Rise of Roblox: User-Generated Metaverse Platform Now More Valuable Than Traditional Game Companies Like EA & Take 2

Above: Image from ROBLOX's stock filing, data from the first 9 months of 2020

As expected, Roblox's IPO today was massive:

What makes Roblox different from other online game platforms is that it lets users create their own games on the platform. Developers receive 30% of the proceeds generated from a game, such as the sale of virtual outfits and avatars... As trading began Roblox stock shot up 63%, trading near 73.50, during afternoon action on the stock market today. That accelerated its market value to $47 billion.

Explicitly designed to be a metaverse, Roblox's valuation so far proves the market validity of user-generated content where user-made games (often made by teens still living at home!) are often more popular than the most popular professional games on Steam. Now with this IPO, you can see the dominance of Roblox and its grassroots content as compared to some of the very top traditional game companies. For instance:

• Electronic Arts' market cap is $37.4 billion compared to Roblox's $47 billion.
• Take-Two Interactive Software (GTA Online, etc.) has a market cap of $18.9 billion compared to Roblox's $47 billion.

To be sure, Roblox's value may decline over time, but given its already strong user and revenue numbers, that's unlikely. Unless, perhaps, it sees heavy competition from Core, Rec Room, VRChat, and other players aiming to compete in the metaverse space.

Comments

[Sean R. Lynch]

I think Roblox is going to have trouble escaping from their reputation as a game platform for kids. Older teens and adults expect more from games than what can be built with Roblox Studio. They also won't want to be playing with a bunch of little kids. So I suspect as kids grow up they'll graduate either to one of the competitors aimed at a more mature audience, or to professionally-created games.

2020 was also a huge anomaly for products like Roblox, because a huge fraction of the world's kids were stuck at home all the time. They wanted to socialize with their friends, but they couldn't see one another in person, so they socialized through Roblox, Minecraft, etc. I doubt there will be nearly as much demand for that once they can play together in person again and are seeing one another every day at school. September seems a lot more likely to look like 2019 than 2020.

[seph]

I never used Roblox so I don't know the lessons it has for companies like Linden Lab, but I'm glad to see a platform with user-created and sold content doing so great.

[Nodoka Hanamura]

@Sean R. Lynch

As someone who has been on the platform for years (dating back to 2008!), to say that Roblox is limited in capability is foolish - I've seen faithful remakes (and original takes) on more 'mature' classics like Battlefield/COD and Payday, as well as original concepts like Arsenal, and they all appeal to me in gameplay and how fun they are. While I usually ignore the younger userbase for the most part (outside of shitposting in PF chat or just casual discussion every now and again when it's civil and/or mature), these games appeal to me for two reasons:

1. As someone who's switched to Linux, I don't have much choices for games that run well like Phantom Forces, especially due to Anti-Cheat. Roblox runs in VMWare Player flawlessly in most games, meaning I can enjoy them easily without having to hassle with such things.

2. Getting into a match in Phantom Forces or Arsenal doesn't take any more than 1-2 minutes from engine startup, taking much less longer than other games like Battlefield and Call of Duty.

While they are graphically inferior to those and there are other issues like you mentioned, I personally would rather play Phantom Forces due to the amount of content its' developers (Stylis) add on a regular basis, the large userbase (It recently reached 1 Billion plays), among many others. And Stylis aren't the only ones who develop for Roblox in this fashion - RolVe, a obvious nod to Valve Corporation, does the same with Arsenal and their other games, some of which are inspired by Valve's releases.