Improbable’s $500m funding hints at a bright future for virtual reality

Thomas McMullan Read more May 12, 2017

The initial hype around virtual reality may be abating, but there are signs that novelty is making way for long-term advancements in the industry. First, Job Simulator and Rick & Morty VR creators Owlchemy Labs were bought-up by Google, and now – in the same week – British simulation firm Improbable has managed to raise $502 million (£390 million) in funding.

Improbable's $500m funding hints at a bright future for virtual reality

Improbable’s funding round – led by Japan’s SoftBank – values the startup at more than £1 billion. According to the BBC, it marks “one of the biggest investments in an early stage European technology business”. Furthermore, while Improbable has said it will “explore and identify opportunities for mutually beneficial relationships with SoftBank,” the company will remain independent.

Set up by Cambridge graduates Herman Narula and Rob Whitehead, Improbable is behind SpatialOS – a distributed operating system capable of creating persistent universes. Forget hundreds or thousands of players linked to a single server, Improbable’s tech opens the door to millions, united in the cloud. While this can be used for everything from data simulations to multiplayer games, it’s also being pegged as the basis for future social VR apps. HelloVR’s vast land of floating potato-heads, MetaWorld, for example, is built using Improbable’s SpatialOS.

“Let’s not get ahead of ourselves. We have to be patient. We can’t expect this stuff to manifest too quickly.”

The investment announcement will come as a boon to the British technology scene, particularly against a backdrop of continued fears around Brexit’s impact on the sector, but it’s also an encouraging sign of VR’s potential development in the coming years. At the VRX Europe conference in London this week, I spoke to Unity’s head of VR and AR, Tony Parisi. An early pioneer of virtual reality, he told me that there’s “a calibration” in the industry, from pre-release hype around VR hardware to gradual, but tangible growth.

“A lot of [big companies] still want to wait and see, but a lot of them are leaning in harder,” he said. “Big studios want to wait and see because the economics don’t work yet. If you can only reach 5 million people are you going to spend £200 million on a title? Maybe not yet. But when you can reach a billion people you’re going to spend it. So all those timing factors are in play.

“What we do, as a service to our developers, is we’re saying: let’s not get ahead of ourselves. We have to be patient. We can’t expect this stuff to manifest too quickly. But then you have these wonderful success stories like ‘Owlchemy creates Job Simulator. They gross £3 million on Steam.’ What happened yesterday? They get bought. That’s just an early success story. I think we’re going to continue to see more of those.”

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(Above: Owlchemy Labs’ Job Simulator)

Owlchemy’s success, Parisi suggested, comes from the fact they are able to show concrete financial results – enough to convince Google to take a plunge and, presumably, harness the company to make content for Daydream VR. Further than financials, however, is the sense that Owlchemy Labs is one of the first VR studios to make a name for itself. Amongst a plethora of virtual reality startups, it’s a sign that leading creative voices are starting to emerge and, crucially, become names that users recognise as indicators of quality.

Social spaces

Another big shift is the change in focus from VR games to VR social experiences. Facebook’s reveal of its new VR app, Facebook Spaces, both impressed and bemused with its vision of cartoon avatars around virtual tables, and it’s notable that Improbable’s funding success comes in the same month. When we spoke to the company back in 2015, CEO Herman Narula talked about the potential for its SpatialOS technology to create shared VR worlds:

“VR is a portal that takes you to another world, but to what kind of world?” he asked. “Unless you can solve the problem of simulated spaces, you’re going to be going to a very limited and lonely world, that’s very pretty but where there is little for us to be able to interact with and little for us to be able to do.”

(Above: HelloVR’s MetaWorld, built using Improbable’s SpatialOS)

According to Narula, Improbable’s technology would give a VR world support for billions of real time objects. Given Facebook’s push for social VR, you can see why the UK firm’s approach is attracting continued interest from investors. When talking about social virtual reality, being able to stitch together persistent spaces for disparate users isn’t just a gimmick, it’s a necessity.

A full realisation of how all of this will work – or a decision on whether users actually want to hang out in headsets – could be years away, if not decades. In the shorter term, success stories such as those this week by Owlchemy Labs and Improbable are a sign that the VR industry is indeed calibrating – beyond novelty and lightweight entertainment towards something altogether more meaningful.