Metaverse Review: Roblox
What is the platform about?
Created in 2004 by David Baszucki and Erik Cassel, Roblox (NYSE: RBLX) is a user-generated video game platform that hosts millions of games and users who actively engage in social and interactive virtual experiences.
With over half of its user base under 12, it’s easy to see how Roblox can capture a significant share of the future gaming economy. With a primary audience whose disposable income will increase significantly over time, Roblox has an incredible opportunity to cement itself as the undisputed leading metaverse.
Business Model
Having experienced explosive growth in 2021, Roblox made $537M in revenue for Q1 2022 and is on pace to double its earnings from 2021. But how exactly do they make money?
Main Sources of Income
- Bookings of Robux, their platform currency:
- One-Time ($1.39 CAD -> 80 Robux, $139.99 CAD -> 10,000 Robux)
- Monthly ($6.99 CAD /Mo = 450 Robux, $27.99 CAD /Mo = 2200 Robux)
This presents a base exchange rate of $1 USD ~= 44.96 Robux
2. Platform Transaction Fees
- 30% of Robux spent in-game goes to Roblox, remaining 70% goes to the developer / creator
- 70% of Robux spend on assets in the marketplace goes to Roblox, remaining 30% goes to the developer / creator
This fee model incentivizes game creation over asset creation.
4 Pillars of the Business
The success of the platform isn’t as simple as charging users in-game currency and transaction fees. There are 4 main pillars of the business that form its foundation.
- Gaming Engine
- Cloud Service Provider
- Social Network
- Distribution Platform
First, they provide a gaming engine to power all Roblox experiences and games while allowing anyone to create and develop on top of the engine, lowering the barrier to game creation and platform development. Second, as a cloud service provider, all games and assets created are hosted by Roblox so creators and developers can focus on content rather than infrastructure and also allows content to be accessed anywhere in the world, on any device. Third, as a social network, it provides a deeper level of engagement that goes beyond product features and game quality. This enables users to be the ambassadors and promoters of the platform. Lastly, as a distribution platform similar to YouTube, game developers and creators can create experiences that directly serve millions of users. This increases the velocity of content created and further enriches the platform.
Popularity
Roblox currently has over 54M daily active users (+28% YoY) and has logged over 11.8B hours of engagement (+22% YoY). That’s approximately 219 hours per DAU which means users log about 2.4 hours every day. With over 9.5M developers on the platform, it’s easy to see why the Roblox games library is home to over 40M experiences.
Here are the most popular Roblox games/experiences (at the time of writing):
- Adopt Me — 29.3B+ Visits, 24.6M Favorites
- Brookhaven — 21.2B+ Visits, 14.5M Favorites
- Tower of Hell — 18.7B+ Visits, 10.2M Favorites
- Alo Sanctuary — 44.8M+ Visits, 274K Favorites
- Gucci Town — 31.8M+ Visits, 144K Favorites
- Nikeland — 19.4M+ Visits, 114K Favorites
Transaction Volume
- $631M in Bookings for Q1 2022 (-3% YoY)
- $11.67 Average Bookings per Daily Active User (-25% YoY)
Device Compatibility
- Available on PC, Mac and Mobile
- Compatible with VR
- Not supported on Linux
What makes it unique?
Although a centralized company, Roblox is unlike any other metaverse platform today as most of its games, experiences, and assets have been built by its users. The platform does not provide strict guidelines and approval systems for publishing which often leads to IP infringement. However, it allows users the flexibility to easily develop and create virtually anything. A big reason for this is the Roblox Creator Studio. The game creation tool is phenomenal when it comes to programming, data analytics, and 3D customization. Watch our Youtube video to learn more.
Why should brands consider it? What makes it relevant? What are the opportunities?
Roblox presents an entirely new way to engage with customers and meet them where they are. It’s a standalone experience that can not only market your product or service but also develop a new revenue stream directly through monetization of the game experience. The platform also presents a unique opportunity to seamlessly integrate physical and virtual experiences. Moreover, brands can leverage Roblox as a new user acquisition channel where they can gather data, track users and convert them.
Nikeland is a notable example of how a brand can effectively design, build and operate a Roblox experience. Nike is utilizing its existing sponsorships by inviting athletes such as Lebron James to connect directly with fans. Nike is also effectively leveraging Roblox to advertise its new product launches with virtual skins such as the new Lebron 19s.
Rating
Engagement
5 —With over 40M games spanning countless genres, Roblox experiences provide users with a full breadth of user controls and interactions. From Tower of Dread where users race against the clock to climb the tower to Adopt Me where users role-play in a SIMs-like MMORPG environment, there are endless possibilities for what users can do and build on Roblox.
Immersiveness
3 —Depending on the device (PC, Mobile, VR) and the game you are playing, Roblox games can appeal to several senses that add to a user’s sense of presence within a virtual experience. However, the look and feel of Roblox is quite unique and veers away from the similarities of reality. It also doesn’t usually have an extensive storyline nor is there always a sense of realistic controls which breaks the feeling of immersion.
Social Interactivity
4—The foundation of success for Roblox has been the highly social nature of its games. With over 60% of its users under the age of 16, it’s no surprise that Roblox acts as a virtual playground for after-school activities. It has features such as adding friends and messages that allows you to connect with other users. In addition, Roblox provides a user profile where you can showcase your avatar and creations with other users. All Roblox experiences can be published directly to the store. While Roblox experiences are highly customizable, there are still elements of an experience that are limited such as voice chat and screen sharing.
Centralization
2 —Roblox is centralized as a platform. As a publicly traded company, its governance structure is centralized around the board of directors and the executives of the company. In addition, its deployment runs on centralized cloud services. While users can purchase assets and content via the Roblox marketplace, they don’t own them outside of the platform.
User Generated Content Creation
5— Despite being centralized, Roblox allows all users to build and create on their platform without requiring ownership of Land NFTs or strict approval processes. As previously mentioned, the Roblox Creator Studio is one of the most robust creator tools on the market, allowing developers to programmatically apply any script to all 3D objects, change game physics and perform extensive data tracking.
Economics
3 — Although the Roblox marketplace is rich with in-game assets and avatar accessories, there are no integrations with external marketplaces since transaction fees are a core part of their business model. With a 30% take rate of in-game purchases and a 70% take rate on Roblox marketplace transactions, it’s clear Roblox won’t be opening up transactions on their platform anytime soon.
Partnerability
5 —Roblox is the metaverse platform to partner with today. It has numerous partner programs such as Roblox Education, Roblox Video Stars Program, and Roblox Branded Experiences. At Roblox Developer Conference (RDC) 2022, they bring top developers from all around the world together to celebrate, collaborate, and learn about the future of the company and their predictions for the platform. With big brands, such as Nike, Gucci, and Tommy Hilfiger, already publishing on the platform, it showcases the trust and reputation that has already been established by Roblox.
Want to learn more about other metaverses, find our other reviews in our State of the Metaverse post.
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