Video game

SoftBank-backed Improbable makes a big bet on video games – Financial Times


When Improbable raised an unprecedented $502m from SoftBank two years ago, its co-founder Herman Narula set out an expansive vision for his London-based start-up. 

Improbable’s SpatialOS software, Mr Narula said, was capable of “recreating the real world”, from modelling traffic across entire cities, to simulating telecoms networks and even biological systems. Venture capitalists talked excitedly of creating a “metaverse” — a virtual twin of the real world, long dreamt of in science fiction. 

But while Improbable still holds those ambitions in the longer term, for the foreseeable future the company is doubling down on what may appear to some to be a more limited application: video games. 

“We began with a dream of building and creating new realities and yes, sure, our technology has applications in other areas,” Mr Narula said in an interview earlier this month. “But if we don’t focus, we will fail as a business. Gaming is the area that has the biggest value proposition for the world frankly . . . and it’s the most interesting commercial thing we could be doing.” 

Last year, Improbable raised another $100m from Chinese internet group Netease, which is one of the world’s largest developers of online multiplayer games, at a valuation above $2bn. That partnership should help it grab a portion of the $140bn that consumers around the world spend on games each year.

But Improbable has yet to see much of that spending. 

Improbable’s revenues for the year ending in May 2018 fell to just £579,859, from £7.8m in the previous year. At the same time, its annual losses increased tenfold to £50.4m, according to its most recent accounts, which were published to the UK’s Companies House registry at the beginning of March.

After raising more than $600m from SoftBank and Netease, Improbable is a long way from running out of money. But the figures point to just how much it is spending to build out SpatialOS — even before it has found customers to pay for the software.

Almost seven years after it was founded, Improbable has yet to publish how much it will charge customers to use SpatialOS and its associated services, instead striking bespoke arrangements with a limited number of individual customers. 

Mr Narula says that Improbable will reveal standardised pricing for its services “not imminently but shortly”. 

“You can either be impressed or horrified that we’ve had the commercial growth that we’ve had without public pricing,” he said. “We continue to carry out our long-term plan — and it is a long-term plan.” 

Improbable has done work with a range of government clients in the US and UK, which it is largely unable to discuss. A $5.8m US army contract made up more than half of its 2017 revenues

But the majority of Improbable’s customers so far have been smaller, independent games developers, including Bossa Studios, creator of Worlds Adrift, and Klang, which is in the early testing stages of its multiplayer simulation Seed

‘Words Adrift’

For now, Mr Narula says he measures Improbable’s progress not by revenues but by the number of companies developing new projects on SpatialOS, which has “exceeded our expectation”. 

“Part of why we’ve raised the money we’ve raised and are pushing the way we’re pushing is we recognise the time it takes to fully adopt something like Spatial,” he said. 

Improbable declined to say how many customers it was working with.

Improbable’s focus now is on creating a “one-stop shop multiplayer solution for developers”, including managing cloud computing requirements as well as SpatialOS itself, that will vastly reduce the upfront costs of creating an online multiplayer game akin to runaway hit Fortnite

This is “what the industry’s been looking for a long time — it’s also why it has taken us bloody ages because you have to build every little piece to get that right”, Mr Narula said. “We are very grateful for the early indie developers that have let us be early partners. They have really taken bullets for us.” 

Those developers have had to endure both the ongoing commercial uncertainty — prompting worries about whether Improbable’s charging model will be economical for both parties — and technical problems, including sometimes drastic changes to how SpatialOS works.

One person who has worked with Improbable likened the experience to “making the movie while building the camera”, which had delayed developers’ ability to ship their own games, while another person said that Improbable seemed to be “overpromising” on what its technology was capable of delivering during SpatialOS’ protracted development process.

Also unsettling for developers was the very public spat over licensing terms at the beginning of 2019 with Unity, the game engine developer that many creators were using in tandem with SpatialOS. 

All that has left some early SpatialOS adopters wondering if Improbable can ever deliver on its ambitious vision for persistent virtual worlds that appear really “alive” to gamers. 

Improbable is looking at ways of reducing the upfront costs of creating online multiplayer games such as ‘Fortnite’

Mr Narula conceded that “a big change to our core architecture” last year and an aborted attempt to force developers to use its own programming language Scala — “a terrible idea” — had been disruptive. 

Nonetheless, Improbable continues to recruit new partners such as Fortnite developer Epic Games, which is creating a new $25m fund with Improbable to finance new games studios, and Crytek, which is developing a new “AAA” title on SpatialOS. 

This month, Improbable revealed that it also plans to develop its own games. New internal studios have been set up in London and Edmonton, Canada. Mr Narula says they will let the company test and “battle harden” new features before they are released to customers, as well as “showing what is possible” using SpatialOS’ capabilities. 

“We are going to focus on things that we think can move the needle for the industry and are not areas where customers are trying to build games,” Mr Narula said. 

Improbable’s renewed focus on gaming reflects Mr Narula’s confidence that it is a much bigger market than many realise, as Google and Apple launch new games platforms. 

“Games are no longer episodic consumptive media for most people — they are now really the basis of new massive online communities that are a lot more like social networks in the way that they function and that we invest spend time in them,” he said. “So much happening in the pattern of consumption of this medium that no one is paying attention to.” 

Even since Improbable was founded, more than 1bn new gamers have come online worldwide, he added, with the time spent both playing and watching video games now outstripping many other forms of entertainment. 

“You can’t put humans in a space like [Fortnite] for that long and not have that have massive, profound social consequences. We are just not seeing them yet,” he said. “I’m almost a little bit ashamed as a gamer myself not to have seen just how big this is. This is staggeringly large.”



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.