Since being founded in 2004, Roblox has grown to be a global gaming phenomenon. As with nearly all successful companies, they are going to take their talents to the public markets. Becoming a public traded company with the associated disclosures
allow us to get some insights into what has and will continue to make Roblox successful. Below are 7 trends that the upcoming Roblox IPO reveals about the Future of Gaming.
- Gaming Continues to Grow in Popularity - With an average of 36.2 million daily active users, Roblox has demonstrated that gaming isn’t going anywhere anytime soon. While there is no doubt that the global pandemic has helped accelerate this trend, the reality is that people enjoy playing games. To put this in context, Roblox had 12 million daily active users in 2018 and 17.6 million in 2019. So, we can see over the past 12 months, Roblox has been able to significantly grow their user base. As gaming is currently one of the safest ways for young people to interact with their friends, these trends are expected to continue for the next several years.
- Developers are essential to platform success - With Roblox studio, Roblox has created a way to enable developers to create games and make money in the process. The 7 million developers who are currently making content for Roblox is a strong indicator that the platform helps bring their ideas to life in a way that is both intellectually satisfying and financially profitable. Currently, approximately 1 million of these developers are able to successfully monetize their efforts with 250,000 earning more than $100,00 in Robux. With the standard 70%/30% split, there is definitely an opportunity here for Roblox to increase the developer community and their ability to monetize. As Roblox continues to grow their user base, more and more developers will invest in building on the platform.
- Virtual economies help create platform stickiness - While most experiences are free to play on Roblox, there is an opportunity to enhance this by purchasing Robux. By creating their own virtual currency system, Roblox has been able to create a virtual economy that enables both their platform and developers to make money in the process. As their economy continues to develop, I would expect there to be an opportunity to grow monetization opportunities for the platform.
- Modern and future gaming is inherently social - Initially, gaming didn’t have the opportunity to leverage a global, interconnected network. Now with both system and platform compatibility, gamers can engage with friends they know well and those they don’t. By creating a safe social experience for gamers, Roblox has been able to build a massive user base and as network effects continue to play a role, this will only grow.
- Create safe and secure environments will be a challenge - While Roblox has done a good job focused on the safety and security of their platform, the reality is that there is still less than desirable content that pops up from time to time. With Roblox studio, developers can create their own content and sometimes those creations will not meet community standards. Although, Roblox is able to identify and shutdown content that violates its standards, that still creates a level of friction for growth as it makes parents nervous about what their kids might be exposed to. In fact, Roblox cites safety of their user base as one of the risk factors that if they are not able to stay on top of could significantly impact their ability for success.
- Virtual identities are important - Most kids and their parents have an understanding of the need to be safe when engaging with online experiences. However, we are also inherently social creatures who don’t want to interact with nameless and shapeless blobs. Roblox has created a unique solution to this with their virtual avatars that allow users to create an identify that is both unique and can maintain their anonymity. This trend will likely continue not just on Roblox but other gaming platforms.
- Variety of content & user experiences - Anyone who spends anytime around kids knows that they love Roblox. However, when you dive a bit deeper, you will quickly find that they do not all engage with the same content. In many ways, Roblox provides something for everyone. By having a wide variety of content utilizing a similarly structured platform, Roblox is able to take advantage of one of the most challenging user experiences - personalization at scale. With Roblox studio, developers can take advantage of this freedom to make the experiences they want tot make and users can find something that is interesting to them. Expect other platforms and gaming systems to try to replicate this wide variety of content that Roblox excels with.
Conclusion - While Roblox can’t clue us in on everything about their future plans due to competitive reasons, there are plenty of insights in their IPO documents about how gaming is going to continue to be a globally dominant force. For the next generation who is currently playing these games, pay attention to these emerging trends as you will be apart of taking these developments and continuing to build upon them.