If you don’t have a child between the ages of five and 18, there’s a fair chance you’ve never heard of the company Roblox. Yet its eye-popping $45-billion direct Wall Street listing last week has generated a lot of talk amongst adults.
Roblox is an online gaming experience that draws a daily audience of 36 million young people to “play, learn, communicate, explore, and expand their friendships.” With an estimated half of American teens under 16 playing Roblox, it’s no surprise that its stock valuation is skyrocketing.
Roblox is unique in that it isn’t just one game, but a web platform available on almost all devices that allows players to create virtual avatar identities and connect to thousands of different games, experiences, and 3D digital worlds – all entirely user-generated by Roblox’s community of close to 7 million (mostly amateur) developers and hosted on a network of corporate and private servers.
Roblox is entirely free to use, but players have the option to buy and spend a virtual currency called Robux ($4.99 buys you 400 Robux) that allows them to access certain special games and purchase specific player enhancements such as clothing, accessories, gestures, emotions, and so forth. How much Roblox you spend defines how sophisticated your experience is. This in-game spending drives Roblox’s business model, generating $435 million in 2019 and a whopping $923.9 million in 2020.
A once-overlooked leader in the social, entertainment, and attention economy, Roblox is proving that children’s gaming is serious business – with serious challenges. Whilst there is much to admire about Roblox, it faces a three-headed design monster in being part social network, part game, and part e-commerce platform. Roblox will need to tread carefully to build on its successes in an increasingly consequential digital media environment.
Social networks reflect social problems
Roblox is essentially a social network, and it comes with all the associated challenges we’ve seen with platforms like Twitter and Facebook: from harassment and polarization to addiction and misinformation. As a platform designed for children, predatory behavior by adult bad actors is an especially serious concern.
Roblox does have some controls in place to mitigate bad behavior. Algorithms and moderators scrub chats and posts of personal information and the Roblox platform does not support the sending of images or video. That being said, even if only 0.1% of a user population are bad actors, with scale that results in tens of thousands of bad actors attempting to evade controls at any given time. Moreover, for kids and teens, rules are made to be broken and they will continue to push the boundaries of Roblox’s moderation system.
The good news is that Roblox has so far done a successful job avoiding many of the risks that such a platform faces. As a children’s platform, Roblox has clear terms of service and actively sensors and monitors language and communications, avoiding the free speech argument that many social networks face. Whilst the games act as sub-communities (groups being a problematic area for Facebook), there’s very loose social connection between players and little to no ability to post point-of-view content or engage in discussion around controversial topics, thus largely sidestepping the problems of misinformation and community radicalization.
As a company, it does a lot of things right when it comes to content moderation and enforcing good community behavior standards. As its popularity and scale grows, however, it will need to strengthen its focus on bad actors, particularly those driven by the monetization of extreme content.
Monetizing content incentivizes the extreme
A unique aspect of Roblox as a gaming platform is the agency it gives players and developers to create infinite new games and worlds of experience – and get paid for them. The Roblox Studio is a free game development environment where kids and professionals alike can create and publish games, experiences, outfits, and other digital items, potentially earning Robux that can be converted back to dollars.
There’s a dark side to this e-commerce content creation model, however. Roblox constantly battles content that goes against its terms of service, particularly an underground network of pornographic worlds called “condo” games. As a player, these experiences are not easy to find from the basic Roblox experience – they pop up and are removed in a constant whack-a-mole moderation battle with Roblox’s content moderation team. A quick search on Youtube, Reddit, or one of the thousands of Discord channels discussing Roblox, however, will yield instructions on how to access these “condo” games – and many kids do.
Just like Facebook and Twitter, the nature of social platforms and the attention economy leads to the proliferation of extreme content. Players and developers looking to monetize their games and experiences often find financial success from extreme content like “condo” games.
Attention is more than child’s play
Modern game mechanics build upon behavior change design to create UX that directly leads to addictive behavior. Advancement, uniqueness unlocks, status badges, mystery boxes, sub-currencies, streaks, and encouragement to come back daily to earn more, are all examples of ways Roblox games entice kids to keep playing. One virtual pet (and human) adoption game on Roblox called Adopt me! uses just about every modern gaming mechanism available, from its own sub-currency to mystery gift boxes to paying to skip the tedious bits. It’s one of the most popular games on Roblox and has been played an astonishing 20 billion times.
This is real business – Roblox developers earn premium payouts for maximizing engagement on the platform and real currency for items purchased in their game. Developers earned a total of $328.7 million from Roblox in 2020, with more than 1,250 developers earning the equivalent of $10,000 in Robux, according to CNBC.
We’ve seen the consequences of digital addiction in youth from social networks that use gamification techniques to keep users engaged. The entire gaming market has long been at the vanguard of exploiting darker interaction patterns to try and hold onto players’ fickle attention, a problem especially in free content. No doubt Roblox could do more to monitor individual use and encourage more balance and breaks, and use gaming mechanisms to promote healthier use. Notifying parents of use trends and patterns might be an additional easy win.
The metaverse meets Wall Street
The term “metaverse” shows up numerous times in Roblox’s filing prospectus with the Securities and Exchange Commission. A jargon term from science fiction literature of the 1990’s, it essentially means a world containing many worlds (hence meta). Like early visions of cyberspace, Roblox’s pitch and ambition, according to their filing, is to build “persistent, shared, 3D virtual spaces in a virtual universe.” Think Second Life for kids with more creative outlets and a better business model, or a more connected, social, and commercial version of Minecraft. The bet is that this platform is set to dominate online experiences (that is, attention spans and the resulting dollars) some years down the road. As of now, Roblox is yet to turn a profit despite seeing a phenomenal boost in 2020 largely thanks to quarantine pushing kids online to socialize. Today, it’s valuation puts it right up next to Hewlett Packard
HPQ , Ebay, and Zillow Z at the top of the Fortune 500 range.
The promise of Roblox perhaps lies more in the thrill of exploring what is possible and what can be created. Several young entrepreneurs have built successful game development companies with dozens of employees based on the Roblox platform and receive steady and sizable income from their creations. Even the most apprehensive of parents would probably admit that that is incredible. As it grows, Roblox will have to tackle the many important challenges that face a social network, e-commerce business, and gaming platform rolled into one. Yet they are also cultivating the first-ever generation of kids with free access to the tools to build, explore, share, and develop virtual experiences that can take them as far as they can imagine.
Responsible innovation depends as much on avoidance of the obvious risks and negative consequences of technology (addiction, misinformation, polarization, etc) as on striving to do good. Can Roblox actively build mechanisms into its platform that encourage self-control and restraint with regard to use? Can they design platform mechanics that encourage kids to be more civil, generous, courteous, empathetic, and fair? Perhaps the biggest opportunity for Roblox to make a positive impact on the world is in educational and experiential learning. Not in the sense of teaching curricula or handing out certifications, but by simply providing an opportunity for kids to be creative with technology, together. Roblox seems especially well positioned to make an impact here, and it will be interesting to watch how it evolves over the next few years.