Startup With U.S., U.K. Defense Links Backs Founder Behind Xbox’s Halo Franchise

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(Bloomberg) -- Improbable Worlds, a startup backed by Softbank Group Corp., is investing in a partnership with a new computer game design studio founded by a veteran of the hit franchise Halo.

The new studio, called MidWinter Entertainment, agreed to use Improbable’s software, which lets users to create massive simulations, for its first title, a multi-player first-person shooter game called Scavengers.

Josh Holmes, former creative director for Halo at 343 Industries, founded Seattle-based MidWinter. Terms of MidWinter’s project funding from Improbable were not disclosed but Improbable said the financing was “significant” for an independent studio of MidWinter’s size. Narula said Improbable would only begin to see a return on its investment once Scavengers is released and begins to gain adoption. 

This is the first time Improbable, created in 2012 by Herman Narula and Rob Whitehead, has directly funded the development of a game.

“It is important to occasionally – very occasionally – pick out developers where we see an opportunity and help them achieve their vision,” Narula said in an interview. “This was simply too good an opportunity to pass up.” 

The majority of Improbable’s revenue through May 2017 came from a $5.8 million contract with the U.S. Army for “defense R&D” and “engineering development,” according to a federal procurement database. Improbable has set up an office in Washington to help it win further U.S. government business.

Games creator Bossa Studios built World Adrift using Improbable’s operating system. Improbable also has a contract with NetEase, a big Chinese games publisher, to develop games using Improbable technology. In addition, it has sold its software to other game developers like Automaton, PlayRaven and Klang Games. But, to date, the company has not inked a deal with AAA games publishers such as Nintendo, Activision Blizzard and Electronic Arts. 

Improbable had sales of 7.8 million pounds in the year up to May 31, 2017 and made a pre-tax loss of 4.9 million pounds, according to filings with U.K. business registry Companies House. Last year, was the first time the company’s revenue was large enough to meet Britain’s mandatory reporting rules. 

It often takes three to five years for a game to go from conception to release and widespread usage, so many of the deals Improbable has signed won’t be reflected in revenue figures for some time, Narula said.

The company’s software can help build simulations of complex real-world environments, making the technology useful for large-scale war games. In early 2016, the U.K. government used Improbable’s SpatialOS offering to simulate every node on the internet to see what would happen to network traffic in a large cyberattack or a natural disaster. 

Sill, Narula said Improbable’s main focus is games. “We believe in a trillion-dollar games industry and we believe games could become the single biggest component of human culture,” he said. The company will never match the success of Google or Amazon.com Inc. by focusing on business use cases, he added. Improbable’s backers, including SoftBank and venture capital fund Andreessen Horowitz, support this game-centric vision, he also said.

Improbable employs about 230, most of them in London. In addition to Washington, the company has offices in San Francisco and is planning to open one in Guangzhou, China, the company said. 

©2018 Bloomberg L.P.

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