Overview
Roblox is an online videogame application that allows players to build their own games and play other people’s games. At the time of writing, the Roblox portfolio consists of more than 50 million videogames.
The business has developed a few revenue streams, including ad campaigns, royalties, and license fees in addition to the Robux sales.
The business began in 2004 and was based in San Mateo, California. From there, the company has grown into a global phenomenon as the most visited gaming space on the internet. In 2021, the firm will be listed on the New York Stock Exchange via a direct listing.
Company Profile
| Company Name | Roblox Corp. |
| Website | https://www.roblox.com/ |
| Founded | September 2006 |
| Founders | Erik Cassel & David Baszucki – Co-Founders |
| Key People | Manuel Bronstein – Chief Product Officer, Craig Donato – Chief Business Officer, Mike Guthrie – Chief Financial Officer, Matt Kaufman – Chief Systems Officer, Barbara Messing – Chief Marketing & People Experience Officer, Mark Reinstra – General Counsel, Daniel Sturman – Chief Technology Officer |
| Headquarter | San Mateo, California |
| Company Revenue | $920 million in 2020 |
| Key Competitors | Flow Play, Mojang, Epic Games, Unity Technologies |
What is Roblox? A Brief History
Source: Gamerempire
Gamers using this platform may connect with other players and game developers. Though it might appear that this company prioritizes older customers, it is reported that users aged under 15 years old have the most proportion in total.
Since the firm offers a platform that enables developers to create interactive experiences for its consumers, the community is extremely passionate about playing online games. Therefore, developers can personalize the games in accordance with the user’s experiences and preferences.
Given that Roblox’s members create its contents, the system quickly grew in popularity and was able to offer an impressive array and diversity of game types. As a result, a flywheel effect was established, attracting numerous players, who in turn can contribute and play additional games.
The gaming business expanded organically throughout its first several years of existence. Because of its success, they were able to obtain the funding as a starting investment back in 2009, earning the firm $2.3 million in cash.
Moreover, the company’s website had nearly 6 million monthly visitors in 2011. On top of that, Roblox’s cloud-based architecture would therefore enable the creation of multiplayer games on different platforms.
Consequently, the developers then had to proceed with the work by releasing the game on Xbox, Android, iOS, and Oculus Rift.
How Does Roblox Work and What Does it Offer?
So how exactly does Roblox work?
For registration, usernames should not put actual names when using the platform. The app will request users to fill in the information, such as genders, birthdates, and a password. From there, the users will be signed up and have an account. It is the same process as registering on Facebook and other social media.
Furthermore, the platform features a profile that contains records of the user’s gameplays, posts, friend lists, friend followers, and friends following. Plus, there is also a group and badges that users are engaged in.
What does Roblox offer to its consumers?
Source: Roblox
Like other online games, when users have registered, they will be able to pick from a wide range of games. Other than that, the users may personalize their characters and begin making connections with other people and friends on the platform.
Users can take part in a group or create one on their own and invite other players to play with. In a group, all members can text each other and create a gaming appointment.
After that, players can pick a particular game to play with their friends. During the game, each player can look at the top-right screen to see a player list.
However, there is a chat feature on the top-left side of the screen, which users can use for communication in the game. You may send private messages to other players by selecting their names from the list of available names in the chatbox.
Roblox Business Model
Roblox adopts a Freemium business model, which lets people make and play games. Users may engage in a lot of games after they register an account on the platform. The players can play over 50 million different games. So it is all up to you.
The business offers a studio that is the only program that can be used to create games. They are able to customize the avatars by purchasing Robux in the store. Robux is similar to a utility token, in which it is represented as a virtual currency that allows users to purchase anything related to the games.
As a result, visitors may create and upload avatars of their own personal hero icons.
Despite the fact that players can play for free, they must access more advanced features and customization by buying items. This could cause problems among family members who do not know about their debit cards.
The company has attempted to address this issue by requesting its customers to buy part of their game currency on the Robux platform. As soon as users purchase on Robux, their account holders should be fully refunded to their own Robux accounts.
Besides, players can subscribe to the platform once at a time or on a monthly basis, so that the account will be automatically credited. This is a great way to keep an eye on the money your kids spend on the website.
Roblox Unique Selling Propositions
The Roblox system is designed to mimic a real economy along with its own digital money by allowing community members to utilize Robux for any purchases. Whereas the majority of the games are totally free, players may upgrade their adventures, avatars, and other aspects of the game by purchasing Robux.
In addition, the company will get a tiny share of each sale. There are two ways for players to acquire Robux: pay a one-time subscription, or a Roblox Premium, and others.
The following four methods are available to designers and devs:
- Designers get revenue by monetizing the online games they build.
- Creators are compensated depending on the amount of time that the premium customers pay for the games through the subscription.
- By providing tools for programmers.
- By listing products for sale on the Avatar Marketplace.
How Does Roblox Make Money?
Along with Robux transactions, the firm earns revenue from royalties, advertising, and licensing. Moreover, users have to pay for higher and more advanced features and functions. Now let’s take a look at each point carefully!
Robux
To play the game, players must purchase Robux, which is computer-generated money that allows them to customize the overall appearances of the player’s avatars, as well as participate in more adventures and better the experiences.
Robux sales account for the bulk of the company’s revenue. As an added bonus, those who pay on a regular basis obtain store discounts as well as better returns from their used goods and the opportunity to trade with other subscribers.
Royalty
The payment of royalties is required if a player desires to obtain exclusive rights towards the next IP party. Thus, owners of intellectual property (IP) must collect a charge every time their intellectual property is used.
License
Walmart and Toys R Us, the Roblox partnerships, pay a licensing fee to offer the business merchandise to its users.
Advertisement
The business has worked with a number of well-known companies, like Marvel and Lego, to promote their products on the platform in return for a fee.
As a result of the company’s strong brand awareness, the ad wanted to promote them. With millions of regular visits and mostly young consumers, it is an excellent demonstration for marketing.
Roblox SWOT Analysis
An organization typically conducts a SWOT analysis to determine the strong and weak parts of the business. Plus, the analysis is also helpful for assessing its competitive advantages and dangers.
Strengths
- Users can find more than 50 million different games on the platform’s library
- In 2020, the daily users reached 32.6 million
- Creative designers and developers can build and personalize the characters on the platform
- Robux works as a native token for community members to buy, sell, and trade the gaming items
- The firm started its first funding round back in 2021, so the shareholders were able to withdraw their initial investment for profits
- As of now, the company has nearly $900 million in funding.
Weaknesses
- The platform was attacked by anonymous hackers who attempted to steal an avatar, Gang-Raped, by changing the code
- The company encountered a huge loss of $250 million over a few years
- Creating characters is limited by the gaming pool
- The firm used to exclude a big chunk of stock to compensate for its cash flow
- As most users are 15 years old or less, the games might affect their future of them.
Opportunities
- To address societal expectations, the company might expand its market by extending out to other regions
- Build reliable and secured cyber security
- Developing constructive gaming experiences are vital for players
- Expanding the market share of teenagers and adults is also important.
Threats
- Maintaining the game’s excitement and adventure is a huge treat
- Another arising risk is to compete with other giant corporates, including Meta, Epic Games, Microsoft, and many more
- The gaming system is still prone to hacking
- Because of the business’s numerous flaws and the intense competition, the firm might face a huge downfall.