Digital Business Case: Roblox

History

Roblox is online gaming platform which was launched in 2004 by David Baszucki and Erik Cassel. The idea was simple to build online space where people from all around the world can generate building, play games and do activities together. (Baszucki, 2022). The Core idea is that build such a platform where creator can build everything and other can use /buy and creators and Roblox earns money from it. In Roblox’s early age it was small, not getting much intention from user/creator but it was grown rapidly during 2^nd half of 2010, especially Covid-19 pandemic (wikipedia, n.d.) . Currently there are 52.2 million daily active users (Roblox Cooperation, 2022)

Vision

The Vision of Roblox from start was

“To build an entirely new category of human co-experience nothing less than the realization of the next phase of human interaction. We imagined an online space where people from anywhere in the world could share experiences with friends, just as they would in person (Baszucki, 2022)”.

Three step analysis of Roblox

What makes Roblox successful

Roblox and its competitor building creative digital playgrounds, where it enables players to build and create.Roblox comes with new idea “humain coexperince” meaning immersive environments that let users play, explore, talk, and just hang out (Schomer, 2019) . This idea attracts many Players across the global especially during the pandemic time.

Figure 1Roblox New Characteristics

Intrinsic characteristics (Swann G. , 2016) of Roblox are free platform with high availability, currently 52.2 million daily active users, 12 million creator and 32 million experiences. Roblox are available for multiple platform(mobile, gaming console, tablet, PC) . Roblox is free to download on the other hand competitor like Minecraft is premium game platform. Players need to buy a copy of Minecraft.

Roblox launched “Roblox Studio” which enable user to build basic things as well create complex behavior and experiences (Baszucki, 2022).  Player can create own game by using Roblox scripting language Lua. Player can allow it to play free or they can put a price on product. Roblox platform offer player to create their own product proliferation. Player can create less functionality, low quality game for free user and high functionality games based on what the user willing to pay.

Figure 2Player game proliferration

Roblox provides critical services such as user acquisition, billing, collections, content moderation, translation, safety, regulatory compliance, and customer support on behalf of the developers and creators. This makes it easier and simpler for even individual developers and creators and small studios to be successful developers and creators. (GOEL, 2022)

Roblox allow creators to set the innovative pricing which is also known as price discrimination (Swann G. , 2016, p. 67).  Most of user can play free games with less feature and quality as they need more quality, they can buy paid games with more features.

• Customer development process

Roblox has created a strong community with over 50 million active daily users and millions of developers. Together they are building new experiences and together developing content. This “user innovation” is a fundamental part of Roblox. However, they have always maintained moderation of the content.

• Work with like-minded VC looking long-term instead of short term

Roblox have worked with like-minded shareholders and have chosen to take a long-term view of the company. They have directly listed on NYSE which have gathered interest from hedge funds and institutions.

• Using their own currency within the platform.

In order to improve their finances, they have created their own virtual currency, Robux. The users will use this currency within the platform. The benefits for Roblox is that they are not relying on bank transfers or other crypto currencies thus they are not losing any transaction fees.

• Bedrock Values

Roblox have clear values that they operate their business within. They are very clear about these values and they communicate it often within the community. Those values are: respect the community, take the long view, take responsibility and get stuff done.

• Organizational structure matters

As Roblox has grown to 1500 employees, they have built an organizational structure that works. They have small teams that are guided by Roblox mission, vision and strategic road map.

Roblox key Characteristics:

Varity of Game and Content

Roblox has variety of game and content. Roblox act like Appstore where user/player has unlimited no of option. Millions of creator-built virtual items, such as hats, shirts, and pants. Users can personalize their avatars and 3D virtual items, assets, and sounds that creators can incorporate into experiences. (GOEL, 2022) 

Gaming program for all Ages

Roblox users are spending an average of 2.6 hours per day on the platform. Half of Roblox users are Gen Zers, between the ages of 13-24 years old. The other 50% of Roblox users are below 13, comprising Gen Alpha, the youngest generation alive today. (How brands are engaging Gen Zers with Roblox Experinces, n.d.)

Virtual Money Robux

Roblox is virtual money created by Roblox. Players would be rewarded for participation and could earn Robux. Roblox create an eco-system. The creator can sell their items/games via robux to players. Which they can convert to real money. Players buy the robux by real money from robux store. The development community now earns more than half a billion dollars annual (Baszucki, 2022).

WE can say that Roblox is vertically superior to other competitor by providing large no of content, flexibility, high availability, compare to its competitor where they are only offer single game.

What are the, key things Roblox did right to be able to scale up to get listed on NYSE and how are they performing?

• Vision
  • Vision can used for strategic purpose, where the aim was to influence the investment decision s of users and the entry decision of rivals. (Swann G. P., 2016).
  • Roblox set its vision very clear to users and competitor that they are coming with new innovation of “human co-experience”.
• Lunch of Virtual Money
  • In 2007 Roblox introduced its virtual money call Robux to manage the finance without external investment. Roblox attract player with Robux. Player rewarded for participation and earned the benefits. (Baszucki, 2022)
• Developer Exchange
  • Next step Roblox lunched developer exchange in 2013. Where creators can exchange Robux into real money. (Baszucki, 2022) Creator can make new content (games, avatar, building, etc) and they can sell it to players with Robux which later be converted to real money through developer exchange.
• Organizational Structure
  •  Roblox re-organized and split into 14 majors’ groups, on average four teams with main goal is creativity and collaboration.
• Connected ventures firms
  • Roblox connected to different ventures firms.  So, they can also invest in Roblox to build more feature in platform.

What are the effects of innovations that enable Roblox on economic growth and competitiveness?

Roblox business model is self-growing circle which basically total rely on content and social network. A Roblox platform is built around user-generated content (UCG), created by the Roblox community of developer and creators. The more high-quality content community create, the more users interested in Roblox are. As Roblox grows, its engagement will increase, and the platform will become more attractive to developer, creators and investor.

Figure 3 Roblox Business Model (GOEL, 2022)

Social features to allow users to communicate with other users during gameplay. Socializing with friends is said to have grown around. It brings more online social interaction. It enhances the creativity and help community to overcome the financial issues.

Effects of Roblox.

Roblox is probably the platform that’s closest to a Metaverse enterprise model. While children can earn Robux a shape of cash and monetize their creations, it’s additionally growing a gig-financial system like conditioning for youngsters, regularly very younger youngsters and pre-teens (Spencer, 2021; Spencer, 2021).

Roblox, like many of its predecessors, is a highly addictive interactive online game platform. While other online games are aimed at teenagers and older, this game is aimed at young children aged 7 and up. The age group is vulnerable, the prefrontal lobes are not developed and easily fall into addictive games and devices. (M, 2016). Children are less physical active, more aggressive and impatient.

Roblox Innovation and competitiveness  Roblox’s innovation “human co-experience” brings the new competitiveness among the other competitors.  The concept of Metaverse spread very rapidly. Other competitors are also working toward new features to their product to attract the user and get the market value

Reference:

Reis, Munir & Mustafa, (2022). Economic Analysis of Technology and Innovation. The Roblox Case

Baszucki, D. (2022). The CEO of Roblox on Scaling Community-Sourced Innovation. Harvard Business Review, 1.

Schomer, A. (2019, August 7). Roblox has eclipsed Minecraft with 100 million users — highlighting the popularity of ‘digital hangouts. Retrieved from https://www.businessinsider.com/roblox-user-growth-surpasses-minecraft-2019-8?r=US&IR=T#:~:text=Roblox%2C%20the%20free%2Dto%2D,blog%20post%2C%20according%20to%20TechCrunch

GOEL, S. (2022, 3 22). How does Roblox make money | Business Mode. Retrieved from thestrategystory: https://thestrategystory.com/2022/03/22/how-does-roblox-make-money-business-model/

Swann, G. M. (2014). The Economics of Innovation: An Introduction. Edward Elgar Publishing.