Funcom reported in a stock notice the 6th of July
that the company intended to update the market on The
Secret World today. This update is based on current
sales, press and gamer feedback and early indicators
of subscription levels following the free 30 days
game-time included in the game client.
Development since launch
Following the launch of The Secret World on the 3rd
of July 2012, Funcom's share price has decreased
significantly. The company attributes this mostly to
the aggregate review score, the "Metascore", for the
game at MetaCritic (www.metacritic.com) together with
other public sources for tracking the performance of
While there are very positive reviews, there are as
well mixed or average reviews from various press
outlets, giving an aggregated score for The Secret
World of 72 out of 100, which is to be considered
low, and not in line with the positive feedback
received during the beta phases from both press and
players. Funcom is of course disappointed with
achieving such a Metascore. A game like The Secret
World, which is not based on a well-known brand, is
normally dependent on positive press reviews to
achieve successful initial sales, in addition - but
not limited - to other factors like word of mouth.
Scenarios for The Secret World for the first 12
months following launch
Funcom has on several occasions presented two
financial scenarios for the first 12 months following
launch of the game; please refer to page 17 in the 1Q
2012 presentation *). Funcom does not consider it
likely that either of them will be met.
To improve sales going forward, Funcom is currently
enhancing distribution by launching the game on the
Steam platform as well as focusing on key areas for
improvement of the game and on-going activities on
content updates, sales initiatives and communication.
The effect of all these initiatives together with
other factors impacting sales are difficult to
predict, but based on the available early data, one
scenario is that sales for the first 12 months
following launch will be less than half of what was
presented in the "Conan-like" scenario. It should be
noted that the sales amount in the "Conan-like"
scenario is significantly higher than for the
game "Age of Conan", due to the assumption of better
retention implemented in the scenario. Also it should
be noted that the company has significantly lower
operational cost for The Secret World than what was
the case for Age of Conan.
As less initial sales than expected is considered an
indicator of impairment, the company is currently
evaluating the need for recognizing an impairment
loss for the game in the profit and loss statement.
Funcom is pleased to see that gamer satisfaction is
high, with user score of 8.4 out of 10 and higher on
www.metacritic.com and other sites like mmorpg.com.
This is in line with the beta surveys and beta
players' feedback that the company received prior to
launch. The company considers this a positive
indicator of high customer satisfaction, and a solid
foundation to build on the positive and engaged
community Funcom has established with The Secret
First indication of churn is more positive than for
Age of Conan, and the in-game store is performing as
expected. The add-on packs are performing better than
expected. Also higher than expected sales are going
directly through the online download stores like EA's
Origin and Funcom's own storefront, generating more
profitable sales for the company.
A possible scenario going forward is that the game
will sell less than both of the two above mentioned
scenarios the first 12 months following launch, but
with high customer satisfaction, it will generate a
more stable subscriber base than the game Age of
Conan. Over time, this will enable Funcom to retain
more customers and generate higher revenue.
Immediate cost-adjustment initiatives
Funcom is currently implementing several cost-
adjustment initiatives due to the expected lower
initial revenues from The Secret World to secure
future positive cash flows.
The next update of The Secret World will be given in
the 2Q 2012 report to be published 28th August.
Badhoevedorp, The Netherlands, 10th August, 2012
This information is subject of the disclosure
requirements acc. to §5-12 of vphl (Norwegian
Securities Trading Act)
*) Funcom 1Q 2012 presentation: