Hello hello - Joe here. Edition #62 at your service - the final SEG3 Report before we all get together next week at SEG3 London. Looking forward to meeting many of you next week in a (hopefully sunny) London town. Final chance to join us if you aren’t already → 🎟 Tickets.

Back to today’s edition, our spotlighted piece comes from Rob Whitehead of MSquared, who dives into ownership in virtual worlds, and the opportunities that are unlocked when blending physical and digital experiences.

I then look at how SEGA are further growing the Sonic universe with their recent Red Bull partnership + the landmark news of a YouTuber acquiring rights for the second division of French rugby, and what it shows about the power of communities as well the precarious position non-premium sports rights holders find themselves in.

Let’s get into it…

Contents: Edition #62

• To platform, or not to platform?

• Sonic grows wings with Red Bull partnership

• YouTube channel, EggChasers Rugby, acquires rights to division 2 of French Rugby

To platform, or not to platform?

Virtual worlds are no longer a fringe curiosity, they’re a cultural phenomenon reshaping how we learn, play, and connect. In 2024, Roblox reported over 85 million daily active users, who spent a staggering 73.5 billion hours on the platform. More than 2.5 million developers have created experiences on Roblox Studio, collectively earning over $410 million in the first half of 2024. That blend of explosive scale and creator-driven content is exactly what draws big brands in. 

Yet working within these platforms comes with compromises. Brands must surrender interoperability (your limited-edition skin on Fortnite can’t be worn in Roblox), creative control (platform owners set the rules, revenue splits and moderation), and continuity (your world might vanish with the next update).

Why should you care?

TL;DR: Virtual worlds are now mainstream cultural venues. They’re already shaping identity, community, and commerce for a new generation. But there’s a catch: most brands don’t own the experience. They sacrifice control over data, design and user safety to operate inside someone else’s ecosystem. As virtual worlds become central to culture and commerce, building on open, decentralised infrastructure – where you own your audience, data and creative future – isn’t just a nice-to-have, but should be a central part of your strategy.

In full: The opportunity, and the problem

The appeal of virtual worlds is clear:

• Scale: Roblox and Minecraft each host hundreds of millions of players, with Fortnite evolving into a full-blown entertainment platform.
  

• Engagement: These spaces blend play, creativity, commerce, and community in a way traditional platforms can’t match.
  

• Cultural capital: Gen Alpha doesn’t just play in these worlds. They live there, socialise there, and increasingly, they shop there too.

But building inside closed ecosystems comes at a cost:

• Safety and moderation: Age-appropriate design is inconsistent and reactive.
  

• Data ownership: First-party user data is limited or inaccessible.
  

• Creative autonomy: Customisation options are restricted by the host platform.
  

• Economic upside: Revenue models favour the platform, not the creator.

These aren’t just branding issues – they’re questions of long-term trust, safety and viability.

At MSquared, we recognise these challenges. That’s why we’ve developed infrastructure solutions that empower:

• Brands to create evolving virtual-world experiences that build loyalty and audience engagement without giving up creative or commercial authority.
  

• Users can carry a portable digital identity – avatar, items, achievements – seamlessly across virtual worlds, so every new experience builds on the last.

As virtual worlds become more integrated into our daily lives, brands and users need platforms that put them in charge.

And that’s exactly what we did with the BBC Philharmonic Orchestra.

A new model: The BBC Philharmonic & MSquared

Powered by MSquared’s Morpheus Platform as part of the MAX-R consortium, the event featured iconic video game soundtracks from God of War, Baldur’s Gate, and Fortnite, played by 90 BBC Philharmonic musicians.

What did fans gain from the blending of the two worlds?

In Manchester, fans experienced a traditional concert.

Online, fans enjoyed a fully interactive concert built on MSquared’s MILEs (Massive Interactive Live Events) technology, an affordable, scalable and customisable platform designed to make large-scale virtual events viable for all types of content creators.

This was no passive livestream. Fans could explore virtual instruments in a museum-like lobby, hear stories from orchestra members about their favourite games, and experience the first-ever motion-captured conductor in a virtual world.

As has also been covered in this newsletter during Edition #29, we’ve also worked alongside MLB, Lamborghini and more to deliver:

• Major League Baseball: A virtual ballpark where 25,000 fans watched live games together, with interactive features and real-time chat.
  

• KosmoPop & TWICE: An immersive album launch party that drove 300,000 Spotify streams and connected K-pop fans globally.
  

• Lamborghini & Gravitaslabs: A premium web showroom for 3,400 custom Lamborghinis, built in three weeks.

These all serve as living proof points that brands can create high-quality digital experiences on their own terms.

The future: Open, safe, and brand-owned

Roblox’s growth signals a shift from standalone games to persistent, social, customisable worlds. For this to work well, creators and brands need to change how they build. That means using decentralised infrastructure they actually control, adopting open standards to keep things portable and secure and building experiences that are not just scalable, but meaningful. 

Virtual worlds aren’t the future. They’re the now. Those who build thoughtfully and on their own terms will be the ones who shape what happens next.

Sonic grows wings with Red Bull partnership

SEGA has partnered with Red Bull to launch the "Racing Around the World" campaign, focusing on a high-octane stunt racing film starring Red Bull athlete Brandon Semenuk, and supports the upcoming release of "Sonic Racing: CrossWorlds".

Why should you care?

TL;DR: Speed, energy, adrenaline... it’s all there, and keeps Sonic relevant and visible across mainstream culture by getting new eyes on the IP, bringing old fans back in and tees things up nicely ahead of the next game drop. It’s smart timing, good use of talent that appreciates the IP and fun storytelling that keeps the Sonic flywheel spinning.

In full: Like Sonic needed to be any faster? Now he has Red Bull!

Sonic is undoubtedly one of gaming’s most iconic IPs, but his reach has long transcended the console. SEGA continues to evolve Sonic from just a character into a key part of mainstream psyche, and this latest Red Bull collaboration is another strategic move to drive awareness and relevance far beyond the traditional gaming audience.

And who better to partner with to tackle wider culture than Red Bull?

Red Bull are the OGs of branded content and talent/IP partnerships, known for creating stories that broaden the conversation far beyond just product to build fandom and connection.

On the partnership, Marcella Churchill, Vice President of SEGA/ATLUS Brand Marketing said:

As she says, the partnership has a great narrative fit (with Sonic’s core traits being speed & energy), making it a natural move that extends Sonic’s relevance into sports, lifestyle and the adrenaline-lovers content mix.

It also presents a re-acquisition opportunity, particularly with lapsed fans who may have grown up with Sonic but drifted away. By meeting them where they are now; on socials, through the type of content they’re likely consuming now, SEGA reopens the door to rediscovery and renewed fandom.

SEGA’s broader transmedia strategy is one we’ve covered before, but it continues to be impressive:

🎬 Theatrical releases like Sonic 3 (with Sonic 4 coming).
📺 Streaming spin-offs like Knuckles
🤝 Licensing & brand collabs like this one

Each of these touchpoints increases Sonic’s surface area and grows the number of eyeballs on the IP, which is crucial to enable SEGA to monetise through multiple formats.

As Justin Scarpone, SEGA’s Global Head of Transmedia shared at SEG3 LA in December, it’s about “how do we tell stories to the maximum sized audience in the most diverse ways” 👇

And this collaboration with Red Bull allows them to do that.

With the new content and a game launch on the horizon, the partnership becomes an engine to drive:

• Awareness; via the stunt racing film

• Relevance; through the Red Bull talent having a connection to Sonic IP & the upcoming racing game

• Acquisition; of new fans through social content reach

• Re-acquisition; of dormant fans that rediscover the IP through that new content

• Retention; as those fans engage with other touchpoints within the Sonic ecosystem

• Monetisation; through game sales, theatrical, merch & licensing etc.

Overall, it’s a sharp, strategic move for both brands that:

✅ Aligns on narrative
✅ Has talent that understands the IP
✅ Timed well with an upcoming game release
✅ Hits all six objectives above to grow the IP and engage audiences new and old

Textbook. And for those of you interested, we broke this framework down in more depth in Edition #41.

YouTube channel, EggChasers Rugby, acquires rights to division 2 of French Rugby

British YouTuber and former BT Sport presenter Tim Cocker has acquired the UK and Ireland broadcasting rights for France’s Pro D2 rugby league. Through his FR-UK Rugby YouTube channel, Cocker will stream full matches with English commentary, offering free access to viewers.

Why should you care?

TL;DR: YouTubers picking up sports rights? We knew something like this would come eventually, but perhaps not so soon. EggChasers are tapping into UK demand for French rugby with a creator model that could be a smart play for non-premium rights holders; one that is less about mass reach, but more about right audience, right place and right time. If it works, it might just be the start of a new playbook for niche sports that focuses on creator-first distribution vs the traditional media model.

In full: YouTubers becoming yet more prominent within 2025? Of course.

YouTubers beating out broadcasters to acquire rights? Not quite on my 2025 bingo.

But does it make sense? For sure.

Interest in French rugby is growing in the UK, but there’s no (legal) way to watch it. EggChasers already have a highly engaged, growing audience hungry for more rugby content, so picking up the rights feels like a smart move for them.

Now, with that said, French D2 rugby rights are not premium, so they’re somewhat within reach of a YouTuber. Premium rights holders will not be following this model (and don’t need to - they have a wealth of suitors from traditional media and streaming).

But, could this be a good test case for other, smaller rights holders to be more creative in how they get distribution of their content, and potentially unlock new business models and fans in doing so?

I think there’s a good argument to say so.

Creators are moving up the food chain, and if those that have built trust with global audiences around certain topics (like Rugby in this example) want to expand their content offering into live - it can only be a good thing for non-premium rights holder to have distribution, a partner onboard that understands the nuance around the sport and depending on how the deal is structured, the opportunity to share in the upside alongside the creator, who will prioritise creative monetisation through ad revenue, subscriptions, merch etc.

So while monetising media rights is the cornerstone of the traditional business model, for many non-premium rights holders, distribution should be the main objective. And that’s why this partnership could be so interesting. The ingredients are certainly there, and creators have proven in recent years that success isn’t about mass reach, but smart, targeted reach that connects with the right audience, in the right place, at the right time.

And if it works, it could mark the start of a new blueprint; one where niche rights find real value through creator-led distribution. Certainly one to watch carefully.

In other news this week…

• FranceTV brings innovation lab to Roland Garros: read here.

• Google ships numerous developments for AndroidXR: read here.

• NetEase’s basketball game ‘Dunk City Dynasty’ reaches over 1 million downloads: read here.

• Roblox introduces License Manager: read here.

• Perplexity release Formula 1 tracker: read here.

• The Gang partner with Philips to release Fortnite map: read here.

• Arsenal expand deal with TCL to global partnership: read here.

• Fortnite data API unlocks more island insights for creators: read here.

• USGA & Ally team up with Super League to release Golf Challenge on Roblox: read here.

• FIBA agrees broadcasting deal with TF1: read here.

• Moments Lab raises $24 million to scale video discovery with Agentic AI: read here.

Working on anything cool, or have a press release you would like us to cover? Send it in for the chance for it to be covered in next week’s edition!

That’s all for now folks - thanks again for reading the latest edition of The SEG3 Report and if you found it of interest, do consider sharing with a friend!