Introduction to Lishi: With the help of the “meta universe” concept, Roblox has gained enthusiasm in the capital market. In the ten years since the establishment of the company, Roblox has been deeply cultivating the youth market, building a UGC game platform, continuing to build a fully immersive digital community, and striding towards a true “meta universe” world.
Zhilavie | Text The 2020 epidemic has caused economic stagnation around the world, but it has promoted the prosperity of the game industry. The “2021 Mobile Game Market Report” released by APP Annie shows that consumers will spend US$143 billion on mobile apps in 2020, of which US$100 billion will come from games; users spend 296 billion hours of gaming hours, a year-on-year increase of 35%. The most outstanding performance among the major game companies is the sandbox game platform Roblox. Most of the users of this platform are elementary and middle school students under the age of 16 (as of the end of the third quarter of 2020, Roblox had 31.06 million daily active users, of which 54% were elementary school students under 12 and 13% were 13-16 years old). After the outbreak, schools were closed and more children had more time to play Roblox. In 2020, the number of Roblox daily active users increased by 85% year-on-year, and the time spent by users increased by 124% year-on-year. On March 10, 2021, Roblox landed on the New York Stock Exchange through a direct listing, becoming the fifth company to choose this way to go public after Spotify, Palantir, Slack, etc. On the first day of listing, Roblox had an opening price of US$45, an increase of 54.4% that day, and a closing price of US$69.50. The market value once soared to US$40 billion. “Bull Queen” Cathie Wood added about 520,000 shares to boost Roblox’s strong performance that day. The product manager of an American asset management company said that Roblox’s popularity on the first day of listing reflects the listing of other game companies and a wider range of technology companies in the past six months, and the demand in the secondary market is high. After listing, Roblox’s market value was as high as 45 billion U.S. dollars at one time, which was 53% higher than the financing valuation in January this year. Roblox was valued at 29.5 billion U.S. dollars at that time, and it raised 520 million U.S. dollars. Roblox’s market value once surpassed the old game company Electronic Arts (EA), and has been higher than Take-Two. The above two companies have significantly higher revenues and are profitable, while Roblox has been losing money for many years, and the loss has continued to expand. Data source: company financial reports, CNBC, US stock research agency It is really puzzling that such a company can go public and still have such a high market value. Why is Roblox so popular in the market? Why would investors chase such a highly valued company? 1 Roblox “meta universe” concept stock Many people may be unfamiliar with “Metaverse”, but those who have watched the popular movie “Number One Player” in 2018 must remember the “Oasis” game, which is the future “Metaverse” world. The term “meta universe” originated from the 1992 novel “Avalanche” by science fiction writer Neal Stephenson. The book describes the term “meta universe” as a virtual world parallel to human reality and society. With the rapid development of 3D, VR and AR technologies, the “meta universe” is gradually evolving into the “real world” in the virtual environment. People in the real society can use digital identities to entertain, consume, socialize, and create in the virtual world. , Earn money, etc., you can also shuttle between different scenes. With the help of the epidemic, the boundary between the virtual world and the real society is slowly being broken. In April 2020, American singer Travis Scott held a concert in the sandbox game “Fortnite”, which was watched by more than 12 million players. The concert lasted for about 10 minutes. The realistic character modeling, stunning game scenes, and the changing venues (from land, water to outer space) with the sound of singing presented a rich sense of hierarchy, giving players a strong sense of immersion. It’s unprecedented. In addition, the University of California, Berkeley held a graduation ceremony in Microsoft’s “Minecraft”. Graduates participated in virtual images. In addition, the world’s top AI academic conference held the 2020 seminar on Nintendo’s “Animal Crossing”, and speakers played manuscripts and delivered speeches in the game. Games are not only an entertainment to pass the time and a spiritual sustenance to escape from reality, but also an extension of the real world. For the popular track of “Meta Universe”, in addition to game companies, many Internet companies have already deployed. Facebook acquired virtual reality company Oculus for US$2 billion in 2014. Facebook CEO Zuckerberg said that VR will first change the game, then digital social, and then the world. Facebook has launched a beta version of the VR social platform “Horizon”, and plans to release the first AR glasses in the second half of this year. Among the many companies that have entered the track, Roblox is the first company to include “Meta Universe” in its prospectus, and is known as the “Meta Universe” concept stock. Roblox mentioned that some people call our category “meta universe”, a term that is usually used to describe the persistent, shared, three-dimensional virtual space in the virtual universe. With the emergence of more and more powerful computing devices, cloud computing, and high-bandwidth Internet connections, the “meta universe” will gradually become a reality. In addition, Roblox also proposed eight key features leading to the “meta universe”, namely Identity, Friends, Immersiveness, Low Friction, Variety , Anywhere (anywhere), Economy (economy), Civility (civilization). This is also the first commercial company to try to describe the characteristics of “meta universe” in general. Data source: Roblox Roblox co-founder and CEO David Baszucki once stated that “meta universe” is a virtual space where people can spend a lot of time working, entertaining and learning. He has also talked about the vision of the “meta universe” many times, “When you study the civil war, long ago, you would study the encyclopedia. Now, people will watch videos or books. In the future, imagine that you can participate in the civil war. , Experience and understand for yourself.” “In the future, Roblox users will not only be able to read books about ancient Rome on the platform, but they can even visit the historical city reconstructed in the’meta universe’ and wander around the city.” A 21-year-old game developer who has been creating in Roblox for 10 years believes that Roblox will become a realistic version of the “Oasis” in “Ready Player One”. Although the current Roblox is far from being as realistic as the “oasis”, and even a bit rudimentary, some basic elements that constitute the “meta universe”, such as virtual scenes, reality clones, social networks, and economic systems, already exist. The development of the “virtual playground” has been established. During the epidemic, Roblox’s explosive growth kicked off the “meta universe”, allowing the market and investors to see more possibilities for Roblox. The hurricane of Roblox’s market value has also completely ignited the “meta universe”. Game companies with related concepts are more likely to obtain high valuations than established game manufacturers. Even the non-game industry wants to catch the “meta universe” concept. The social software Soul recently stated that it is a “social meta-universe.” An investor described the enthusiasm of this concept in the capital market by “hearing’meta universe’, with two eyes shining”. However, Baszucki, who has many years of entrepreneurial and management experience and experienced the ups and downs of user-generated content (UGC) games, said that this is still a way away from the fully immersive digital community originally envisioned. So, how did the highly anticipated Roblox gain the favor of children step by step? 2 Roblox sticks to long-term goals Open the Roblox application, and at first glance, you will think that this is a Lego-style sandbox game. In fact, in addition to the 3D client for players as a whole, Roblox also has Studio toolsets for developers and cloud services to ensure the effective operation of the platform. Roblox has built a UGC game platform. Developers can use the tools in Studio to create games or various experiences, and even benefit from them. Players can play games and socialize in this virtual world. Many Roblox users are both developers and players. As early as the end of the last century, Roblox co-founder Baszucki had a deep understanding and practice of educational technology. In 1989, Baszucki founded an educational technology company called Knowledge Revolution. They established an online laboratory and developed a software that simulates a physical experiment environment. Students can use the software to simulate levers, ramps, pulleys, and ejections. Physical experiments such as sports. Baszucki found that children not only use this software to solve physical problems, but also use it to try to simulate crashes, building collapses, etc. He said that the fun of experiments is that students can set experiments and explore independently. Compared with the content in the physics book, the children’s own creativity is more interesting. In 1998, Knowledge Revolution was acquired by engineering software development company MSC Software for US$20 million and turned it into engineering simulation software. After that, Baszucki invested in Friendster and got in touch with and understood social networks earlier than Facebook and MySpace. The above experience of Baszucki laid the two core foundations for the creation of Roblox, namely the toolbox and social scenes that support creativity, plus his interest and accumulation in virtual environments, games, education, digital identity, and the future of technology. Roblox in 2004 The company was born. In view of the gradual development of various aspects of the market, such as the adoption of broadband, the improvement of hardware, the development of multiplayer games, the recovery of the Silicon Valley ecosystem, etc., around 2004, large-scale games ushered in a period of vigorous development, and various game companies have tried various Kind of development strategy. In the early days, Roblox did not have a distinctive direction or vision. Baszucki recalled that we had a few false starts, but in the end we thought that we must make a completely unified product. In the end, Roblox decided to make a UGC game platform. However, in that era of enthusiastic gaming, it is not easy not to imitate a successful company and stick to its own position. Due to the very high degree of overlap of the user group, the number of users of “Minecraft” released in 2009 quickly surpassed Roblox, and in 2013 its paying users reached 10 million. Early Roblox employees recalled that friends, acquaintances, and colleagues chatted in your ears and said, maybe you can do this. Roblox’s vice president of technology said that this requires a certain amount of perseverance, not just copying “Minecraft”, and then saying that this is a better game, and we want to do more than just a game. The managing partner of Greylock Partners said that I rarely see people like Baszucki who are focused on mission, vision and long-term vision. He was under tremendous pressure, and when he truly understood what needed to be realized, he never wavered. After clarifying the company’s positioning, Roblox created game development tools, operated servers that support these tools, established a portal website, and built social systems such as communications, message boards, and private messages. Because the Roblox game engine is very simple to use, and the game characters similar to Lego blocks are very attractive, many young players have begun to try to make their own games. Gradually, a variety of games full of fantastic ideas appeared on the Roblox platform, including all kinds of role-playing, shooting, simulation and construction games. At the same time, the company has also developed some regular entertainment games for players, and the Roblox game library has become more and more substantial. When there were enough players and game developers on the platform, the company stopped its own game development in 2008 and launched the virtual currency Robux on the platform. In 2013, Roblox provided developers with virtual goods. After that, Roblox continued to optimize this set of real-world currency trading systems. For developers, Robux can be earned in four ways, namely, selling paid games developed by themselves, earning players’ time sharing on free games developed by themselves, paying for content and tools transactions between developers, and selling virtual games on the platform. commodity. For example, 21-year-old Alex has been creating games on Roblox since he was 9 years old. At the age of 17, he made a game “Prison Break” which has been played 4 billion times in total, relying on the skins and props in this game. Waiting for sales, Alex can earn millions of dollars every year. At the same time, Roblox is actively deploying the VR field. Since the opening of the VR function in 2016, it has gradually realized the cross-platform and cross-device adaptation of VR games. Players can experience VR games through computers, mobile phones, Xbox, and Oculus. Roblox has always paid great attention to the improvement of game technology and picture quality. In recent years, Roblox has devoted more energy to educational expansion and globalization. Roblox opened the summer programming summer camp activities, provided teachers with free online programming courses, purchased offline programming training courses, etc. In 2019, Roblox and Tencent formally reached a strategic cooperation to introduce Roblox into China. Tencent brings it into the school as a STEAM education course and teaches programming on the Roblox platform. On the road to globalization, Roblox hopes that in the future, users from different countries can chat and interact in their native language. The company has invested a lot of resources in research and development, using machine learning, crowdsourcing and traditional methods to help developers complete translation work as much as possible. Recently, Roblox has provided localization services for the first 150 games with translation in 5 languages. Currently, Roblox has landed in 180 countries and supports 11 languages. Since the launch of the game platform, there has been no viral inflection point or rapid realization of early investors. Roblox has been laying the foundation for its long-term development. For example, in order for the platform to run with native-level performance on devices such as iPhone, Android and Xbox, and require only a few engineers to maintain it, Roblox took hundreds of engineers to implement it for three years. The senior engineering director of the project said, I don’t know how many companies of our size are willing to spend such a long time and so many engineers to do this. For another example, because the Roblox team has maintained compatibility with existing games during continuous updates, almost all games developed on Roblox can still be played. After 15 years of development, in April 2019, Roblox’s monthly active users reached 90 million, bidding farewell to slow growth and entering a period of rapid development. 3 Challenges facing Roblox After the outbreak, Roblox increased activities such as viewing nearby players, online meetings, Party Place, and virtual concerts, which further promoted the development of online social networking and enhanced user stickiness. Sensor Tower data shows that in 2020 Roblox will have 160 million downloads on dual platforms (Apple Store, Google Play), and mobile platform revenue will exceed $1.1 billion, making it one of the “billion dollar clubs.” After years of development, Roblox has grown into a world-class gaming platform, and its monthly active users have surpassed its long-term competitor “Minecraft” (Roblox was 150 million in July 2020, and in October of the same year, “Minecraft” was 131 million). Niko Partners analysts said that millions of Roblox developers can create games on the platform and provide them to other users to play. This model creates a unique community that not only attracts new users, but also improves Old user stickiness. UGC creation is difficult to reflect value in the short term, but in the long term it may form an unimaginable huge potential and a difficult-to-replicate model. Industry insiders believe that the mutual promotion of UGC content and community effects is one of the main reasons for Roblox’s growth. Even with such results, Roblox still faces severe challenges. No one knows what will happen to the Roblox platform when the epidemic is over and the school reopens and the children return to real life. Roblox’s chief financial officer said that with the relaxation of epidemic restrictions, we expect the growth rate in 2021 to be much lower than the growth rate in 2020, but we believe that most of our core indicators will show absolute growth throughout the year. The game industry has never lacked competitors. Soon after Roblox went public, social gaming platform Rec Room completed a new round of financing of US$100 million, with a total valuation of US$1.25 billion. Founded in 2016, Rec Room currently has 15 million users, revenue has increased by 566% in the past year, there are more than 5 million exploreable game rooms, and more than 2 million players have created content. In addition to games, Rec Room has become the first choice for many activities, such as digital gatherings, creative courses, brainstorming, weddings, etc. The target user age of Rec Room is older than Roblox, and it allows players with zero programming skills to create games. Rec Room, which belongs to the concept of “meta universe”, will become Roblox’s biggest threat in the future. The industry generally believes that Roblox needs to change its low-age user structure to enhance profitability. At present, Roblox’s users are mostly teenagers, which shows that the existing platforms, including game graphics and character design, are not attractive to older users, and it is difficult to reverse the long-term loss of money. Even if the games on the platform are gradually satisfying the needs of more user groups, and the gender ratio of users is more balanced, due to the lack of adult players, Roblox’s size is difficult to match with game giants such as Activision Blizzard and EA. After all, the purchasing power of adults is even greater. Stronger, higher user value. Few companies are like Roblox, both a game engine and a game platform. Whether facing competition or optimizing user structure, Roblox needs to develop ideas and grasp the rhythm in various aspects such as development tools, user communities, and new technology introduction. Roblox is still a long way from the “meta universe”, the immersion shown in the movie, and the digital community for all, and there is still a long way to go. In the future, if Roblox’s user ecology achieves innovative development and reengineering, as users of primary and middle school students grow up and become more paying players and more creative developers, they can continue to stay on the platform and form a certain This kind of inheritance and virtuous circle, Roblox may lead children into the real “meta universe” world.
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