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Funcom: Poor Metacritc damaged Secret World performance

Developer making "cost-adjustment initiatives" as MMO underperforms

Funcom, developer and publisher of The Secret World, has acknowledged the game's poor performance - indicating that a lower than expected Metacritic rating has adversely affected revenues.

The game's averaged review score is 72 per cent, significantly lower than Funcom expected following largely positive feedback from beta testers and early previews. Since launching on July 3, 2012, The Secret World has been under-performing in terms of audience, monetisation and customer retention, with the company share price falling rapidly as a result.

In an investor note, Funcom has cited the importance of a high Metacritic to a new IP as a key factor in this lower-than-expected result.

"Following the launch of The Secret World on the 3rd of July 2012, Funcom's share price has decreased significantly," the note reads. "The company attributes this mostly to the aggregate review score, the "Metascore", for the game at Metacritic together with other public sources for tracking the performance of games.

"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."

Previous financial targets for the title have been missed by significant margins, forcing the company to re-evaluate its expectations.

In response, Funcom is attempting to open new distribution channels via Steam and focus on improving areas highlighted as in need of attention by users and reviews.

"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," the report continues.

"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."

Despite the apparently bleak picture, Funcom is confident that the title can be turned to profit, which is pressingly necessary after the rocky performance of the company's previous Age of Conan.

"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 World.

"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."

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Dan Pearson