NPCx’s current funding round has a valuation cap of $7 million. The company has been primarily focused on research and development efforts, but it earned a $10,696 profit in 2020 through the early completion of a small animation project. Earning revenue while in a pre-launch phase is particularly impressive and demonstrates the strong potential of NPCx’s technology. While 2021 was devoted to research and development efforts, 2022 is when NPCx plans to bring its technologies and products to the market. 

At first glance, NPCx’s revenue-to-valuation multiple of 31.9x (as of 2020) may seem quite high. However, it is actually below average compared to industry averages for video game technology and animation. Many companies in this sector have revenue-to-valuation multiples upwards of 3x higher. So while NPCx’s revenue might seem very small to warrant a $7 million valuation cap, it is justified given the industry’s financial landscape. Overall, NPCx’s valuation is incredibly fair given its revenue growth, pre-launch status, and favorable revenue multiple.

NPCx operates in the broad-ranging US 3D animation market. 3D animation software utilizes motion to bring characters, objects, and props to life in video games, films, and other types of digital media. Animation can be broken down into a process of modeling, layout and animation, and rendering. Revenue from 3D animation projects was $15.3 billion globally in 2021 and is forecast to reach $32.9 billion by 2028. This market size is decent. The industry, however, deeply benefits from an above-average projected growth rate of 11.5% a year over the next six years. This high growth rate could grow even further due to increased sector adoption and consumer demand. As the popularity of detailed 3D animation grows, so do its use cases. The real estate, medical, and education industries all have compelling use cases for high-quality animations. 

Overall, NPCx looks well-positioned to secure a growing niche of the 3D animation market. The company is likely to benefit from the market’s strong growth.

NPCx co-founder and CEO Cameron Madani is an experienced interactive entertainment executive. Madani has led developers, artists, and scientists in creating unique AI systems that increase the quality and volume of 3D assets for many media types and use cases. His past experience as a director and publisher for Sony, Microsoft, and Nintendo positions him to form meaningful partnerships with industry leaders and grow the NPCx name quickly. Madani became an industry leader after launching his first award-winning video game, Torchlight, for the Xbox 360 in 2011. He holds a Bachelor of Arts degree in history from UCLA and a Master of Business Administration in finance from Pepperdine Graziadio Business School. 

Michael Puscar is co-founder, CTO, and NPCx’s first investor. He is a serial entrepreneur with experience in AI technology and software development. Puscar has successfully led a company from founding to acquisition, and his proven track record of technology entrepreneurship should help NPCx refine its product offering. Puscar holds a Bachelor of Science in computer science from Temple University. 

Alberto Menache is NPCx’s technical advisor for motion-capture technology and visual effects. Menache is colloquially known as the father of motion-capture technology. The last seven years of his career have been spent with James Cameron on technology development and deployment on the deeply loved Avatar film franchise. Menache holds a Bachelor of Science in engineering from the University of Anáhuac and a Master of Science in mathematics and computer science from the University of Miami. His extensive expertise should serve NPCx very well.

Engineers, scientists, and managers make up the remainder of the growing NPCx team. Juan Sevillano serves as the director of animation, Juan Franco as the lead software engineer, Jesus Prada as a data scientist, and Michael Muvdi as the senior marketing manager. Their talents and past experiences in this industry should all aid NPCx’s development and rollout into the market.

NPCx’s founders, advisors, and supporting team members have noteworthy educational and technical experience. This team is well-qualified to create NPCx’s initial technology and offerings. In time, NPCx will need to build out its sales and legal teams to truly scale and gain widespread adoption.

The market for 3D animation is large and scaling quickly into sectors beyond entertainment. However, NPCx faces well-known and well-established competitors. Major market players in character design and development include Rockstar Games, id Software, Bethesda Game Studios, Unreal Engine, Unity, Maya, Blizzard Entertainment, and PUBG to name a few. NPCx, however, is one of the first to market with technology that creates in-game characters with lifelike decision making capabilities. Non-player characters previously relied on a chain of commands or a behavior tree to dictate their actions in relation to the moves of human players. Every possible player action adds a new branch to the behavior tree, which is time intensive for developers and requires extensive computing power. These constraints lead to limited and often unrealistic decisions by non-player characters, which in turn tends to distract gamers and disrupt their gaming experience. NPCx reimagines character development as non-player characters being able to model more realistic human behaviors through their AI and machine learning technology.  

NPCx’s technology is innovative and in high demand. The company has already entered into an agreement with a major motion capture studio (NPCx has not specified which studio), an impressive feat considering how young the company is. As players become more accustomed to games with this technology, it’s possible that all industry players will need to adopt the NPCx technology or risk falling behind. In this sense, NPCx’s direct competition is likely to be with companies that supply the technology used for high-quality animation rather than animation studios themselves. 

NPCx’s technologies have applications in video games, film, extended reality, streaming entertainment, and the metaverse. And there is potential for the company to expand even further. Many ed-tech companies — like Coursera, Udemy, and edX — could potentially make promising partnerships with NPCx in the future. Real estate development and management companies are also beginning to adapt and demand lifelike 3D animation modeling technologies. If NPCx can remain open to addressing the needs of many different market sectors, it could dominate the world of 3D animation technology offerings for various industry verticals.

NPCx devoted its early life to research and development efforts. During this time, it remained in the pre-product and pre-launch phase, refining its technology and its capabilities. Co-founders Cameron Madani and Michael Puscar wrapped up two animation projects that used the NPCx technology, which drove $219,200 in revenue and $10,696 in profit for 2020. That revenue went directly back into research and development efforts. 

In the last year, NPCx’s co-founders also welcomed team member Alberto Menache, supporting engineers, and a marketing specialist. Growing the development team early on will likely make the company’s launch in the animation market more successful. NPCx has also made several strategic partnerships, including with Google Cloud and Motion Burner, a motion-capture services group.

In 2022, the NPCx team anticipates the launch of two major technologies: TrackerX and AIMX. The team has shared little about these projects, but it anticipates rapid adoption of the animation technologies will drive revenues. In the future, NPCx expects its services revenue to decline. But this should not be a point of concern for investors, as the company’s product revenue will likely increase. With increased exposure and adoption, the NPCx business model will be structured as 90% licensing and 10% service-based revenue. This is a sustainable and highly lucrative business model.  

NPCx has made significant progress in product development, early revenue collection, team growth, partnership creation and future product rollout planning. Given the nature of the industry and the complex technology the company has developed, NPCx’s performance since its founding is impressive. If NPCx can follow through on anticipated product launches, it will make a very exciting investment opportunity for investors.

NPCx’s overall investment risk level is low. However, it has funding and defensibility risks. NPCx is young and has yet to fully launch its product and service offering. It also has yet to raise a sizable amount of capital or prove any sustained financial traction given its focus on research and development in 2020 and 2021. While market performance is likely to be strong given the team’s experience, high market demand for improved 3D animation, and key differentiators, its performance remains a projection. 

Defensibility risks arise due to the competitive nature of the markets NPCx is targeting. NPCx is unable to patent its technology and service offering at this point, which could cause concern for investors. While NPCx seems to offer superior service and cutting-edge technology that is difficult to replicate, it legally remains vulnerable. If well-established competitors attempt to replicate NPCx’s technology or run with the concept of applying neural networks to animation, the company might struggle to remain competitive.

The biggest concerns for NPCx are rooted in its early stage and defensibility. NPCx was founded in 2020 and has been focused on research and development efforts. Although its technology appears to exceed current 3D animation capabilities, the company has not officially launched any products yet. If the team runs into hurdles this year and delays its product rollout, competitors could beat NPCx to market, and it could fail to generate the revenue needed to sustain operations. While the company has acquired a small amount of revenue from a past animation project, this isn’t telling of its overall business model or growth projections. Investors face many uncertainties surrounding product-market fit and operational success.

NPCx is developing cutting-edge technology, growing its team, gaining financial traction, and securing meaningful partnerships while in a pre-launch phase. That’s impressive progress from a young company and indicates that its team is passionate about the product. Even with only a couple of its products ready for early use, NPCx was able to generate revenue and a small profit in 2020. Competition in the 3D animation space is significant, but this is not a winner-take-all industry. If NPCx can move into a licensing model quickly, its revenue numbers could begin to climb shortly after launch. There’s also ample room for the company to develop products that address animation needs in industries outside of video games, including real estate, education, and medicine.  

The NPCx team is lean, but key team members have excellent industry experience as well as leadership skills. One of the co-founders successfully oversaw a company from founding to acquisition, which increases the chances of NPCx’s own success. With a strong executive leadership team, additional capital, and promising early partnerships, NPCx could become a leader within the 3D animation industry.

NPCx is transforming the way users interact with digital media. 3D animation technologies under the NPCx name are cutting-edge and could revolutionize entertainment and video games. Its AI technology creates intelligent non-player characters that make decisions in a realistic and human-like way, which greatly improves the gaming experience. NPCx competes with other major companies that build out non-player characters, but it is not a winner-take-all market. The market size for 3D animation and previously limited innovation in non-player character development indicates that NPCx has a ripe market to tap into. NPCx’s product rollout projection is exciting for investors, as the company is moving quickly and has established meaningful partnerships to aid in its rapid growth. The experienced NPCx team should further bolster investor confidence as the founders have a track record of success within the industry. NPCx becomes an even more exciting investment opportunity given its fair valuation.  

However, it is very early on into NPCx’s development, and the company has yet to fully launch its products. Its true performance and product-market fit are still unproven. The market is limited in size, and if the company fails to generate revenue soon, the business might become unsustainable. Therefore, NPCx is a Neutral Deal.

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Carolyn Price, March 21, 2022.