New Entertainment Building Blox🏗️

Roblox wants to go public on social media platform-like metrics and perhaps valuation📈, and Apple bought a lot for very little👏

According to Substack, I’ve mentioned Roblox in 11 editions of this newsletter over the course of this year, starting with how SuperMario Maker 2 was not a threat to the company, continuing with their stellar performance over Q1, and everything in between. Well, I hope you’re ready for a groundbreaking #12 because last week they filed for an IPO…

Despite both revenue and bookings growing significantly over the past two years for Roblox, they were unprofitable for every single of the last three years. The company lost $86M over the entire year of 2019 and $203M in the first nine months of 2020 as they increased expenses in an effort to strike the iron while it’s hot and push for growing their player base with everyone stuck at home right and over the incoming holidays.

On the user base side, the number of daily active users in Roblox grew 47% in the year between 2018 and 2019, and a whopping 82% from Sept 2019 to Sept 2020 for a grand total of 31 million people using the platform on an average day. The total number of hours players engage with games on the platform also grew significantly, from 9.4 billion in 2018 to 22 billion at the end of September 2020

The company’s growth pattern is very similar to social media companies in the past that were three years into their journey, a lot of losses but growth and engagement metrics are booming. Roblox’s multi-sided platform, made up of players on one side and developers on the other, is bound to create increasingly strong network effects over time, with the incipient phase being apparent as we speak when looking at the size of the user base and number of hours engaged.

The advantage of gaming products that provide a platform for users to generate content on when compared to social networks, that rely on the same idea, comes in the form of the fun and excitement that create a strong bond between participants, resulting in deeper, longer-term engagement with the product. When an entertainment product infiltrates the fabric of society to such an extent, especially when they conquer the heart of the youth, then you know you’ve got something special on your hands. Who knows, maybe even one of the avenues for a future multiverse…

With the timing of the IPO, it looks like Roblox are trying to take advantage of a combination of factors we’ve seen evolving over the pandemic months. First, the appetite for new IPOs of next-gen companies with a slight disregard for actual numbers in the S-1 filing and, secondly, they’re trying to ride this engagement and monetization wave that the entire gaming industry has been on since the beginning of quarantine. One thing’s for certain, that speculated $8B figure valuation is a lot less likely to happen now than it was a week ago, but who knows what trick the company can pull out of their hat during the roadshow when pitching their vision to investors over the next few weeks.

Apple’s newly announced App Store Small Business Program is a brilliant image move from the company with the most positive image in the world and the company has forgone just a negligible part of its revenue, but will this smokescreen be enough to get everyone off their back?

The new program changes the 30% cut Apple currently takes from each transaction down to 15% if a developer has made less at $1M over the previous calendar year, with the cut applying to premium products, in-APP purchases and subscription-based ones. Why a million dollars? Well, it’s a big-sounding number with a lot of zeroes, apart from that, it’s as arbitrary as they come. And while it’s true that the measure will benefit ‘most’ developers — is anyone shocked that there are more developers making less than $1M that there are over that limit? — and that this will help up-and-coming companies, Apple is taking the smallest of hits here.

With the ‘less than $1M’ bucket of developers bringing in around 5% of Apple’s revenue, the cut will mean a 2.5% reduction to the company’s bottom line. A drop that would barely register over a normal, uneventful day of trading. The marketing value the company got from announcing the news would have been worth that much money.

While this is a good first step and one that can — and will — be quoted in every Keynote and before every government commission for the foreseeable future, the bigger issue in the ‘Monopolistic Apple’ narrative remains the unique, Apple-owned payment system used when buying anything in the AppStore. Until that situation changes, Apple will remain closer to the Navy than they are to being pirates.

1. Here we have it, after two entire weeks of drought, another gaming franchise is getting the TV show makeover. ‘The Last of Us’ IP will be adapted by the creator of the Chernobyl hit and will be distributed on HBO’s outlets. If one had to quickly define the two games in the series, I think it’s safe to say that their emotional storytelling is one of the best in the space, and giving other mediums a run for their money. Amongst all the previous such endeavors we’ve seen over the past year, this appears to have the most potential as far as I can tell, starting with a solid franchise and putting the best creative talent behind it ‘just’ leaves execution to be sorted, which is a lot less compared to the other projects being developed at the moment📺🎮
2. It’s official, WB announced that the new installment of the ‘Wonder Woman’ franchise will be launching on HBO Max on the same day it hits theaters, Dec. 25th for no extra cost. If the service happens to not be available in your country at that time, the movie will land in a cinema near you a week earlier. As quarantines across the globe are extended to what looks like an indefinite timeline, more and more movies of billion-dollar potential are moving to streaming, effectively leaving theaters out to dry. This hybrid solution looks to be a compromise attempt in order to appease theatre chains while also driving subscriptions for the streaming service, whether this is the best of both worlds it remains to be seen. In the idea that no crisis should be wasted, the time for experimentation is now, when the expected performance of both cinema chain owners and movie studios is low across the board, from both analysts on the Street and shareholders🦸‍♀️🦸‍♀️
3. You would have thought that after seeing the reaction to the idea of a live-action Tom&Jerry movie last year WarnerBros would have pulled out of it, instead they doubled-down by hiring some big names. As of last week, there’s also a trailer for the thing and it looks as gruesome as one would imagine. While making animated characters interact with real-life actors is tough, doing so with 2D characters of such fame as these two is damn right impossible, with the final look appearing unnatural to the point that characters appear to be from two different movies. I’m just wondering if the COVID quarantine has lowered the bar we expect of movies to such an extent that viewers would watch pretty much anything by the time this launches next year, and the recognizable characters will just be enough to push more people over the edge😾🐭
4. A truck containing five million pounds worth of Apple products was hijacked in the UK last week but fortunately, no one was hurt in the incident. We don’t know exactly what was stolen but some quick math gives us around 3 iMacs and 2 XDR displays🦝🦝
5. TIME’s list of best inventions from 2020 is out and this is always something that’s fun and informative to go through, at least for me, the ‘Sustainability’ category has some interesting entries and a familiar name💡
6. Here’s a question I often — read ‘never’ — hear from readers: ‘What do you get the boat-owning alpha male in your life that has it all?’ Well, an underwater drone that can go down to 175 meters, of course. If during the dot-com bubble you could foresee the downfall of a multi-billion dollar company whenever its owners would start buying yachts and Gulfstreams, this might be the ‘indicator species’ for companies of lower value that just got through their first money raise🛥️🛸