Most would not think of 2022 as a particularly good year for those involved in the business of metaverses.
It was a period in which Meta’s Reality Labs division lost $13.72 billion, followed by another $3.99 billion in first quarter of 2023. The jobs of staff in that unit now appear under threat. Horizon Worlds — Meta’s virtual realm — has struggled to generate any kind of traction, although it is responsible for some pretty memorable memes.
Meta is by no means the only company to have been swept up in the metaverse craze, but it’s bet on the concept was so large, and the apparent failure of that bet so damaging, that many are ready to write the idea of virtual, interoperable worlds off entirely.
Yet for Improbable, an eleven-year-old British gaming company that has been through several pivots, a gamble on the potential of metaverse technology appears to be paying dividends.
“We began pivoting and restructuring our business so that all of our capital would go towards one thing and one thing only, which is enabling this. And really what drove that was just the adoption,” said Herman Narula, Improbable’s CEO. “It’s all about going from building games to building experiences which are game-like but which live within a metaverse context.”
Losses trimmed after metaverse pivot
Improbable said last week that it had cut losses to £19 million ($23 million) in the 2022 fiscal year, down from a whopping £131 million ($159 million) the previous year, while revenues more than doubled to £78 million ($95 million) in the period.
The improved performance is the direct result of its metaverse pivot, according to Narula. The business raised $150 million to establish a network of interoperable metaverses named MSquared in April 2022, with a16z and SoftBank Vision Fund 2 both investing alongside others. It then raised another $100 million led by Elrond, the blockchain firm, later that year.
The idea was to give brands and companies a way to roll out their own metaverse experiences and events, with tech that could also sync up with blockchains and web3 projects. Improbable’s clients range from soccer teams to crypto projects like Yuga Labs — creator of the Bored Ape Yacht Club — which is working on a metaverse named Otherside.
Improbable has two virtual events scheduled in the next few weeks — one a watch party for a Major League Baseball game, the other a metaverse party for soccer fans. Big brands in sport, however, are not necessarily wedded to the term metaverse.
“On the one hand, the hyped metaverse has kind of died down,” Narula said. “But a lot of the people we’re trying to solve problems for, they don’t care if we call it metaverse.”
“They just want to build interactive experiences for people that scale. They don’t really care if it’s called that.”
Crypto communities in the metaverse
Narula has strong views on how crypto projects should think about branching out into the metaverse. Most projects are not so well capitalized as Yuga, which has raised hundreds of millions of dollars from venture capitalists and through NFT sales. Most, therefore, should not aim to build vast, virtual worlds to populate with blockchain-linked IP, per Narula.
“For the vast majority of NFT projects, I don’t think that’s the best transition,” Narula said. “The right model is ship something every week, ship something constantly with the community. That’s the power I think of the NFT space and why I think the most interesting stuff we’ve done has been really rapidly put out.”
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