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Edit #2: Okay, 3 private messages later, I get it. People want to know what this means for subscription numbers. Funcom was very specific with their retention model: Their TSW retention scenario over 1 year was 35-40%. Their AoC retention number was 22.5% year over year. They made it perfectly clear that TSW is currently in between this.
Therefore, without additional sales, they are projecting (in essence) something between 25-30% retention, or of those first 200,000 subscribers (or so): 50,000-60,000 subscriptions by July 1, 2013. Of course, they are going to try and bring in new subscribers to replace the churn. I have never been privy to actual churn numbers, but let's just follow the numbers and simply pro-rate it based on medians:
Median Scenario #1: 212,500 initial purchasers/subscribers: Retention Rate 30% year after year: Expected churn: 12,000 subscribers per month:
MOST LIKELY SUBSCRIPTION NUMBER FOR TSW AT THIS TIME: 175,000 SUBSCRIBERS
Beyond what is obvious to anyone from reading their presentation, my review of the financial report (and previous ones) has shown the following:
1) Sales: Unless they are using different metrics, sales are between 200,001-224,999. Funcom had previously used 25k increments as the "cutoff" for listing in previous disclosure (see earlier Funcom reports);
2) Future of the Company: The memo is out without expressly saying it: No more large scale MMOs. The Secret World will be the last.
3) Future Games: The only thing that succeeded for The Secret World was the in-game revenue margins. They are averaging around $5.00 per subscriber;
4) AoC and AO: Bleeding income slowly (as to be expected);
5) Beyond the impairment charge: Funcom before the employee massacre and before TSW's failure was needing $12.4 million dollars to stay afloat per quarter
6) How Funcom values its assets: AoC, TSW, AO, Fashion Week, Pets vs. Monsters, all other IPs: 19 million dollars. Translation? Before the impairment charge, some buffoon thought that TSW was worth 45-50 million dollars. LOL.
7) Debt: 18 million dollars in shorter term loans, 14 million dollars in other assorted packaged debt, of which no doubt the remaining 4.4 million in convertible bonds will be cashed in sometime soon;
8) Cash Crunch: AFTER issuing 10.1 million dollars in shares Q2/2012 and AFTER converting 8.258 million dollars of bonds, Funcom is left with 16.928 million dollars in cash. Meaning that without issuing shares and without converting high interest bonds, Funcom would have been out of money sometime in May.
9) Asset valuation part two: Apparently Pets vs. Monsters, the "cash-flow" positive monster that it is, managed to still have its asset value reduced by 1 million dollars. In other words, they slashed its value by over 70%.
10) Further risks: Apparently one of their "credit facilities", a.k.a. line of credit, requires that the main holding bank for Funcom most hold 2.5 million USD. Since this is essentially tapped, that 2.5 million USD cannot be used to fund the company, reducing free cash to 14.428 million dollars (other restrictions not disclosed likely apply at other institutions in Norway, etc.)
11) F2P failure: Outside Ao, AoC, and TSW, F2P barely making $150,000.00 per month.
Conclusion: Given AoC's lack of change in impairment and the consistent revenues brought in both by AO and AoC, and given Funcom's pretty strict guidance when it came to in-game cash shop margins, Q4-2012 (sorry, not Q3-2012) will provide a VERY accurate subscription base for TSW. It is also safe to say that unless Funcom completely strips TSW to its barebones and reduces staff even further, Funcom will go bankrupt next year. Even 150 staff (worst case scenario given their guidance of approximately 50% layoffs), given their bloated compensation packages on the BoD (see year end report) and sense of financial entitlement, will blow through the available 20-21 million dollars in remaining cash very fast.
Edit #1: Sorry, I mixed up Bloodline Champions with Pets vs. Monsters. Some brainiac at Funcom decided to give Pets vs. Monsters an asset value over 1 million dollars before it even started turning cash flow positive (and note, cash flow positive for a quarter does not include impairment charges, development costs, or future development costs). WTF Funcom rofl.