Roblox should have a bright future, as we can hardly imagine what the platform will look like in 10 years. At this point we should focus on the visible growth opportunities: 1) Expanding internationally, 2) Attracting older Users, 3) Increasing platform use cases, 4) Improving monetization.
1) Expanding Internationally: While Roblox generates 68% of bookings from US & Canada (vs. 73% in 2018), DAUs and hours engaged outside of North America already account for 70% and 65% respectively. At the same time, DAUs and hours engaged in Europe, Asia and the rest of the world grew faster in 2019 and 2020 than in the US & Canada, which means that the international expansion seems to be working. According to CEO Baszucki, in China there are 3x as many potential Roblox players as in the United States and today there are actually zero players because the platform has not been launched yet in China, as the JV between Roblox and Tencent just recently got the approval.
2) Attracting older users: Due to the blocky nature of the platform-physics it’s difficult to judge but Roblox is seeing promising signs. The 13+ year old DAUs grew +107% in 2020, faster than the +72% for the 12- year old, so that the 13+ now make up 45% of total DAUs. The same is true for hours of engagement. More targeted content, improving graphics, personalized curating of messages and an improving recommendation engine should aid the shift to older players. However, the competition for older audiences is likely to be a bit tougher.
3) Increasing platform use cases: The vast majority of time spent on Roblox today is for video gaming or at least game-like experiences. However, Roblox will focus on broadening the use cases. For example, they will be more and more experimenting with concerts, like they have done quite successful with Lil Nas X last year
. Those concerts become a cultural phenomenon that kids feel they have to be a part of. Longer term, the platform can be used for education, work and even e-commerce, which could drive engagement and monetization significantly.
4) Improving monetization: In 2020 Roblox generated an average of 6c of bookings per hour of engagement, up against 5c the year before. In Q4 2020, it reached a record level with 7,6c per hour, which is still low compared to other forms of entertainment (e.g. Netflix is viewed as one of the lowest on a cost per hour basis at ~25c) and other video game companies (e.g. Activision was ~50c per hour in 2015). In 2020, Roblox only had an average of 490,000 users spending money on a daily basis (1,5% of DAUs), up from 185,000 the previous year. The subscription offering ‘Roblox Premium’ is growing twice as fast as Roblox since introduction in September 2019 and should support ARPU growth over time, while subscription plans for individual experiences should further drive that. Another type of monetization is immersive brand advertising, which would be a high-margin addition and Roblox plans to incorporate features like branded worlds, like they did with DC Comics