Key Takeaway: Virtual gaming worlds may become social networks of the future; they’re being watched by investors as usage slows in battle games like Fortnite.
As Fortnite blew up into a teenage cultural phenomenon last year, investors including KKR & Co. jumped on the bandwagon and poured more than $1 billion into Epic Games, creator of the “battle royale” video game.
Despite drawing millions of youths around the world, the raucous game — which drops up to 100 heavily armed players into a no-holds-barred gunfight on a deserted island — isn’t growing as fast as it had been.
What may be taking its place is a gaming experience that’s quieter — and with a deeper impact.
Singularity6, which recently attracted $16.5 million in Series A funding led by Andreessen Horowitz, isn’t focused on gun battles or winner-takes-all contests. Instead, Los Angeles-based S6 is developing what it calls a “genre-defining social simulation experience,” a game set in a virtual reality with a heavy emphasis on interactions with other gamers and, apparently, AI-powered characters.
The funding was the second-biggest VC investment in AI and machine learning gaming sector this year, according to PitchBook data. It trailed Berlin-based Klang’s $22.3 million in funding. Investments in the field are rising, to $59.7 million so far this year from $46.9 million for the same period last year, according to PitchBook.
“We want to build towards a particular future — a world in which the evolution of technology brings us closer together and not further apart,” S6 cofounder Aidan Karabaich writes in a Medium post. “And we’re going to use games, the social networks of the future, to get us there.”
The convergence of social media and gaming has been more gradual and less noisy than genre-defining battle royales like Fortnite, but each sector sees opportunity in the other. Video games have become a mainstream $135 billion business with the advent of always-on smartphones and high-profile esports competitions drawing millions of real-world viewers.
Traditional social media players have watched and worried as younger users gravitate away from their parents’ networks — as evinced by Facebook’s then-shocking billion-dollar acquisition of younger-skewing Instagram in 2012 and its subsequent adoption of features reminiscent of even younger-skewing Snapchat. Earlier this week, Mark Zuckerberg announced Facebook Horizon, the social media giant’s take on a virtual reality world featuring 3-D avatars, not static profiles and posts, and a heavy emphasis on social interaction and gaming.
That’s exactly how Karabaich and S6 cofounder Anthony Leung became involved in the gaming space, growing up playing massively multiplayer online (MMO) games which put the user in an alternate world with hundreds, if not thousands, of other people.
“A game,” Karabaich wrote in the blog post, “can be a place where you feel like you really belong.”
A New (Virtual) World
Leung and Karabaich both came to S6 from Riot Games, which a decade ago launched League of Legends, a massive multiplayer online battle that can be seen as Fortnite’s great-granddaddy. But their inspirations are smaller, quieter games — games like Animal Crossing and Stardew Valley, which are less about battling and more about exploring and building homes within rich virtual worlds.
What they are building today is something of a mystery: The only image released to date depicts a pastoral scene, with verdant fields giving way to mountains, and details from the company and its funders are scant.
“We can’t say too much at the moment about the game that S6 are currently developing, but the push to provide deep and compelling virtual worlds that enrich the lives of users provides the animus for the company,” states a blog post by London Venture Partners (LVP), a games-focused venture capital seed fund which provided S6 $2.5 million in seed funding last year and joined the current round.
The approach is drawing investors who see this kinder, gentler approach to gaming as attracting new often underserved audiences, including women. “Users are spending more and more time online and desire a wider variety of options aside from hyper-competitive MOBA-like PvP games [and] certain communities, such as women, are being underserved by current offerings in the market,” LVP says in its post.
“In those moments, we were connected. Connected to a vast network of gamers and part of real, vibrant communities where we felt like we could truly be ourselves.”
And the gaming space will only grow larger. Andreessen Horowitz General Partner Andrew Chen predicts that the sector will create many recognizable brands in the next decade, buoyed in part by the popularity of streaming services such as Twitch and esports competitions creating “more viewers than players.”
“We plan to be very active in this space across the whole stack — studios, platforms, comms/social, video, and much more,” Chen said in a series of tweets. The company also has hired a new partner focusing on games and media, Jon Lai, who like Singularity6’s founders previously worked at Riot Games.
But, Chen says, the impact extends well beyond gaming. “If history repeats itself, the next social network won’t look like the social networks we know today,” Chen said in a blog post.
New Social Networks
Chen and others believe that the rich virtual worlds created by games will eventually supplant traditional social networks. That’s in large part because people invest so much time and energy into creating and improving their characters as they navigate these worlds and interact with friends within them.
“In those moments, we were connected,” Karabaich writes. “Connected to a vast network of gamers and part of real, vibrant communities where we felt like we could truly be ourselves.”
It’s not a new concept. Linden Labs’ Second Life created an early 3-D online virtual world back in 2003, drawing more than one million users to a slow-moving experience with no battles, no quests — not even a real purpose to play beyond exploring the virtual space and interacting with each other. At the peak of its popularity, real-world presidential candidates and their supporters supplemented their social media outreach with virtual presences within the Second Life world.
More recently, battle-focused Fortnite built its 125-million-strong following largely because of the virtual world it inhabits, complete with mysterious special events that keep people coming back with their friends. And the early screengrabs of Facebook Horizon, perhaps not coincidentally, are reminiscent of a more modern and cartoonish Second Life. Slated to launch in beta next year, Horizon will include gaming experiences and less of what we think of as traditional social media activities.
“In the future, commenting on photos will seem quaint for those who grew up playing online games with their friends where they can build huge cities block by block, explore new plants, start an indie band or dance group — or compete to be the last team standing in their favorite sports,” Chen says.
Karma’s Scarlett Kuang contributed to this story