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🎮 Roblox’s 2021 Results
- Roblox just released their results for FY2021, Q4 2021, and Jan’22. Key highlights:
- FY21: Increase in revenue by 108%, increase in bookings by 45%, 40% year-over-year (YoY) increase in Daily Active Users (DAUs) to 45.5M, with users spending 41.4B hours on the platform, an increase of 35%.
- Q4 21: Increase in revenue by 83% YoY, increase in bookings by 20%, 33% YoY increase in DAUs to 49.5M, with users spending 10.8B hours on the platform, an increase of 28%
- Solid growth continuing in Jan 22: Increase in revenue by ~65% YoY, increase in bookings by 2-3%, growth in DAUs to 54.7M, but reduced Average Bookings per DAU by ~22% YoY.
- In 2021: Developer payouts of >US$500M, almost 2000 experiences on the platform generating >1M hours of player engagement, and a very high 90% repurchase rate amongst paying users.
- Roblox’s shares declined due to missing its estimates for topline revenue and earnings. However, significant headway on its priorities of growth in number of users and user engagement, relative to monetization.
- Understanding Roblox’s secret sauce
- A social gaming marketplace, not just provider of content. Relies on >1M developers and players creating 3D content in a decentralized way.
- Flywheel effects as more developers create better content, which draws more players who invite their friends. Supported by Roblox’s Game Fund too.
- That said, the upside for on-platform developers likely isn’t large enough to attract big studios. Even as costs are lower given Roblox’s servers, tools, and audience.
- Challenges on the horizon #1: Monetization of international audiences
- Increasingly challenging as much of the new user growth is driven by audiences in emerging markets, from a different spending culture and with less purchasing power.
- Will also need developers to create more localized experiences to better address international markets, and potentially explore new monetization mechanics.
- Likely working on building up the pool of Premium subscribers.
- Challenges on the horizon #2: ‘Aging-up’ with core audiences
- Reliant on young North American and Western audiences for the bulk of monetization.
- While growth amongst older demographics is positive, Roblox will increasingly compete against other social platforms like Tiktok, Youtube, and Snapchat. This could mean a higher cost of user acquisition from off-platform.
- Key success factor is user retention, which will take (1) a stronger social network element, and (2) exceptional age-appropriate high-quality content, noting that older users tend to prefer more polished products.
- To some extent, brand partnerships e.g. with NFL and McLaren support this.
- Entering the Metaverse
- Roblox will increasingly move towards building persistent, social virtual 3D experiences for the Metaverse, including but going beyond gaming.
- Base infrastructure on which experiences in fashion, music, sports, commerce, games etc can occur. Diverse content will be needed for successful long-term monetization.
- Highlighted by recent reports, Roblox will also need to work on protecting users and ensuring a safe digital environment for exploration. A larger issue for the Internet industry as a whole.
🤝 Global Gaming Deals Activity in 2021
- Report released by InvestGame covering record-breaking global gaming deal activity in 2021. Key highlights:
- Total closed deal value exceeding $71B, reflecting >2x YoY growth spanning 937 deals, excluding another $9B worth of announced but yet-to-close deals.
- Broad-based growth: Across all platforms, segments, and types of deals.
- Likely an under-report of total global gaming activities given unannounced investments, or deals that aren’t publicly valued.
- That said, with Microsoft’s acquisition of Activision Blizzard, Take-Two’s takeover of Zynga, and Bungie coming under Sony, Jan 2022 has already topped 2021’s full-year record in deal value.
- Growth in Blockchain Gaming space
- Wider implications of deal growth
- Number of players: Likely correlated with growth in users continuing from Pandemic lockdowns, the gaming industry demonstrating market resilience, and reaching new audiences with better devices in emerging markets. This makes gaming a growing and profitable industry, hence drawing increased deal activity.
- Talent: Creation of new jobs, increasing pressure for new studios to attract and retain talent with competitive pay and benefits packages, often including equity.
- While there won’t necessarily be growing salaries across the board, there is an increasing ground-up emphasis on a positive and healthy working environment, e.g. A Better Ubisoft campaign