IMD business school for management and leadership courses

 - IMD Business School  - IMD Business School  - IMD Business School
This is How Roblox Beats Facebook in the Race For the Metaverse

Published on September 20th, 2022

This is How Roblox Beats Facebook in the Race For the Metaverse

Published on September 20th, 2022

If you have school-age children in America, there’s a big chance you’re familiar with Roblox. It is a gaming company that many users under 18 enjoy. Most of its games are accessible on mainstream devices like PCs, phones, and game consoles.

At the latest developer conference, Dave Baszucki (Roblox’s CEO) announced that the company would start testing ads that would be immersive, meaning they would be placed inside the game itself, on virtual billboards or other places within the gameplay experience.

The company is also introducing a secondary market for the sale of virtual digital assets. These include clothes and accessories that players’ avatars wear. Players use Roblox’s virtual currency, Robux, to purchase digital assets within a game. Roblox gets a cut of each sale.

 - IMD Business School

Other new features include the ability for players aged 13 and older to chat with avatars that are close to them on Roblox. They can also import their contact lists and discover pals within a game.

If this doesn’t sound like a metaverse, I don’t know what does.

How Roblox Studio Turns Video Games Upside Down

The great thing about Roblox is that it’s not just a video game, but rather a platform that allows users to “do it themselves.” This is possible because of the company’s 3D engine, which people use to create their own games. Additionally, players can use capture technology to record emotions for their avatars. Finally, by using Roblox’s animation studio, creators can upload videos that will be turned into 3D animations automatically. The Roblox Studio is a tool that helps you create interactive places and worlds, according to the company website.

“We’re kind of like YouTube except our content is games, and our content allows everyone to play together,” CEO Baszucki said in 2018. The 58-year-old is a frequent presence on Roblox, where he uses the name “Builderman.” He is not like the Gen Zs on Roblox. He is a Baby Boomer himself.

Because there is so much user-generated content, Roblox has gained the loyalty of millions of video gamers—some 33 million daily active users. For casual gamers, there are millions of multiplayer games to choose from. They include Capture the Flag, obstacle courses, and races based on well-known characters like Sonic the Hedgehog and Peppa Pig. The creators behind these mini-games can profit handsomely from their hard work.

Around a year ago, Samuel Jordan of Fort Lauderdale, Florida decided to put his college education on hold for a while. The 21-year-old joined Roblox’s accelerator program in summer 2019, and he claims that last year alone, he made $600,000 from his Roblox creations.

To fuel the efforts of creators like Samuel, Roblox holds the annual “Roblox Innovation Awards.” Here, awards are given to user-created content in categories like “Best Use of Tech” or “Most Immersive Environment.” By recognizing the artistic and creative abilities of its player base—and allowing users to cast their votes through a voting hub—the company is able to engage users more deeply than ever before.

Image of Roblox characters showing on a smartphone - IMD Business School
Kazan Russia August 25 2021 Roblox is an online game platform and game creation system A smartphone with the Roblox logo on the screen surrounded by gamepads

London residents Alan and Sinéidin Cooper described how their two daughters, ages 5 and 10, as well as their 7-year-old-son, each spent around five hours a week playing Roblox before the pandemic. Now that time has increased, owing to the platform’s ability to link people together. The family spends $40 to $45 worth of Robux every month on average.

“It’s a great way for them to socialize,” Mr. Cooper said.

Despite having such a loyal userbase, Roblox has difficulty turning a profit. In 2020, its net loss amounted to $253.3 million, up from $71 million the previous year. It has said it will keep investing in its platform, which boasts many features, such as long-distance learning, conference hosting, and concert streaming capacity.

But let’s pause for a moment and think about what tech giants have been doing.

How Roblox Has So Much More Downloads Than Facebook’s Metaverse

 - IMD Business School

Many experts believe that the Metaverse—a term that was coined in Neal Stephenson’s speculative sci-fi novel Snow Crash—will be successful only after many people start using augmented and virtual reality. Somehow, CEOs like Apple’s Tim Cook and Meta’s Mark Zuckerberg have gotten too excited about 3D and immersive experiences. They demand something engaging by aiming to make their version of the Metaverse indistinguishable from the real world. Microsoft’s Mesh platform is designed to make it easier for AR and VR hardware to work together in immersive, networked worlds. The platform makes use of Microsoft Azure cloud services to provide the necessary technical infrastructure.

These are all technological marvels aimed at adult engineers. Teenagers don’t care.

The popularity of Roblox has been due in part to its low-end technology. It works on iOS, Android, PC, Mac, and Xbox One, as well as in VR experiences using the Oculus Rift, HTC Vive, and Valve Index headsets on PC. Setting up a Roblox account is simple; free players can play unrestrictedly. The company is less focused on making digital experiences seem real than in making them accessible. Roblox users, developers, and creators come from all corners of the globe.

The average Roblox player may not notice, but those low-resolution graphics actually work in the game’s favor by providing consistent building blocks that make it easy to create something new. The things that make Roblox “better” are the parts that are enabled by these constraints.

What are the results? There is a wide range of material to discover. As of September 30, 2020, there were over 18 million Roblox experiences, and during the twelve months that ended September 30, 2020, nearly 12 million of these were enjoyed by Roblox’s user base. It’s not a high-end metaverse that tech giants would admire. In his article for Stratechery, Ben Thompson referred to Roblox as the Microverse.

But this is classic low-end disruption. That’s how Facebook launched its first social network targeting university students at Harvard and MIT. That’s how Apple launched the first smart phone, which suffered call drops far more than Nokia. That’s how Sony launched its first transistor radio targeting teenagers who wanted to listen to rock music but didn’t care about the sound quality. You don’t start from the top, you disrupt from the bottom. Roblox has found popularity by catering to a demographic that tech giants ignore: teenagers.

That’s how in 2022, the VR platform owned by Meta—Facebook’s parent—has 300,000 monthly users. Roblox? Over 200 million.