RDC 22 imagery displayed on a vertical billboard in Roblox.

Roblox is ready to grow

Roblox rode a wave of pandemic-era growth with a sevenfold increase in value, an explosion in its user base, and a wildly popular Lil Nas X concert attended by tens of millions of viewers. Much of this success is due to Roblox’s core user base, which is young and highly engaged players.

Now, those kids are growing up, and Roblox is trying to grow up. The all-age, user-generated gaming platform today announced plans to add age guidelines to its games and significantly expand its advertising business, as it works to appeal to an older demographic, expand its revenue streams, and still support the needs of its millions of young adults player.

These changes are an important step in how Roblox sees its users and how the company handles advertising. Roblox — and the millions of people who create games for the platform — will soon have a new way to make money and the opportunity to target a slightly older demographic. Whether Roblox can become a billion-person platform with thousands of creators will depend on its ability to translate these new features into growth and profit.

“When we first started, most people on our platform were under 13. We’ve now crossed a huge threshold where most people are over 13,” Roblox CEO David Baszucki told edge. “We’re very optimistic that in the long run this technology will support people around the world and be connected and connected in many ways.”

So far, Roblox is probably mostly known for its popularity with children — the company has said that more than half of U.S. children under the age of 16 play Roblox. Now, as its user base gets older, Roblox is finding ways to keep them coming back and giving advertisers a more targeted way to reach its 52.2 million daily active users.

Roblox billboard advertisement.
Image: Roblox

At the company’s annual developer conference today, Baszucki announced a series of sweeping changes to the platform, including a new immersive advertising system that will allow advertisers to reach millions of players of the game — or they are Called the Roblox “experience”. Until now, creators used the in-game currency Robux to buy banner ads, often resulting in ridiculous meme-like creations to entice players to visit and play their games. Well-known brands are also dabbling in Roblox, partnering with developers to create bespoke experiences: Gucci Town and Spotify Island, and even a virtual Chipotle restaurant, among others.

Meanwhile, the new advertising system is a way for brands to advertise within the Roblox experience through interactive billboards, posters and other surfaces. Initially partnered with a select group of companies and developers, the new ad system will allow creators to place 3D ads into their own experiences — like a billboard in a stadium or a taxi top in a game — and receive a cut Advertisement Income. In addition to ads in the user-created experience, brands can also have “portals” that act as tunnels between games, taking players to new branded areas in Roblox, such as a shoe store or coffee shop. The company will begin testing immersive ads by the end of the year, with a full rollout planned for next year.

“In effect, Roblox will have 3D ad units where appropriate, as a large ad server for all these brands,” Baszucki said. “We’re very cautious about who these brands are initially. But in the long run, it’s going to be more and more a self-service model with the right brands for our platform.”

GIF showing Roblox players entering a brand portal ad for Vans shoes. On the other side is the skate park.
GIF showing Roblox players entering a brand portal ad for Vans shoes. On the other side is the skate park.

Portal ads for Vans bring players into the branded experience.
Image: Roblox

Advertising in the virtual world has yet to be confirmed, but brands are already seeing it as the next place to target potential customers. In-game purchases on platforms like Roblox Fortnite May offer signs of making money in the metaverse: Fortnite For example, one collaboration with the NFL earned $50 million from skins, while in Roblox, some players paid thousands of dollars for virtual Gucci products. But Roblox’s “bookings” — what players spend on Robux, from which the company gets a cut — fell short of expectations last quarter. Roblox went public last year after a surge in popularity during the pandemic, but its stock has fallen and is not yet profitable.

The push to bring more advertising to Roblox is coming, along with scrutiny over how the company handles advertising that is already happening on its platform. In a FTC complaint filed earlier this year, the watchdog group Truth in Advertising said the branded Roblox experience was poorly recognizable, making it difficult to discern whether a game was sponsored, especially for younger children. With immersive advertising, Baszucki said, Roblox will grow in an “ultra-conservative” way — the brand will only be able to reach players 13 and older, and Roblox will disclose when the experience contains ads.

If immersive advertising is to be a boon for Roblox’s business, the developers responsible for making the game have the same commitment. Roblox developers have several ways to make money on the platform: they can create and sell items, such as clothing for avatars or offer in-game purchases, which players can buy using Robux. In 2020, Roblox introduced Premium Pay, which pays game developers based on the time it takes to create an experience. Roblox said it paid creators $538.3 million in 2021, with more than 2.7 million people receiving Robux in June. Chief product officer Manuel Bronstein said Roblox will “align with the way we share revenue with the community today” when it comes to ad creator payments.

Currently, after app store fees and Roblox’s own dividends, creators get the remaining 30% of their revenue from in-app purchases—much less than other platforms. Some creators say it’s hard to monetize despite the time they’ve invested in making games, especially for the millions of child developers who start doing what they love but are exhausted trying to make their games successful. According to Roblox, the top 1,000 developers make around $32,000 a year, and the vast majority of developers monetizing the platform are over 18.

At launch, the company sees immersive ads as a product for players 13 and older, and it will go hand in hand with new age guidelines on the platform that will designate certain experiences as appropriate for different age groups. First, games will be divided into three levels: 13 and up, 9 and up, and all ages, and describe the type of content each game contains, such as violence or gore. Parents will then be able to choose the type of games they want their kids to see.

“In the film industry, we have G, PG and PG-13 … 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 very reasonable and no different from what we might find on streaming video or other similar channels.”

Children still make up a large portion of Roblox players – according to the data, only 52% of users are over the age of 13 wealth. But Roblox has found that players in their 10s to early 20s are growing the fastest, and Baszucki said Roblox’s vision as a platform for kids is changing.

“When we see growth from 17 to 24 [year old group]mainly that people are still socializing and playing, and that perception is disappearing,” Baszucki said. Certain events, such as certain Roblox concerts, tend to attract older crowds. In the distant future, there may be A human Roblox experience – such as working in a digital space, or gaming more suitable for people aged 17 and up.

Many Roblox users head to the platform to hang out with friends, and the company announced several updates to its avatars and social features at its developer conference. Avatars will be more expressive, with facial expressions like smiles and winks, and soon, Roblox players will be able to chat with each other using their avatars, and their cameras will animate the avatar’s expressions. In addition to the less restrictive over-13 option, the company will also begin testing voice chat with filters for players under the age of 13.

Roblox relies on developers—from hobbyists to established studios—to build attractions that attract players. Brownstein announced today that the company’s $25 million game fund, which provides funding and support for developers to make the next big Roblox game, will receive an additional $10 million in funding.

The addition of immersive ads, age guides and more social features shows that Roblox wants to prove that it’s no longer just for little kids. Its development goal — to make “thousands” of developers earn enough to support themselves — hinges on expanding its audience beyond the people who made it big in the first place.

“We have a mission statement, and we want to connect a billion people with optimism and civility,” Brownstein said. “But in order for us to reach this amazing goal and mission, we definitely need to grow, internationalize, and all those things.”

Leave a Comment

Your email address will not be published.