Roblox and Forever Games
THIS WEEK IN VC
Roblox: The Next Great Social Network?
Roblox, released in 2006, has 43M daily active users, making it one of just a few ‘forever games’
Roblox CEO Dave Baszucki is looking to expand into a full-fledged social network with a new advertising play and more complex user generated content.
The game has hosted concerts by Little NasX and is home to a permanent Gucci experience.
Gaming used to be a hits business. Like movie studios producing new blockbusters, game studios only made money if they made a hit. That made them tricky to invest in.
Today we have forever games: World of Warcraft, Roblox, Minecraft, Fortnite. The first three are all over 10 years old but have millions of daily users. That persistence is changing the business models of gaming and making games much more attractive to investors.
They’re also beginning to carry some real cultural clout.
Roblox’s Little Nas X concert was attended 33 million times. Fortnite’s NFL collaboration made them $50M off a set of digital jerseys (only the Star Wars and Marvel skins earned more). Gucci has a permanent store set in Roblox and digital Gucci bags sell for upwards of $1,500.
Games Built by Gamers
But what most games still lack that true social networks have in spades is user generated content (UGC). That’s what makes Roblox so interesting, it’s a UGC engine not that different from Instagram or TikTok.
Except instead of sharing pictures and videos Roblox users are sharing games.
Roblox is a platform for gamers to build and share new games. There are 40M user-created games on the platform and 30% of every dollar spent in Roblox goes back to game creators.
The most popular game on the platform, Adopt Me! has over 29.6 billion visits and has topped 1.9M concurrent users. Incredibly, it wasn’t developed by Roblox it was developed by a Roblox gamer.
What makes a Social Network? Ads
At their developer conference last week Roblox announced its launching in-game ads in the form of digital billboards like the one pictured.
Every platform has to figure out what native ads on their platform look like. On Instagram, it’s product photography that looks like a post or a story. TikTok is still figuring it out but right now it’s brand ambassadors that look like TikTokers.
On Roblox and in games in general it will be digital billboards you can interact with in-game. It’s a bit dystopian but what ads aren’t?
The important thing is that its part of Roblox maturing as a platform. Social networks have ads.
The Roblox Platform Playbook
To sum up, there’s a lot to learn from Roblox.
1. User Generated Content: Roblox doesn’t have to build the next hit game. It just has to make it fun for users to build games on the platform. It’s a hard flywheel to get turning but if you can convince your users to make engaging content for you, you’ll have an incredible business on your hands.
By investing in a revenue share for game creators since the beginning Roblox has empowered users to build 40 million games on the platform. It’s safe to say that’s paid off.
Start with Tools: Instagram started with a photo filters and at TikTok’s core is a great video editor, Roblox built a simple but powerful game design system for players.
2. Ads: Ads are the third side of the social media marketplace. With 43M daily users ads are long over do in the world of Roblox.
3. Developers are Your Friend: Developer networks are ultra valuable for early platform companies. In addtion to ads, Roblox just announced another $10M for it’s developer fund. They’ll provide grants to sophisticated devlopers to push the limits of the Roblox platform.
If it works and the next Fortnite is built on Roblox the returns would be colossal.
TLDR: Roblox’s in-game advertising, brand partnerships, developer fund, and most importantly, central focus on user generated content, all hint at where games could be going and what the next great social network could look like.
In Other News…
A group of teenagers calling themselves Lapsus$ hacked Uber last week and Rockstar Games. They posted 90 videos of the next GTA game online and commented on cybersecurity forums from Uber’s account. Might want to change some of those passwords…
Opendoor lost money on 42% of its home sales in August. Automated home buying and selling may not be a terrible idea but the last 12 months was definitely a terrible time to launch. Zillow already imploded. Time will tell if Opendoor managed the balance sheet better.
Slack launches Canvas, a collaborative drafting tool to challenge Notion and Google Docs. They’re effectively doing to Notion what Microsoft Teams did to Slack. Offering a free, similar version to thousands of teams who already use Slack, undercutting Notion’s appeal. Oof.
The Information reports VCs have $290B in funds that has yet to be deployed. They’ll have to start spending that capital some time soon or risk losing their funds and their management fees.
Raise: $1.6M from Creator Venture and Blue Wire
Including: Alex Lieberman, cofounder of Morning Brew, Anthony Zaccaria cofounder of Linktree, David Perell founder of Write of Passage
One Liner: Stealing ad budget from Google and Facebook
Beehiiv is building a tool for newsletter writers to send great emails. But that’s just what they do on the surface. Beeehiiv’s real mission is to steal market share from Meta and Google.
When I interviewed founder Tyler Denk on the podcast back in February he said that if Beehiiv can land 10,000 newsletters — which is a big if — Beehiiv could start to compete with Meta on targeted ads. That’s why to start they’re building an absolutely killer newsletter product incorporating everything Tyler learned as Morning Brew’s first product manager.