In my previous post “What is the metaverse? any related companies? Are there any related companies? “, Roblox (ticker: RBLX), a very special company, was mentioned in.
Introduction
What does the company do?
Roblox enables its users to develop games using a simple, block-based system, share them with other users, and then monetize them to earn an in-game currency called Robux.
In the world of children, everyone knows
Grab a kid under the age of 13 in North America and ask him if he knows about robot bricks, and he will probably tell you that not only does he know, but he has been playing with robot bricks for a long time, and he has met people from different countries on it. Regional partners. Before the new crown epidemic at the end of 2019, the average daily active users of RoboBricks reached 19.1 million, including 11 million in North America.
According to the age distribution of users in 2019 – users under the age of 13 accounted for 57.6%, that is, more than 30 million primary school children log in to the machine brick once a month, and the local penetration rate reached 55%.
Type of special game
The simple game genre
Roblox is a sandbox game platform that integrates a large number of simple gameplay and simple graphics. Most of the games on the machine brick are non-professional developers, but the machine brick provides complete development tools and tutorials, which greatly reduces the threshold of game development.
Socially oriented
The difference between the machine brick and the ordinary game platform is that on the traditional game platform, each game is independent of each other, and most of them are stand-alone games. But on the robot bricks, by creating an Avatar virtual human image, players can connect with other players and interact socially in different games. This is also the basis for the machine brick to talk about the metaverse. On the machine brick, because of the addition of social elements, the player’s sense of immersion in the virtual world will be stronger.
The biggest difference between the machine brick and the traditional game platform is that the machine brick is essentially a UGC platform. Users can not only experience different games on the machine brick, make friends with different friends, but also become a content creator, develop a Earn Robux by playing a game or designing an avatar decoration. Robux is a game virtual currency that can only be used on the machine brick platform, 1 Robux=0.01 US dollars.
Great advertising potential
RoboBricks currently has 66 million daily active users and about 250 million monthly active users, although the number of users is incomparable with other social platforms. However, since the average daily active user time on the machine brick is as high as 2.5 hours, it has also attracted many brand owners to test advertisements on the machine brick, such as Gucci, Nike (ticker: NKE), Chipotle (ticker: CMG) and Spotify (ticker: SPOT).
Generative Artificial Intelligence Solution
Online gaming platform Roblox is launching two new generative artificial intelligence tools in February 2023 to simplify game creation: Code Assist for generating code through natural dialogue and Material Generator for creating material design through simple descriptions – To make game development easier. Currently in beta, these tools automate basic coding tasks by generating useful code snippets and creating object textures as prompted.
Competitors
Microsoft
Minecraft, acquired by Microsoft (ticker: MSFT) through mergers and acquisitions, is the most direct and powerful opponent of the Roblox in the field of children’s games.
Unity
Unity (ticker: U) is one of the main rivals of Robo-Bricks in the field of metaverse, or virtual reality games. For a detailed introduction to the company Unity, please refer to my previous article “How does Unity, the only software partner of Apple Vision Pro, make money
Strategic partner
Meta
Different from Apple(ticker: AAPL), Apple Vision Pro chooses Unity as the main software partner; Meta (ticker: META) head-mounted device Quest chooses the machine brick as the main software partner, the machine brick Block programs are also put on Meta’s Quest program store for Quest users to download. From this incident, we can know the importance of the mechanical bricks in the AR/VR metaverse.
Business model
Social attributes have advantages
The business model of RoboBricks is pretty good. In the game ecology and social ecology it creates, a large number of creators without bargaining power continue to produce content, and the RoboBricks platform sits firmly in the center of traffic distribution. Avoid the revenue fluctuations caused by excessive reliance on the hit product cycle that often exists in traditional game companies, and can also get a share of every profit.
Two Paid Services
There are two types of paid goods or services provided on the Robolox platform:
- One is that the creator provides materials such as virtual decorations to dress up the player’s Avatar avatar, such as hats, clothes, hand-held objects, and so on.
- The other is the props used in the game on the platform, such as resurrection opportunities, accelerators, etc., which are payment points set by game developers and have nothing to do with the official Roblox.
No matter which player pays for any of the above goods or services, they need to pay Robux (platform token).
Charging rate
Roblox’s charging rate can be divided into two different ways:
- Avatars decorations, after the player pays (exchange Robux with real currency, pay with Robux), the Roblox will share 70% of the Robux, and the creator of the material will share 30% of the Robux.
- For the cost of purchasing props in the game, the machine brick only charges 30% of Robux, and the remaining 70% is left to the developer.
Business development
Pandemic pushes up substantial growth
During the pandemic, as students stayed at home to spend more time creating and playing games, the growth of robot bricks accelerated, and the number of robot bricks bookings jumped by 45% in 2021. However, that growth spurt came to an end as the pandemic passed and its core audience of primary users returned to school.
But only 5% growth in 2022, to $2.9 billion, as pandemic-induced tailwinds dissipate. It’s also increasingly relying on lower-margin overseas and older users to drive its bookings growth, a pressure that has widened its net loss to $924 million in 2022 from $492 million in 2021.
But if we look at the quarterly growth of Roblox in terms of bookings, daily active users (DAU), total engagement time, and average bookings per daily active user (ABPDAU), we can see some clear signs of improvement over the past year (the form below).
| METRIC | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 |
|---|---|---|---|---|---|
| Bookings Growth (YOY) | (3%) | (4%) | 10% | 17% | 23% |
| DAU Growth (YOY) | 28% | 21% | 24% | 19% | 22% |
| Hours Engaged Growth (YOY) | 22% | 16% | 20% | 18% | 23% |
| ABPDAU Growth (YOY) | (25%) | (21%) | (11%) | (2%) | 0% |
Earnings for the first quarter of 2023
Machina’s average daily active users reached 66.1 million in the first quarter of 2023, while its average daily active user bookings (ABPDAU) declined – primarily due to its expansion into overseas markets leading to average bookings per user Volumes are lower – it appears to have finally bottomed out. Rolling out new generative AI tools for its platform could help it attract new creators or convince existing players to develop and monetize their own games.
Its bookings are expected to rise 19% to $3.4 billion in 2023, but net losses could still widen to $1.1 billion. As such, RoboBricks has yet to prove that its business model, which relies heavily on Robux sales, is actually sustainable. The company’s shares have come off all-time highs, but they’re still not cheap, trading at eight times 2023 sales bookings.
The main challenges
For the current Roblox, the most critical first step is – how to get more adults into the Roblox? Because most of the current users are children, even though there are a large number of users on the platform, children basically do not have the consumption power, which greatly reduces the platform’s liquidity of the Roblox.
Therefore, whether it is seeking higher payment power or seeking other new monetization methods such as advertising, Roblox still need more adults. Although the core competitiveness of RoboBricks is obvious among teenagers at this stage, it can be regarded as a game platform with the highest penetration rate, but if it is put into the eyes of game users of all ages, it can only be said that RoboBricks Blocks are moats, but not wide.
This is the main reason why the stock price of Roblox is currently undervalued in the market.
Related articles
- “How does Roblox make money?”
- “What is the metaverse? any related companies? Are there any related companies? “
- “How does Unity, the only software partner of Apple Vision Pro, make money?“
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