What is a growth story for Roblox?
Three weeks past the spring semester, 18-year-old students begin to realize the real life in college campus in Tokyo. Some are excited to leave their houses and spend their time with friends. The others are bored with deadly boring orientations and instructions from college lecturers. I taught marketing at five different campuses for a decade and found that most students came fifteen minutes late on class schedule and sleep in the back of the classroom. They did not read digital textbooks and handouts at all. Asian students in my class could choose whatever the topic they want to study and turned in paper or digital file for the final evaluation. Most topics were cosmetics, fashion, Disney, automobiles, smart phones and computer games, You know what kind of firms provide their services to college students. Poke-mon presentation was one of the best ones I have ever received with almost complete research but I wondered why a presenter student was so enthusiastic about computer games.
Last month, The Economist published a story of game platform with “School’s out” for Roblox. It illustrates a sign of great success in American story for consumers, developers and investors. A 16-year old start-up, led by Mr. David Baszucki, built its base on the idea of the “metaverse”. Mr. Baszucki describes it as the persistent virtual world where gamers meet each other, experience together, and making money for a living. For some developers and investors in Wall Street, it is becoming true.
A British newspaper sketches customer and developer foundation in figures. In America, three out of four children aged 9 to 12 signed up on the platform and daily active users reached 37m in 20m gaming experiences. In Britain, the numbers shows a half of population in teens signed up the platform.
Roblox attracts 8m young and amateur developers, among them, Alex Balfanz earned millions to develop a hit game. In 2020, the platform earned 300 of them a total of $329m to distribute $100,000 or more each for compensation. With $253m revenue in 2020, the firm reinvested 70% of it to software developers, hoping to develop more extraordinary hit than “Jailbreak”.
The firm raked massive cash from the capital market in January. It raised additional $520m in that month on top of the capitalization from mere $4bn at the beginning of 2020 to more than seven-folds, $29.5bn. It stands at $38bn. A broker reckoned that the share could be anywhere between $30 to $120 a piece at IPO and reportedly opened more than $64 a share.
With a basic profile with corporate figures, a college instructor like me argues in the introductory marketing classroom that students come to fully equipped with a growth strategy of game platform. An conventional approach depicts a generic framework of 4Ps, product, price, promotion, and place. As if they were a boss of the platform, what story do they make for fortune? No fancy analysis is required in the report or presentation. In the feature of product, game software comes on the digital world one after another. Developers quickly jump on the projects to release new games until players get on the fad with social network service such as Reddit. A good deal of them give birth to it and most of them will be gone soon. Unlike Disney with abundant financial support and professional creators, Roblox developers work in sink or swim around the clock.
On the platform, players sign up and play free. For enthusiasts, it induces to buy extra features such as avator outfits and accessories with digtal money. Monthly subscription and advertising on the platform could be a choice for further growth but the company seems to acquire enough money from the consumer market and proceeds from the capital market for the time being. Contrary to Disney, branding excludes sophisticated symbols and sticks to amateurs to gain the attraction of population from both consumer kids for next generation and developers for productive solution. Some of them make a good living.
For game distribution, the platform provides a digital city for kids. Physical bricks-and mortar stores are no longer adequate as long as Covid-19 keeps ailing school goers at home. School masters have kept Asian students in Tokyo off campus for more than a year. Instead of searching part-time jobs for restaurant with limited time during the lockdown, it is better to go ahead to start learning coding in online lessons such as Courcera. No time to sleep until they start to earn something.