David Baszucki, CEO of Roblox. Courtesy of Roblox
Roblox, an online platform that combines games, social media and remote user-generated content creation, was one of the biggest winners at the start of the COVID pandemic as millions of people sought virtual connections.
Its revenue doubled in 2020, with millions of people flocking to its platform to create games in the virtual universe. The company is now seeking to attract more users, aiming to reach one billion daily users, a multiple of today’s 66 million, and become profitable after years of deep losses.
Paving this path, the company began working closely with brands like Nike and Ralph Lauren to eventually allow shopping directly on its metaverse platform. Children under 13 years old make up the main audience for Roblox. But with 17 to 24-year-olds now the fastest-growing age group, moves like collaborations with retail brands will become increasingly important to attract older enthusiasts, says Roblox CEO and co-founder David Baszucki. Fortune.
Roblox, founded in 2004, is still seeing daily user growth, albeit at a more moderate pace since the pandemic. However, costs are rising faster than revenues. Roblox had a massive net loss of $934 million on revenue of about $2 billion in 2022, and that losing trend continued this year as the company invested heavily in research and development, including artificial intelligence, and improving its security infrastructure users.
While Roblox shares have recently risen after recent financial results showed progress in controlling costs and user growth, its stock remains about 40% below its 2021 IPO level amid pressure to grow beyond its youth base and concerns that interest in metaverses has become sluggish. compared to his past hype. Basutsky is outraged by the assumption that interest in The Metaverse reached its peak by declaring that it’s not so much the prevalence of the term, but its ability to promote what humans are innately programmed for: connection. “The mission was to connect billions of people every day with optimism and civility. And that was consistent whether there was a buzz around that particular term or not,” says Basuki. Now he must find a way to profit from this basic human propensity.
This interview has been edited and condensed for clarity.
You often mention that you want “politeness” in Roblox’s online offering. Is this a realistic goal?
Within a month of launching Roblox, when there were just four of us in the office, we saw a vision of how civilization could be a beautiful part of our mission. We created a civility and safety moderation system within a month of launching it, with four of us co-founders as moderators. At the September Roblox Developer Conference, one of my predictions was that we would publish a generalized score of the civility of users on our platform and that as people come to Roblox, they would be able to see it move up and down. (The company declined to provide a timeline for implementing this indicator.)
During the pandemic, Roblox usage has gone through the roof. How has Roblox gotten people back to more face-to-face interactions?
When people couldn’t get together, Roblox gave them a way to be together. We often see behavior where people use it as a place to hang out or socialize. We’ve increased all of our metrics since that peak time, so the social communications platform foundation has shown it has the strength to grow post-pandemic.
So how do we reach one billion daily users, one seventh of humanity?
One way is to expand the age range on our platform. Secondly, we are approaching the state we are in around the world, to the state we are in now in the United States. Japan is growing at 100% year on year and Brazil is growing at around 30-40%. The third vector is that people are more likely to use Roblox for spontaneous connections beyond half-hour or hour-long gameplay. Another one of my big predictions is that within the next five years, a musician will spontaneously perform live on Roblox in front of over a million people.
Let’s talk about Roblox’s potential in the metaverse via partnerships with brands such as Ralph Lauren. Will we see more of this type of marketing?
Traditionally, we have seen brand advertisements in newspapers. More recently, we’ve seen banners and video ads, and then more native and immersive ads. Now there’s a level of immersion, like at Vans, where we can put some merchandise and a skateboard together and see what sells.
So how can retail partnerships evolve?
Just like we can shop on a website or in a brick-and-mortar mall, you and I have the opportunity to go shopping at a third virtual stop.
What brands are best for this?
We’ve seen early innovation from brands like Gucci, which sold $3,000 items on Roblox. But we should expect a wide range. I wouldn’t rule out automotive, consumer electronics, film, and I certainly wouldn’t rule out fashion and beauty.