Walking the red carpet at the annual MTV Video Music Awards is an exclusive honor reserved for one-name superstars like Kanye, Taylor or Lizzo. Or anyone with an internet browser.
More than a million virtual visitors have had their photos taken on a metaverse recreation of the iconic meet and greet in “The VMA Experience” on gaming platform Roblox in the weeks before Sunday night’s IRL awards show from Newark, New Jersey’s Prudential Center.
The opportunity is a collaboration between MTV and Super League Gaming, a company that despite stock-market skepticism has positioned itself as a facilitator between metaverse-curious brands and web creators. As much as the metaverse — interconnected virtual worlds that could have 5 billion users creating a total addressable market of as much as $13 trillion by 2030, according to Citigroup — has been touted as the internet of the future, popular youth-centered gaming platforms such as Roblox and Minecraft are where millions of users and their avatars have already been playing, creating and shopping together for over a decade. Super League, which aims to supply the pickaxes and shovels for the coming metaverse gold rush, is the only company that works with both platforms.
“It’s so much easier and frictionless now to be the educator on metaverse games, because what we’re able to do is say we’re not talking about what’s five or ten years away, we’re talking about what’s already existed for years,” Super League CEO Ann Hand told Forbes. “We can be a mainstream entry point, a safe entry point for a brand.”
So far, Wall Street stock pickers are unconvinced. Super League is mired in a market “abyss,” according to Hand. Its $36 million valuation and $1 share price are a quarter of what they were this time last year, a downturn that can only partly be explained by the recent rejection of all things crypto and Web3.
The stock has been on a roller-coaster ride since the “wallstreetbets” craze of March 2021, when a mysterious photo of a McDonald’s ice cream cone and a frog emoji briefly sent Super League shares into the stratosphere. The picture was tweeted by Chewy founder, GameStop chairman and Reddit whisperer Ryan Cohen, and was interpreted as a reference to Hand, who worked previously at McDonald’s and Project Frog. That week #SLGG stock was traded nearly 400 million times, despite having just 24 million outstanding shares, and two weeks later the price hit its all-time high of $11.20.
Hand took the opportunity to fundraise, and in short order Super League acquired a pair of virtual production studios and a Roblox-specific advertising platform, substantially scaling up its business. Top-line revenue is expected to exceed $20 million in 2022, according to the company’s second-quarter investors call, up from $11.7 million last year and $2.1 million in 2020. Hand says the company just signed its first seven-figure partnership deal for a five-week campaign, and the median deal size now exceeds $250,000. “A year and a half ago, I’d be celebrating that our average deal size was $50,000,” she said.
Still, the company reported an $8.7 million net loss in the second quarter, and bearish online analysts believe profitability issues could lead to a capital increase that will cause “significant stock dilution.” While those conditions might make Super League an attractive candidate for acquisition, Hand said she believes the company is a growth stock that could one day be worth “$500 million to $1 billion” on its own.
That level of growth would depend on the durability of Roblox and Minecraft, which face competition from the world’s largest companies. Meta spent a reported $10 billion on its metaverse division in the last year alone, nearly 40% of the total value of Roblox Corp., which is $26 billion. Apple, Microsoft, Google, Amazon and NVIDIA have poured tens of millions and even billions of dollars into virtual reality headsets, real-time 3D technology, digital avatar rendering and other aspects of what may, or may not, eventually form some decentralized virtual successor to our modern mobile internet.
Yet as of February, Meta’s Horizon Worlds claimed only 300,000 users per month, compared to the more than 52 million active daily users on Roblox. At the height of the pandemic Roblox was being played by over half of U.S. kids under the age of 16, the company told The Verge, and last quarter Roblox users, half of whom are 13 years old or younger, recorded 11.3 billion hours of engagement. There’s little reason to foresee Roblox’s decline in the near future, leading some to believe that “The Metaverse” — capital M — could end up looking more fragmented than the grand unified vision currently being promoted.
“One of the things that’s a bit errant in Meta’s philosophy, they’ve already proven that having a social network appeal to everyone is challenging,” Super League Chief Commercial Officer Matt Edelman told Forbes. “I think the idea of a ‘Ready Player One’ environment that can appeal to a 14 year old, a 24 year old and a 44 year old who like different games, are interested in different kinds of content and have a different affinity for characters and gameplay mechanics and interactive communications, I don’t see it.”
Either way, executives and designers agree Roblox’s signatures — customizable characters, social spaces and the ability to create as well as consume — are not exclusive to the “TikTok generation” that makes up its player base, and will likely shape the culture of all future metaverses. That’s why Super League, which sees its knowledge of that culture to be its biggest asset, is focused on the metaverse that exists rather than the one that may or may not come.
“At least for the time being, there’s no sign that Minecraft and Roblox are going to become less popular any time soon,” Edelman said.
Super League offers clients detailed advertising analytics, relationships with creators and experience in building immersive branded experiences that reach a generation of users proven to be good at ignoring traditional advertising.
For example, Super League dropped characters from Dreamworks Animation’s “The Bad Guys” into popular existing Roblox worlds, reporting back that 2.2 million unique users saw the characters and 62% of them self-selected to interact. When asked via in-game dialogue whether or not they’d go see the movie, 79% responded yes.
To promote the VMAs, Super League designed a world where users can walk the virtual red carpet, play mini-games like a timed race platformer and interact with NPCs (non-player characters) to earn tokens, which can then be used to cast votes for one of the real-life VMA categories — best metaverse performance. As of Wednesday, Super League reported 1.5 million votes had been cast. At each engagement point comes reminders to tune in to the show on Aug. 28.
“Everything you would need to do can get developed in a turn-key fashion with the partnership with an agency,” says Tyler Hissey, a senior vice president for Paramount Media Networks and MTV Entertainment Group. “And Super League had expertise in both Minecraft and Roblox. That has proven very valuable.”
Other brands have set up a more permanent presence on the platform, operating worlds that run year-round and selling virtual merchandise, known as “verch.” Early returns show that a Nike shirt or a pair of Vans worn by a digital avatar carries the same social capital as the tangible product, to the point that an in-game Gucci purse resold last year for 350,000 Robux, or roughly $4,115. Its real life counterpart retailed for around $3,400.
“Kids these days don’t see a digital and physical difference,” Hand said. “It’s their life.”
The company has engaged in talks with large scale IP owners to facilitate full-scale, permanent worlds that could eventually turn into “multimillion-dollar deals” for Super League, Hand said. She estimated that top performing games can net $25 million to $75 million in a given year. In total, Roblox reports $538 million was earned by the community in 2021, and the platform is happy to promote a model that can serve both teenage hobbyist creators and professional studios alike because it takes a 50% cut of all transactions made in-game.
“I think the big push is for self-serve,” Roblox Head of Developer Success Adam Capps told Forbes. “We want anyone to be able to develop whatever they want on the platform and let the players decide what they want to consume.”
Super League’s next big development is a full-scale world of its own, called Super League Arcade, coming in late September. The space will be a central hub for players to meet up before teleporting out into existing games, which Super League has retrofitted with a special competitive experience, harkening back to the company’s pre-metaverse roots as “the little league of esports.” Hand likens the world to the food court at a mall, where people congregate before going off on their individual adventures.
It’s not the company’s first foray into what they call “owned and operated” worlds. They also run the “Minehut” server on Minecraft and recently bought Roblox’s “Anime Battlegrounds X.” It is, however, its most ambitious, and gives the company further ability to monetize its end users directly. In a sense, the company is taking their own tools and going digging for some metaphorical gold.
Hand says she’s confident enough in the company’s future that she no longer checks the company’s stock price first thing in the morning, and is no longer kept up at night wondering whether the company will be around in a couple of years.
“We’ve established a really strong foundation,” she says. “I think the question now for the company, the question that I think about a lot, is how big can it be?”