In connection with the intent to launch a voluntary offer by Tencent Cloud Europe B.V. announced today, 22 January 2020, the Management Board of Funcom SE (the “Company“) has decided to give an update on several matters that have been discussed with the Company’s Executive Management and other key stake holders in the Company. Different from normal procedure, these matters are communicated publicly now, before they have been discussed and decided by the Supervisory Board:
i. as they could be relevant for shareholders when considering the mentioned voluntary offer,
ii. to make sure information received by Tencent during the process of the voluntary offer is publicly available, and
iii. as the discussions and decisions by the Supervisory Board have been delayed several times due to the voluntary offer, the change in ownership, and the change in the Supervisory Board composition.
The Management Board’s recommendation to the Supervisory Board will be to increase the focus on the Open World Survival segment with Games-as-a-Service business model. This recommendation is based on the fact that Conan Exiles continues to perform well, with December 2019 having been the third best month in terms of average number players on PC since Early Access launch in January 2017 and with the Company continuing to develop the game with a paid map DLC (Downloadable Content) for release this year. The performance of Conan Exiles and similar games indicates that this genre reports strong lifetime revenues. The recommendation also reflects the belief that both the Dune IP and the Survival games genre are a good match with a large long-term potential.
The Management Board is of the opinion that these factors justify a more ambitious Dune project to launch after around two years of production time. Such increased focus would require a redirection of resources from other initiatives, the most significant being the co-op shooter game, initially scheduled for release during 2020 that has been impacted by scope changes due to external/market pressures with increasingly strong competition and internal delays.
The Management Board believes that the scope and ambition level for the Dune game should be larger than Conan Exiles to allow the game the best possible chance of maximizing its very large potential. If these proposed changes are approved by the Supervisory Board, it is likely that the Company will need additional financing to supplement the revenue generated from current operations.
In summary, the Management Board believes delaying the abovementioned co-op shooter game until after the release of the Dune game and securing the necessary funding to support this plan will lead to the best long-term success for the Company and will bring these matters to the Supervisory Board for discussion and decision as soon as possible considering the restrictions connected to the voluntary offer by Tencent Cloud Europe B.V..
Badhoevedorp, the Netherlands, 22 January 2020
On Funcom SE and applicable law:
Funcom SE is a European public limited liability company (Societas Europaea) with its registered office in the Netherlands and its shares (i.e. depositary receipts) are admitted to trading on the Oslo Stock Exchange in Norway. The Company has a two-tier board structure, meaning a Board of Supervisory Directors that is responsible for supervising the policy of the Management Board and the general course of affairs in the company, and a Management Board that is responsible for the management of the company’s affairs.