By Alexander Lee • May 14, 2024 •
As Roblox evolves from a gaming hub to a full-service digital platform, the company’s leaders have made it clear that every step of this transformation is a calculated move. The eventual goal: to make Roblox a destination for all aspects of virtual life — and to turn a profit in the process.
The past month has seen a series of historic firsts for Roblox users, from the late April announcement of an e-commerce pilot test in collaboration with Walmart, to the May 1 rollout of video ads on the platform.
The platform is still growing: during its Q1 2024 earnings call last week, the company reported that its daily active user count had increased 17 percent year-over-year to nearly 78 million, with a 15 percent rise in user hours engaged during the same period. However, Roblox remains as yet unprofitable, posting a net loss of roughly $270 million for the quarter, on top of a roughly $1.2 billion loss in 2023.
To learn more about Roblox’s pathway to platform status — and how the past month’s announcements will help the company ladder up to that goal — Digiday spoke to Roblox vp of economy Enrico D’Angelo for an annotated Q&A.
This conversation has been edited and condensed for length and clarity.
On the other changes Roblox has implemented to become more of a platform
D’Angelo:
“The fact that we opened up Marketplace to all is another element of this. If you think about the vision of digital and real-world commerce coming together, you need to be able to have physical merchants come into the platform. And we’re nearly there — the Walmart proof of concept is the beginning of that. But you want digital merchants to be able to come to the platform, and in fact, you want physical merchants to become digital merchants. That will not be possible if digital commerce is not open to all.”
Digiday:
D’Angelo flagged Roblox’s decision last month to open up its digital item marketplace, which had previously been an application-only service, as a crucial step in the company’s plans to turn Roblox into a full-service platform. D’Angelo’s decision to draw a line between the opening of Roblox’s digital marketplace and the introduction of real-life commerce on the platform shows how the rollout of virtual commerce could act as a blueprint for the eventual expansion of Roblox e-commerce. Eventually, the goal is for just about any ID-verified user to be able to sell physical products on the platform, not unlike the way Amazon and Ebay’s third-party seller businesses have grown in recent years.
On the ways Roblox benefits from reaching platform status:
D’Angelo:
“If we are successful at starting this e-commerce business, and at attracting users and thinking of Roblox as a commerce destination, our engagement will be different. We’re going to drive older users to the platform; the benefits are going to be way beyond just ‘how do I monetize that one commerce transaction?’
If brands are monetizing, our advertising revenues will increase, because brands will want to drive more traffic to these real-money-making destinations. So now, all of a sudden, our advertising business will go from being just brand-awareness driven, which is what it is today, to almost a direct-response advertising business.”
Digiday:
D’Angelo’s explanation once again shows how one update to Roblox helps support the company’s goals in another area — in this case, the introduction of e-commerce and Roblox’s ongoing push to become an advertising network over the past year.
So far, digital ads on Roblox have relied on metrics such as brand awareness to convince brands to buy in, much like intrinsic in-game ad networks on other gaming platforms. The introduction of e-commerce represents a promising new revenue stream for Roblox; per D’Angelo, it also has the potential to bring Roblox’s ad business to the next level by making it possible for Roblox ads to drive sales directly — another parallel with Amazon’s evolution from an e-commerce website to a bona fide platform.
On the importance of maintaining a balanced economy on Roblox
D’Angelo:
If there’s no economic incentives in the long term, content creation will slow down. And our mandate is to actually make it accelerate, not to make it slow down. We have developers these days that have in some cases north of 100 people working at a developer, and that is a testament to the fact that Roblox is a great place for creators to come and make money and great content. If you look at our public numbers, we’ve been paying a lot more to our developer community every year. That’s a result of our economic system, combined, of course, with the great content that developers built on the platform.”
Digiday:
D’Angelo’s answer reflects the importance of maintaining a good relationship with the Roblox community as the company scales up. Roblox is walking a fine line as it implements more ads and commerce opportunities; though Roblox players are generally comfortable with the presence of brands in their games, this acceptance largely comes from the fact that recent updates that have been good for brands, such as Portal ads and e-commerce, have resonated with users, too. In 2023, Roblox reportedly paid out a record-setting $740.8 million to developers on the platform.
As Roblox positions itself to be a more ideal playing ground for brands, it is crucial for the company keep its community’s feedback and preferences in mind, too. And Roblox is already planning to implement even more new features in the near future. At last year’s Roblox Developers Conference, CEO Dave Baszucki shared a list of projections and predictions with audience members, teasing future developments such as in-platform education, professional recruitment and even Roblox dating.
https://digiday.com/?p=544768
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