UK games company Improbable falls out with largest partner – Financial Times

Improbable, the $2bn UK gaming software company, has been unexpectedly blocked from operating on its largest partner platform, in a major blow to the SoftBank-backed company.

Game developers use Improbable’s main product, a cloud-based operating system called SpatialOS, to design highly detailed virtual worlds. The system then plugs into graphics engines that render those worlds on to the screens of games consoles and computers.

Unity makes the most popular graphics engine among Improbable customers, claiming that half of all online games are powered by its product. But on Thursday, Improbable said Unity had informed it of a change in its terms of service to ban Improbable’s use of its product.

“We had been told before that we don’t violate their terms of service, but now they’ve made it so we do. Apparently, some aspect of the revenue component of our model is the problem,” said Herman Narula, chief executive of Improbable.

“Other engine providers work with us for free and provide us support. This is how the industry works, but it looks as though they want to change their business model, or maybe they want to build a competing product, we don’t know.”

Unity said it had been in negotiations with Improbable to enter into a “standard commercial relationship” for more than two years, but the discussions had broken down six months ago.

“Unfortunately, Improbable chose an approach which doesn’t involve partnering with Unity, but instead involves making unauthorized and improper use of Unity’s technology and name in connection with the development, sale, and marketing of its own products,” said Joachim Ante, Unity’s co-founder and chief technology officer.

Unity has reassured developers that their games would still be able to run. “Anyone currently using SpatialOS will not be affected. Projects that are currently in production or live using SpatialOS are not affected by any actions we have taken with Improbable,” said Mr Ante.

Most developers using Improbable’s platform are small independent studios. But the company signed a deal last summer with Chinese company Netease, one of the world’s largest developers, to build games on SpatialOS using Unity.

The deal with Netease doubled Improbable’s valuation to $2bn little more than a year after SoftBank paid $502m for a significant minority stake in the company. The financing, which SoftBank moved into its Vision Fund soon after the initial investment, was the largest ever for a private British company.

But Improbable has struggled to generate the sales to match its promise. One games developer, who did not wished to be named, said the software was expensive and pitched at more advanced publishers, but that these are more likely to use their own servers for computer processing.

Company accounts filed in the UK in February showed that Improbable had revenues of £7.8m in the year to May 2017, up from £72,331 for the same period a year earlier.

Additional reporting by Aliya Ram

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