Improbable, the high-profile virtual worlds company founded a decade ago, believes it is to finally achieve profitability this financial year.
The London firm made a loss of £129m for the year ended 31st December 2020, while the Financial Times reported that these widened to £152m in 2021.
However the rise of the metaverse is seemingly having a big impact on its fortunes. Improbable has partnered with Yuga Labs on its upcoming Otherside virtual world, where so many users rushed to purchase virtual plots as non-fungible tokens that it crashed the Ethereum blockchain network. More than 4,600 concurrent ‘voyagers’ took part concurrently in the first Otherside experience.
The business, which says it has a strong pipeline of partners to be announced over the coming months, is also working with the Ministry of Defence on synthetic environments for training; has divested North American gaming studios Edmonton and Midwinter; and exited from the China market.
“Our new model is rooted in the metaverse, and we are very excited to see that the technology, services and expertise we have developed over a decade building virtual worlds are now proving to be such a fantastic match for pioneering brands seeking a new form of direct engagement with their fans and new revenue streams,” said Herman Narula, co-founder and CEO.
“Our partnership with Yuga Labs has also made us lay the foundation for new experiences with strong creative brands, and the spectacular response of the Otherside community makes us very excited to be developing more of those experiences with other partners in the coming months.”
The company said revenue in FY2021 increased by 60% to £30m, driven mainly by games services, while 2022 revenue growth is projected to be double or triple that amount. It also expects to be profitable this year, while projected revenue for 2023 is in excess of 2022 revenue based on signed contracts.
Additionally, it has confirmed that it is closing a financing round of $100m, composed of new and existing investors, at a valuation in excess of $3 billion.
The lead investor in this round is Elrond, a blockchain platform for Web3 payments, DeFi and the metaverse. Elrond has introduced two key innovations in blockchain: it brings a 1,000-fold cumulative improvement in throughput and execution speed, enabling linear scalability with a fast, efficient and secure consensus mechanism.
Elrond claims to be able to scale beyond 100,000 transactions per second, with negligible cost. Its goal is to become the backbone of a permission-less, borderless, globally accessible internet economy.
Beniamin Mincu, Elrond founder and CEO, said: “This investment is instrumental for Elrond, in initiating a deeper partnership with Improbable. As we gear up for our X-Day early November, we aim to redefine the utility of blockchain, and gather our community to push beyond the limits of Web3. We are excited to invest and build together, at a critical time when the value and utility of the metaverse are being defined and shaped.”
Narula added: “We are particularly pleased to be partnering with Elrond. We share a common vision for Web3 and the metaverse and expect to benefit from their leading expertise in blockchain technology.
“In 2022, while we reshaped our business and improved our financial profile, we continued to add new technology capabilities such as crowd audio, diverse crowd rendering, and improved density up to two billion operations per second.”