The Metaverse gaming platform Roblox is vibrant within its own world. Approximately 78 million active users every day organize hunger strikes through in-game payment systems and build art marketplaces and resale markets. However, real-world investors lack confidence in the game's ability to continue to grow.
The company posted revenue of just over $800 million in its most recent quarter, well below expectations of $929 million. The forecast for annual bookings, or revenue from sales, has been lowered to $4.0 billion – $4.1 billion from the previous estimate of $4.14 billion – $4.28 billion. Roblox stock plunged nearly 20% on Thursday following the announcement.
The amount of time users 13 and older spent playing games increased by 19% this quarter, the smallest increase for Roblox in two years. Roblox Chief Financial Officer Michael Guthrie said the platform attracts an older audience that takes longer to get used to and grasp gameplay, and the CEO said the company is focused on future growth. He added that he was optimistic.
“Our team has worked diligently to identify driving opportunities. [daily active users], hours, and booking growth are back at 20% year-over-year,” Roblox founder and CEO David Baszucki said during the company's earnings call on Thursday. “Based on results since mid-April, we believe these measures are having positive results.”
Roblox, which currently has 77 million users, has been around for 20 years, but according to Morning Consult, it's hugely popular among young people, who are on social media as young as 8 years old. I spend up to 3 hours a day. It provided connection and entertainment during the pandemic. The company went public in 2021, making its New York Stock Exchange debut at a valuation of $45 billion. But while Roblox has expanded to stay fresh and introduced mini-games and social media features, it has struggled to maintain growth amid high operating costs.
Roblox has been working to reinvent itself by integrating advertising into its platform. This month, the company announced a partnership with Walmart, allowing the big retailer to sell its products in-game. In April, it launched virtual billboards that display video ads. The company also partners with leading companies to build its advertising business. In March, fashion brand Hugo Boss launched its Hugo Blue line in-game, allowing players to dress their avatars in the line's denim streetwear. Stephanie Latham, Vice President of Global Partnerships at Roblox, said: luck Last month, advertisers competing for Gen Z's attention found Roblox an attractive platform.
“We recognize that just like other parts of life where people interact with their favorite brands, advertising exists naturally in 3D immersive spaces, and we want brands and creators to create innovative advertising products that people can enjoy. We are focused on creating a solution that can be launched on Roblox,” Latham said.
industry struggles
The company hopes its increased presence of video ads will help sustain the platform, but Roblox's struggle to grow its daily user base is part of an overall industry slowdown.
Beyond the hype surrounding the end of the Metaverse, the gaming industry as a whole seems to have peaked during the pandemic, since returning to work and school pulled more gamers from the virtual world into the real world. Struggling to recover. Games cost dizzying amounts of money to develop and market (an estimated $2 billion in the case of Grand Theft Auto 6) and are expensive for consumers. As a result, console sales and spending on mobile games have both declined this year.
The industry is feeling the heat. In the first two months of 2024 alone, video game companies will lay off 8,000 employees, including 1,900 at Microsoft's video game division and Activision Blizzard, and 1,900 at Sony Interactive Entertainment, which owns PlayStation. There are 900 people. Microsoft announced further cost-cutting measures this week, including its Xbox division offering voluntary severance packages to some staff, Bloomberg reported.
Phil Spencer, CEO of Microsoft's gaming division, told gaming site Polygon in March that the industry was expected to shrink in both player numbers and revenue, and publicly traded game developers like Roblox He said there will be added pressure to demonstrate their game development capabilities to investors. Can be expanded.
“My biggest concern about the industry is the lack of growth,” he said.
