Roblox (RBLX) is an online gaming and game-creation platform. Developers and creators can create and publish their own game content on Roblox Studio. Other users access and play these games through Roblox Client applications. RBLX’s platform is powered by its in-house system, Roblox Cloud, backed by its own data centres. Based on a report by GameRefinery, a mobile gaming research firm, Roblox’s market share in US is estimated to be 4.85%.
RBLX’s platform relies on user interactions and user-generated content for organic growth. Its community consisted of about 7mn active developers and 31.1mn daily active users (DAUs) as of September 2020.
Revenue sources. Almost all of its revenue is generated from sales of its digital in-game currency, Robux. This currency allows players to purchase virtual items or enhance their in-game experiences. Purchases can be one-off or made via monthly subscriptions, known as Roblox Premium (Figure 3). RBLX shares 26% of its sales with developers and pays 24% app-store fees. The remaining 50% is its share of revenue.
Other revenue streams are advertising, licensing and royalty fees from intellectual property (IP) rights, which are currently minimal.
DAU demographics. The majority or 33% of RBLX’s DAUs are from the US and Canada. About 54% of its DAUs are under the age of 12. The majority, or 72%, are engaged through mobile.
Based on previous statements by Steven Ma, Tencent’s Senior Vice-President, the joint venture is expected to attract 40-50mn users in China. This figure towers above RBLX’s current 31.1mn DAUs. Assuming an increase of 10mn DAUs in its first year in China, RBLX’s annual bookings – which are revenue plus the change in deferred revenue and other non-cash adjustments in a year– can potentially increase 34.9% YoY from 2020 levels. China is thus expected to provide a large boost to its sales.