Metaverse Company Skirts Stock-Market ‘Abyss’ To Take Roblox Users Down VMA’s Virtual Red Carpet

An exclusive honour reserved for only one-name stars like Kanye, Taylor, or Lizzo is walking the red carpet at MTV Video Music Awards. Or anyone who can access the internet.

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.

MTV and Super League Gaming have teamed up to create the opportunity. This company, despite some stock market skepticism, has been positioned as a facilitator between web creators and metaverse-curious brands. 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 is the only company to work 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.”

Wall Street stock-pickers have not yet been convinced. Super League is mired in a market “abyss,” according to Hand. Its valuation at $36million and $1 share price is only 25% of what they were in the same time last year. This decline can be partially explained by the recent rejections of all things Web3 and crypto.

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. Despite only 24 million shares outstanding, #SLGG stock was traded almost 400 million times that week. Two weeks later, the price reached its all-time high at $11.20.

Hand took advantage of the opportunity to raise funds and Super League quickly acquired two virtual production studios as well as a Roblox-specific advertisement platform. This allowed Super League to significantly scale up its operations. 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 reports that the company has just signed its first seven figure partnership deal for a five week campaign. The median deal size is now over $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 reported spending $10 billion on its metaverse unit in the past year, almost 40% of Roblox Corp.’s total value of $26 billion. NVIDIA, Apple, Google, Amazon, and Microsoft have all invested tens to millions or even billions of dollars in virtual reality headsets, 3D technology and digital avatar rendering. These are just a few of the many aspects that may eventually create a decentralized virtual successor for our 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. The company claimed that Roblox was being used by more than half of U.S. children under 16 at the height of the pandemic. Last quarter Roblox users were half 13-year-olds or younger and recorded 11.3 billion hours 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 provides clients with detailed advertising analytics, relationships and experience in creating immersive branded experiences that reach an audience proven to ignore 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. Super League reported that 1.5 million votes were cast as of Wednesday. Each engagement point includes reminders to tune into the show on August 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. It has been extremely 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, it was sold for 350,000 Robux or approximately $4,115. Its real-life counterpart cost $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. Hand estimated that the highest-performing games could earn between $25 million and $75 million per year. Roblox reported $538 million in community earnings in 2021. The platform is happy promote a model that serves both amateur creators as well as professional studios. It takes 50% of all transactions made within-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. The company is, in a sense taking its own tools and digging for 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?”