More on Roblox and the Metaverse. I’m absolutely fascinated with Roblox because it seems to have done what Facebook WANTS to do, years ago. And continues to do well. Roblox (RBLX -9.67%) is a gaming platform that is enormously popular with younger children, with approximately half of its users aged 13 or under.
In third-quarter 2021, daily active users reached 47 million compared to 36 million in Q3 2020, a 31% increase.
These users are also playing more, increasing the number of hours engaged by 29% to 11 billion. Part of its appeal is that Roblox features many games within its platform, and several of them offer virtual worlds (the metaverse) where users can interact with one another. Millions of children are socializing in Roblox without ever leaving their homes.
Founded in 2004, the platform now has 47 million daily active users globally and 9.5 million developers who build out “experiences,” aka user-created worlds and games. Roblox is more akin to Fortnite–parent Epic Games, in that it’s focused on building an immersive world within existing gaming tech, rather than investing heavily in nascent tech like AR and VR. In July 2020, the company claimed that over half of American children play the game.
In 2021, Roblox saw a surge in anime and horror experiences. New titles like Anime Fighters Simulator and The Mimic quickly accrued hundreds of millions of visits while existing titles like Shindo Life and Spider saw their activity double year-over-year. Certain subgenres like simulator collector experiences also saw a four-fold year-over-year engagement time spike, particularly those that require users to collect minions to fight non-player characters (NPCs).
The company went public in March 2021 at a $40 billion valuation. That figure has since risen to over $67 billion.
People are already making millions selling virtual items in Roblox: In a profile of Trusov, Business Insider scanned his income documentation and verified that he had cleared more than $800,000 in 2020 and $1.4 million in 2021.
Bloomberg analysts predict that the metaverse could balloon to an $800 billion market by 2024.
How Does Roblox Make Money?
Roblox uses a Freemium model for its users. While games are free to play overall, users can only access more advanced features and customizations by paying for them. On other platforms, however, this type of micro-transaction has caused many problems for the unaware parents and their bank accounts. But Roblox has attempted to solve this issue by simply requiring players to buy a set amount of its in-game currency (Robux). Once the currency has been used, then players’ Robux accounts need to be refunded. Users are able to set up a one-off payment, or they can set up a monthly subscription to refund the account. This is a great solution for managing what kids spend on the internet.
In 2020, Robux generated 35% of its revenue through Robux sales via Apple’s App Store and 19% through Robux sales via Google Play Store. It is estimated that Roblox makes around $12.50 for every 1,000 Robux sold.
Currently, Roblox has advertising deals with Disney’s Marvel, Lego, and AT&T’s Warner Bros. It also has partners in the form of Toys’R’Us and Walmart, who are able to sell Roblox-branded items bringing in revenue from its licensing agreements. It has also got further plans to host ‘live’ virtual events, having done so in collaboration with artists such as Twenty One Pilots and Zara Larsson in 2021.
With regards to royalties, Roblox allows developers to keep the full copyrights of their intellectual property (IP). However, it retains the right to license out the developer’s products and collect royalties whenever the IP of developers is displayed on another party’s website, forum, etc.