... the community site has been up for a year and ALL the links are still under the bate version of the game. ie server info.... you see "may change after beta" they need to seriously update the site with current info of the game and also release curent info of when and or if this game is being realeased to 360. It was said may of 09 which has come and pass

runstalker
runstalker

I'm back in Warhammer. With the free server transfers they've been doing to wrangle-up players together, you can find some really active servers with lots of RvR at each tier, Scenarios rollin' all night.

Duckshot
Duckshot

I canceled my subscription. Still waiting for DX10.

Mr_Member
Mr_Member

A full scale expansion pack is scheduled for Q4 of this year to reward existing players. In addition, distributor issues may lose some of it's impact as Funcom moves to digital distribution of the game throughout the year. The CEO, Mr. Aas, told me they prefer to have a direct relation to the customer and thereby get a bigger cut of the revenues themselves. The CFO's resignation is not dramatic as he's "just not a gamer" and wants to work with traditional industires. He told me this himself. Most likely new employers are oil, gas or energy industry.

Hekynn
Hekynn

OUCH well glad I'm gonna cancel my account in June and pay for my EQ2 account which I am using game cards for now :(

Mystoksor
Mystoksor

with the likelihood if eidos being acquired by square, I wonder if they'll want to keep AoC

jrabbit99
jrabbit99

I can't wait to try the free trial :)

Inconnux
Inconnux

Yet another MMO that was RELEASED BEFORE IT WAS READY. I am amazed that people can't figure this one out. I will NOT pay for a bugfest game with features promised and not delivered. Generally MMO's have one shot to get it right, if they don't release a relatively bug free game with actual content on release, it will fail... There is always another game that is coming along in development that is being hyped... 48 to 18 servers says it all

Mush_Mouth
Mush_Mouth

@ansek: you just described Matrix Online's problem, too. Anyways, I'd bet money they're going to axe the 360 version.

ansek
ansek

Sadly, those weak revenues are not a surprise and somewhat deserved as FC really took the money and ran with AoC. So much content & game functionality promised, but not delivered. Note that I played from early access through December, so I tried, but FC just could not get it right... LESSON: Release too early on empty promises = MMO suicide

BearishSun
BearishSun

Funcom isn't a bad company, they just made some bad choices with Age of Conan. I love their other games such as Anarchy Online and Dreamfall. Also they have another MMO in development, I hope that one turns out well. And maybe they can even fix up AoC.

ColdfireTrilogy
ColdfireTrilogy

Good thing the player base has stabilized that's always the big factor in the success of an MMO game. You can hype initial player base all year long but when it comes down to it, sustained revenue is where MMOs make their $$$.

combatsoldier
combatsoldier

They made the right choice here. I hope they prevail and recoup there losses cause over all they are a really great company. Just had a bad chief.

samiup
samiup

good move, by acknowledging its own mistakes in hiring the wrong people (people who launched a bug full title), Funcom has made the first step into a potentially prosperous future. now i think they are doing ok, AoC have been fixed as far as technical bugs, a couple of patches more and they can have the best MMORPG on the market.

Un4givingAsault
Un4givingAsault

firedrakes, sounds like your a buisness major... BAHHH

Visiondj1
Visiondj1

Failcom earned this. They over-hyped AoC, promised content that magically wasn't there at release, and took to long to realize end-game was important. They also seem to have internal disagreements killing them from the inside. Looks like there's an open grave next to Ensemble studios...

firedrakes
firedrakes

one other issue is like they said cfo job is to make sure you gain money. not loss it

JS0123456789
JS0123456789

Maybe if they had waited and released it on the 360 and PC simultaneously it would have helped them. They could have ironed out some of the bugs before launch and picked up some revenue from 360 sales. Instead they released it on the pc, saying it'll be coming to the 360 in six months or so, it sputtered out of the gate on the PC and now we may never see this game on the 360.

Skullcandy
Skullcandy

Age of Conan deserves the 8.5, it's an excellent game. The problem comes from the fact that it's one more MMO released before it was fully ready. The majority of people jump into an MMO expecting it to run smoothly and bug free, and if the developers had concerns other than their profit margin more MMO's would be ready at launch. Instead, people log in, find an unfinished, buggy game, and cancel their account as they can't justify paying for a frustrating experience. If Age of Conan had been released as 'free to play' and instead focused improving performance for the million or so people that initially spent $50 for the game, their customer base could only have grown. Eventually someone will catch on. Either that or the MMO genre will die out completely due to lack of faith by the consumers.

DontEatCream
DontEatCream

The MMORPG market is a tough nut to crack. If you don't make a product that's better than WoW, then you ain't gonna see tremendous sales. Yes, Age of Conan is different from WoW, but many casual gamers see it as just another fantasy sword-and-axe MMORPG. When it's compared to WoW, a game with 11.5 million players, 2 expansions, and god knows how many features, AoC just can't compare.

DukeEdwardI
DukeEdwardI

i had high hopes for age of conan, i was planning on it replacing WoW. Unfortunately, that was not to be. Still sad that FunCom is losing money and the people there are at risk of losing their jobs during this crappy time.

CH1CK3NCH4SER
CH1CK3NCH4SER

Hey didn't Gamespot give Age of Conan an 8.5? Didn't they also predict that it would be one of the best MMO's of all time? Then again, they also gave MGS4 a 10 and Halo Wars 6.5...