Roblox High School

Roblox is ready to grow

Roblox led to a sevenfold increase in pandemic-era growth, an exploding user base and a wildly popular Lil Nas X concert with tens of millions of attendees. That success is largely thanks to Roblox’s core user base of young and highly engaged players.

Now, those kids are growing up and Roblox is trying to grow up too. The all-ages, user-generated gaming platform is announcing plans today to add age guidelines to its games and significantly expand its advertising business as it seeks to court an older demographic, expand its revenue streams and still support the needs of its millions. Young players.

The changes are a major step in how Roblox thinks about its users and how the company approaches advertising. Roblox — and the millions of people who create games for the platform — will soon have a new way to make money and an opportunity to target a slightly older demographic. Roblox’s ability to become a billion-person platform with thousands of creators backing it depends on whether these new features can translate into growth and profit.

“When we started, the majority of people on our platform were under the age of 13. We’ve now passed a huge milestone where the majority are over 13,” said David Baszucki, CEO of Roblox. to the edge “In the long term, we’re very optimistic that this kind of technology will support people around the world and in broader ways to connect and stay together.”

Up until this point, Roblox was mostly known for its popularity among children – at one point, the company said that half of US children under the age of 16 played Roblox. Now, as its user base gets a little bigger, Roblox is looking for ways to keep them coming back and give advertisers more targeted ways to reach its 52.2 million daily active users.

A standing billboard in Roblox is shown with an image of RDC 22 on it.

Roblox billboard ad.
Image: Roblox

At the company’s annual developer conference today, Baszucki announced huge changes to the platform, including a new immersive advertising system that will allow advertisers to reach players across millions of games — or “experiences,” as they call them at Roblox. Until now, creators have purchased banner ads using the in-game currency Robux, often resulting in nonsensical meme-like creations to entice players to visit and play their games. High-profile brands have also entered Roblox by working with developers to create custom experiences: Gucci Town and Spotify Island, and even a virtual Chipotle restaurant.

The new advertising system, meanwhile, is a way for brands to advertise on Roblox experiences through interactive billboards, posters and other surfaces. Working initially with a select group of companies and developers, the new ad system will allow creators to drop 3D ads into their own experiences — like a billboard at a sports stadium or atop a cab at a game — and generate ad revenue. In addition to advertising in user-created experiences, brands also include “portals” that act as tunnels between games, taking players to a new branded area, such as a shoe store or coffee shop on Roblox. The company will begin testing immersive ads later this year, with plans for a full launch next year.

“Effectively, Roblox will, where appropriate, have 3D ad units that will act as a massive ad server for all of these brands,” Baszuki said. “We are very careful about who these brands are initially. But in the long term, it will shift more and more to a self-service model for brands that fit our platform.

The GIF shows a Roblox player entering a branded portal ad for Vans shoes.  On the other side is the skate park.

A portal ad for Vans takes players into a branded experience.
Image: Roblox

Advertising in the Metaverse is still unproven, but brands are already seeing it as the next place to target potential customers. In-game purchases on platforms like Roblox and Fortnite The token for money to be earned on Metaverse can be: Fortnite $50 million off skins from just one partnership with the NFL, for example, and on Roblox, some players have paid thousands for virtual Gucci products. But Roblox “bookings” — the amount players spend on Robux, of which the company gets a cut — missed estimates last quarter. Roblox went public last year following an explosion in popularity during the pandemic, but its stock has fallen and it’s still not profitable.

The push to bring more advertising to Roblox comes as the company scrutinizes how it handles advertising already happening on its platform. In a Federal Trade Commission complaint filed earlier this year, the watchdog group Truth in Advertising found branded Roblox experiences poorly marked, making it difficult for young children in particular to determine whether the game was sponsored. With immersive ads, Baszucci said Roblox moves with “extreme conservatism” — brands can only reach players 13 and older, and Roblox discloses when experiences contain ads.

If immersive advertising is a boon to Roblox’s business, it holds the same promise for the developers responsible for creating the games. Roblox developers have a few ways to make money on the platform: they can create and sell items like clothes for avatars, or offer in-game purchases that players can buy using Robux. In 2020, Roblox introduced premium payments, which pay game developers based on the time they spend on the experience they create. Roblox said it paid creators $538.3 million in 2021, earning more than 2.7 million Robux in June. In terms of creator payment for ads, Roblox “will be very consistent with the way we share revenues with the community today,” says Manuel Bronstein, chief product officer.

Currently, after app store fees and Roblox take its own cut, creators are left with about 30 percent of revenue from in-app purchases — far less than other platforms. Some creators say that even if they spend time developing games, it’s hard to make a profit, especially since millions of kid developers are starting to do what they love to try to make their game a success. The top 1,000th developer earns about $32,000 a year, and the majority of developers monetizing on the platform are over 18, Roblox said.

At the time of launch, the company was thinking about immersive advertising as a product for players aged 13 and above, and it will go along with new age guidelines on the platform, which will dictate experiences appropriate for different ages. To begin with, the games have three tiers: 13 and up, 9 and up, and all ages, with descriptions of what content each game contains, such as violence or blood. Parents can then choose what type of game their child wants to watch.

“In the movie business, we have G, PG and PG-13… and I think that’s a good metaphor for where we’re going,” Baszucki said. “There is no R-rated content on Roblox. We think everything is really reasonable and nothing different from what we find on streaming video or other channels.

Kids still make up the majority of Roblox players – just 52 percent of users are over 13 good luck. But Roblox is seeing the fastest growth among players in their late teens to early 20s, and Baszucci says Roblox’s focus as a platform for kids is changing.

“If we look at the growth from 17 to 24 [year old group]it’s mainly because people are still socializing and playing, that perception will go away,” Baszucki said. Certain events on Roblox, like some of the concerts, attract an older audience. And in the not-too-distant future, there may be Roblox experiences aimed at adults — for example, working in digital spaces or 17 and older. Games more suitable for people with

Many Roblox users go to the platform to hang out with friends, and the company announced several updates to its avatar and social features at the developer conference. Avatars are more expressive with facial expressions like smiling and winking, and soon, Roblox players will be able to chat with each other using avatars, animating their avatar’s expressions with their camera. The company will begin testing voice chat with filters for players under 13, along with a 13-plus option with lower restrictions.

Roblox relies on developers — from hobbyists to full-fledged studios — to build its attractions that bring players. Bronstein announced today that the company’s $25 million Game Fund, which gives developers money and support to create the next big Roblox game, will receive an additional $10 million in incentives.

The addition of immersive ads, age guidelines, and more social features wants to prove that Roblox isn’t just for little kids anymore. Its goals to grow — and make enough money to support “thousands” of developers themselves — depend on expanding its audience beyond the people who made it big in the first place.

“We have a mission statement of wanting to connect a billion people with optimism and civilization,” Bronstein said. “But in order for us to reach that wonderful goal and wonderful mission, we absolutely need to grow in age, grow internationally and all of those things.”

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