Roblox drove a wave of growth from the pandemic era to a sevenfold increase in value, an exploding user base and a wildly popular Lil Nas X concert with tens of millions of attendees. That success was largely due to Roblox’s core user base, made up of young and highly engaged players.
Now those kids are getting older and Roblox is trying to grow up too. The user-generated gaming platform for all ages today announces plans to add age guidelines to its games and significantly expand its advertising business while serving an older demographic, expanding its revenue streams and continuing to serve the needs of its millions of young players.
The changes are a big step in how Roblox feels about its users and how the company approaches advertising. Roblox – and the millions of people who make games for the platform – will soon have a new way to make money and the ability to target a slightly older demographic. Roblox’s ability to become a multi-billion dollar platform with thousands of creators relying on it depends on whether it can translate these new features into growth and profit.
“When we started, the majority of the people on our platform were under the age of 13. We have now crossed a huge threshold where the majority is over 13,” said Roblox CEO David Baszucki. The edge. “We are very optimistic that in the long term this kind of technology will support people around the world and in a wide variety of ways to connect and be together.”
Until now, Roblox may have been best known for its popularity with children — at one point, the company said more than half of American kids under 16 played Roblox. With its user base getting a little older, Roblox is looking for ways to keep them coming back and provide advertisers with more targeted ways to reach its 52.2 million daily active users.
At the company’s annual developer conference today, Baszucki announced a slew of major changes to the platform, including a new immersive advertising system that allows advertisers to reach players in millions of games — or “experiences” as they’re called on Roblox. Until now, creators bought banner ads using the in-game currency Robux, often resulting in: nonsensical meme-like creations made to entice players to visit and play their games. High-profile brands have also ventured into Roblox by partnering with developers to create custom experiences: there’s Gucci Town and Spotify Island and even a virtual Chipotle restaurantamong other things.
The new advertising system, meanwhile, is a way for brands to advertise in Roblox experiences through interactive billboards, posters and other surfaces. The new ad system will initially work with a group of select companies and developers and allow creators to place 3D ads in their own experiences – such as a billboard in a sports stadium or on top of a taxi in a game – and to share of advertising revenue. In addition to advertising in user-created experiences, brands can also have “portals” that act as a tunnel between games, taking players to a new branded area in Roblox, such as a shoe store or a coffee shop. The company will begin testing immersive ads by the end of the year, with a full launch planned for next year.
“In fact, where appropriate, Roblox will have 3D ad units that act as a massive ad server for all of these brands,” Baszucki says. “We are initially very careful with who these brands are. But in the long run, this will shift more and more towards a self-service model for suitable brands for our platform.”
Advertising in the metaverse isn’t proven yet, but brands are already seeing it as the next place to target potential customers. In-game purchases on platforms such as Roblox and Fortnite could be a sign of the money to be made in the metavers: Fortnite earned $50 million off skins from just one partnership with the NFL, for example, and in Roblox some players paid thousands for virtual Gucci products. But Roblox “bookings” – the amount players spend on Robux, of which the company gets a share – missed estimates last quarter. Roblox went public last year after an explosion in popularity during the pandemic, but the stock has fallen and it is not yet profitable.
The push to bring more ads to Roblox is coming as it explores how the company is handling the ads already happening on its platform. In a Complaint from the Federal Trade Commission Filed earlier this year, watchdog group Truth in Advertising says brand-related Roblox experiences are poorly identified, making it difficult to discern whether a game is being sponsored, especially for young children. With immersive ads, Roblox will move with “extreme conservatism,” Baszucki says — brands will only be able to reach players 13 and older, and Roblox will reveal when experiences include ads.
If immersive ads are a boon to Roblox’s business, the same promise goes to the developers responsible for creating the games. Roblox developers have a handful of ways to make money on the platform: they can create and sell items such as clothing for avatars or offer in-game purchases, which players can purchase with Robux. In 2020, Roblox introduced premium payouts, which pay game developers based on the time they’ve spent on the experience they’ve created. Roblox says it paid out $538.3 million to creators in 2021, and Robux made more than 2.7 million in June. As for creator payout for ads, Roblox will remain “very consistent with how we share revenue with the community today,” said Manuel Bronstein, chief product officer.
Right now, after app store charges and Roblox taking its own share, creators are left with about 30 percent of in-app purchase revenue — significantly lower than on other platforms. Some creators say that despite spending time developing games, it was hard to make a profit, especially for the millions of young developers who start doing something they love, only to get burned out trying to make their game successful. The top 1,000th developer earns about $32,000 a year, and the vast majority of developers who make money on the platform are over the age of 18, according to Roblox.
At launch, the company is thinking of immersive advertising as a product for players aged 13 and over, and it will go hand in hand with new age guidelines on the platform that will designate certain experiences as appropriate for different age groups. For starters, games have three levels: 13 and up, 9 and up, and all ages, with descriptions of what kind of content each game contains, such as violence or blood. Parents can then choose which type of game they want their child to see.
“In the film industry we have G, PG and PG-13… And I think that’s a good metaphor for where we’re going,” Baszucki says. “There is no R-rated content on Roblox. We think everything is very reasonable and no different from what we might find on streaming video or other similar channels.
Children still make up a large proportion of Roblox players – only 52 percent of users are over 13 years old, according to Fortune. But Roblox sees the fastest growth among players in their older teens to early 20s, and Baszucki says Roblox’s vision as a platform for kids is changing.
“If we look at the growth in the 17 to 24” [year old group], that mainly people who are still socializing and playing, that perception disappears,” says Baszucki. Some events, such as certain concerts at Roblox, tend to attract an older crowd. And in the distant future, there could be Roblox experiences aimed at adults – for example, working in digital spaces, or games more suited to those 17 and older.
Many Roblox users head to the platform to hang out with friends, and the company announced several updates to its avatar and social features at the developer conference. Avatars will be more expressive, with facial expressions such as smiles and winks, and soon Roblox players will be able to chat with each other using avatars, with their camera animating their avatar’s facial expressions. The company will also begin testing voice chat with filters for players under 13, in addition to a 13-plus option with fewer restrictions.
Roblox relies on developers – from hobbyists to full-fledged studios – to build its attractions that bring players in. The company’s $25 million game fund, which gives developers money and support to create the next big Roblox game, is also getting an additional $10 million boost, Bronstein announced today.
The addition of immersive ads, age guidelines, and more social features indicate that Roblox wants to prove it’s not just for little kids anymore. Its goals for growing — and making “thousands” of developers make enough money to support themselves — depend on expanding the audience beyond the people who made it big in the first place.
“We’re on a mission to connect a billion people with optimism and courtesy,” says Bronstein. “But to achieve that great goal and that great mission, we definitely need to age, grow internationally and all that stuff.”