But how long that frenzy can last is increasingly under question. With vaccinations rolling out and pandemic restrictions easing in some places, gaming behaviour may begin to change. Investors are not thinking about what will happen when the pandemic subsides, van Dreunen said.
“There’s going to be a lot less time to play Roblox,” he said.
David Baszucki, Roblox’s chief executive and a founder, said on Wednesday in an interview that he does not expect the platform to hemorrhage players when the pandemic ends and children return to playing with friends outside.
“We don’t think we’re going to lose all of that, or all of the amazing people we’ve gathered,” he said.
His shares in the company were valued at approximately $US5 billion when trading opened.
Roblox, which went public in a direct listing in which no new shares were issued, was founded in 2004 by Baszucki and Erik Cassel, who were engineers and entrepreneurs. (Cassel died of cancer in 2013.)
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The site, which was released in 2006, is an online universe in which players can interact and choose from more than 20 million unique games. They can then use their avatars to break out of prison, explore tropical jungles or adopt pets. Players pay for premium memberships, as well as for items and clothing for their avatars using a digital currency called Robux.
Turbocharged growth
For years, Roblox steadily gained popularity with younger audiences. That growth was turbocharged last year by the pandemic. On average, 32.6 million people a day logged into Roblox, nearly double the 2019 average of 17.6 million, the company said. While Roblox is unprofitable, its revenue surged 82 per cent to $US924 million last year.
Over the years, Roblox raised $US871 million in funding. Its biggest investors include Altos Ventures, Index Ventures and Meritech Capital Partners.
Roblox has also enriched many developers, who make its games and digital accessories. Many of the developers are teenagers and young adults who grew up on the platform. They split their profits 50-50 with the company.
After delaying its December listing, Roblox was supposed to go public in January. But it pushed that date back after the Securities and Exchange Commission asked the company to change the way it calculated its revenue. Roblox has since complied.
At an investor event last month, Craig Donato, the company’s chief business officer, said Roblox was trying to add more users, largely by appealing to international audiences and older gamers. The company is working toward more polished graphics, more complex games and increasingly lifelike avatars, he said.
The eventual goal, the company has said, is to create a “metaverse,” a concept mostly reserved for science fiction that describes a shared online universe where people can live and interact as if they were there in person. Roblox holds business meetings on the platform and has promoted virtual concerts within its universe.
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“Just as the mail, the telegraph, the telephone, text and video are utilities for collaborative work, we believe Roblox and the metaverse will join these as essential tools for business communication,” Baszucki said during the investor day. “Ultimately, someday we may even shop within Roblox.”
But before the metaverse can happen, Roblox will have to navigate what happens when the pandemic ebbs and children return to playing outside.
“A big chunk of the performance they had in 2020 in terms of revenue was COVID-related, particularly in the US,” said David Gibson, chief investment officer at Astris Advisory, a financial advisory firm in Tokyo. “The concern I have is they are forecasting this will slow down in the second half of 2021.”
The New York Times
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