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Master the Meta: Everything you need to know from Roblox’s first Investor Day

A glimpse into Roblox's numbers ahead of its IPO

Master the Meta: Everything you need to know from Roblox’s first Investor Day

Master the Meta is a free newsletter focused on analysing the business strategy of the gaming industry. MTM and PG.biz have partnered on a weekly column to not only bring you industry-moving news, but also short analyses on each. To check out this week’s entire meta, visit www.masterthemeta.com!

On Friday, Roblox hosted its first Investor Day presentation ahead of going public via direct listing in a couple of weeks. Leadership talked about the company’s mission, shared some updated numbers, and hinted at a few new developments to come. If you missed it, I recommend reading our initial analysis on the company from November, which quickly lays out what Roblox stands for, what its growth opportunities are, and notes a few key risks. Little has changed on that front; Roblox is still an incredible business with massive aspirations that’s moving very quickly.

The engagement and financial numbers management presented continue to be best in class.

Some 2020 highlights:

  • 32.6 million DAUs (+85 per cent over 2019)
  • 30.6 billion hours of engagement (+120 per cent over 2019)
  • There are now 20+ million experiences and 35+ million “items” in the Roblox store.

Source: Roblox's public presentation

And, of course, bookings follow these excellent engagement stats (and any profits are largely reinvested). It’s also worth spending a moment on creator stats. Out of the 8 million developers on Roblox, 1.25 million (15 per cent) earned income, 1,250 (.01 per cent) earned more than $10,000, a little more than 300 (.003 pet cent) earned $100,000+, and only a handful earned $1+ million. Yes, it’s great that there are development teams thriving on Roblox, but there’s room for improvement here. Roblox is naturally limited in what percent it can share with developers, especially since App Stores take their 30 per cent cut, but better incentives would do a lot of good (on top of increasing engagement-based Premium Payouts).

It’s an important point, but let’s not miss the forest for the trees. Despite a relatively low revenue share, the Roblox ecosystem is killing it, and there are more developments in the works:

  • Voice chat is coming. There will certainly be restrictions to keep it safe for kids, but it’s a nice addition nonetheless.
  • The team is working on more advanced avatars, likely a play at engaging and retaining older audiences. Note: 42 per cent of users are 13 and over.
  • These advanced avatars could come with more advanced features such as layered clothing and facial animations (thanks to the recent Loom.ai acquisition).
  • In 2021 Roblox will continue to experiment with new collaborations and even branded worlds. That’s a cool idea. There will be uninspiring branded worlds, I’m sure, but there are abundant opportunities for really interesting partnerships and awesome experiences.

It goes without saying that Roblox is crushing it. Sure, there’s room for improvement, and growth rates will inevitably decelerate, but it’s an amazing accomplishment. Roblox’s last funding round (a month ago) valued the company at $29.5 billion, essentially the identical market cap as Unity right now. When Roblox goes public in March, it will certainly trade for a lofty premium. Expectations are extremely high, so execution risk is quite real. However, if Roblox can motivate more creators, retain larger and older audiences, benefit from any App Store changes, and continue to raise the bar on what’s possible then it just might continue to surpass what everyone anticipates. Winners tend to keep on winning, and Roblox is as winning as they get right now.

Master the Meta is a newsletter focused on analysing the business strategy of the gaming industry. It is run by Aaron Bush and Abhimanyu Kumar. To receive future editions in your inbox sign up here:

 

 

 

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