Roblox $70m User-Generated Gaming Economy

Roblox is a game creation platform that provides users with the tools required to create their own game within the game. “Oh yeah, that’s cool” I hear you say, but the real kicker is that these user-created mini games are monetised. Suddenly the barrier to entry to become a profitable game developer has been knocked down. This is the story of Roblox and the virtual currency, known as Robux, that powers their user-generated gaming economy.

Roblox Brief History

We have discussed big money in new games such as Cryptokitties before, but the world of Roblox isn’t exactly new, it has been around since 2006 …or 2004 if you want to count from the time when it was first being demoed. That’s a hell of a long time for a video game to be active, it’s a long time ago in general. 2006 was the year of the release of the award winning documentary Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan and Italy had just won the FIFA World Cup, oh, how times have changed.

Fast forward to modern day and Roblox (at last count in 2017) has 64 million monthly active users, which is definitely nothing to sneeze at and is available on a myriad of platforms, including:

• Microsoft Windows
• macOS
• iOS
• Android
• XBOX One
• Oculus Rift

Compare the Roblox timeline with another long-standing competitor Minecraft. I actually was surprised when I read that Minecraft had only been around since 2009, as I could have sworn that I was playing it many years earlier. Roblox has the best part of 5 years over Minecraft, but it wasn’t until recently that I had even heard of the title …but I am probably not in their target audience either.

Speaking of the target audience, they are a young crowd, most likely somewhere in the age range of 6 to 22 years. Having said that, this is just a guideline and there are a lot of parents who love playing similar games just as much as their children do.

The name Roblox itself provides an indication of what is to come, a combination of robots and blocks. Graphically, Roblox sort of looks like Mr Minecraft took Miss LEGO to the bedroom and then waited 9 months. It is simplified artwork when running up against the likes of modern day graphics in the latest Grand Theft Auto or Witcher title, but it is this simplified artwork that is part of the reason why it is possible for users to create their own worlds too, the focus is all on the gameplay and social aspects instead of the prettiness.

User-Generated Games

It is the user-generated content that makes the Roblox platform enticing to Profit Pants. Almost anyone can be a Roblox developer and start building their own games inside the Roblox world. Logging in to the Roblox Studio engine a developer can use object oriented programming to creating virtually anything that they can imagine.

Object oriented programming has been around for decades. Most simply put, Roblox Studio gives you a whole catalogue of pretty objects that you can drag and drop into place to create your world. Visually you don’t really need to do worry about much to start with, you only need to be concerned with how people interact with these objects in order to make it a “game”. You then modify the code associated with the objects so that they can do funky things. Imagine dropping 100 blocks in Minecraft to build a basic box shaped house, but then also being able to change the code associated with each individual block so that when you approach they change colors, or fly away, or you just die. This is all possible with object oriented programming. Fast, easy for the basics, but still as complex as you want to make it.

The Roblox Corporation have gone to great lengths to ensure that their developer community is nurtured too. There are detailed creation tutorials online, they try to teach kids to code, they even hold a Roblox Developers Conference. They are giving aspiring creators all of the tools that they need to succeed. The scary part is that in the time that you take to read this article you instead could have downloaded Roblox Studio and even started being a developer yourself, pending your download speeds. It really is that easy to start. I haven’t played around with Roblox Studio myself, however if I was a parent with a child who showed any interest at all in coding then this is one avenue that I would send them for further investigation. It sure beats QBasic coding for entertainment value.

Starting to develop games on the Roblox Developer Studio platform has a few other large advantages too. For a start the base of the game has already been built for you, there are servers that run the games, there are players already looking for sub-games and there is already a mechanism in place for you to get paid if you are a success. It has a lot going for it as a stepping stone, maybe this will become one of the new things for game developers to have on their CV.

One of the first projects that many people will play with after first installing Roblox Studio is to create an obby, or much more universally known amongst the non-Roblox world as an obstacle course. Building an obstacle course as a first project allows new developers to gain an understanding of a few of the basic tools within the program including object placement.

And we aren’t just talking a few dozen different games that have been created here. There are an estimated 40 million user-created Roblox games that have been built on the platform by somewhere around 2 million different developers/creators. Let that sink in for a moment …there are 40 million different games that have been created within the Roblox game. That number is huge. Huge to the point of never ever, ever, being in the realm of possibility for a single company to create. Granted, the quality of a large majority of those games is going to be crap, but these are 40 million opportunities for the Roblox company to hit a winner, 40 million opportunities for the Roblox company to make money, because they created the engine that built the game.

There is an old saying on the tip of my tongue about this, but that is where it is remaining too. But the moral was to not fight against others in the game, but instead be the one who is in charge of the game to begin with and profit from everyone. Yeah, it sounded much better in my head before going down on paper, but that’s Profit Pants for you in a nutshell.

Robux: The New Dancing Dollars

So why would a developer want to spend their time building games? Well some people probably are just doing it for the love of the game, but the answer for at least a large portion of the developers is Robux. Robux, often abbreviated as “R$” is the Roblox in-game currency and most importantly exchangeable for real world cash.

It wasn’t always a case of developers being able to cash out their Robux to real world money. The Roblox DevEx system, which allows the exchange of Robux for real bucks, only came into play in October 2013. An article in early 2014 mentioned that several developers had already made “over $10,000”. If you read on though you will realise that $10,000 is chump change these days amongst the largest developers on the platform.

As a very rough guide, because more detailed calculations here will in time prove likely to be inaccurate and will add no more excitement to this titillating subject, 100 Robux is worth about $1. And that’s the simple conversation we are going to use for the remainder of this article.

There are two main areas where developers are making Robux on Roblox (now say those last 3 words 10 times fast and find yourself in a tongue twister):

• You can charge people to play your game: This is a model that only some of the games follow. One of the recent high earning examples of this model is Welcome to Bloxburg, which has a description of “Build and design your own amazing house, own awesome vehicles, hang out with friends, work, roleplay or explore the city of Bloxburg. The possibilities are endless!”. For this particular game the upfront purchase price is very low, only 25 Robux, the equivalent of 25 cents. Welcome to Bloxburg also takes advantage of the second earning option too though.
• You can charge people to buy in-game items: Other games are completely free to play, however offer in-game transactions in order to better your playing experience. Oh yes, don’t we just all love micro-transactions. I think that it is fair to say that The Sims fleet of games has turned off a whole generation, where they prey on their user-base to purchase bland items which even in real life aren’t that exciting. Is anyone in the mood for buying an in-game summer tee from GAP? Anyway, rant over, Jailbreak is one of these games. The Jailbreak description reads “Welcome to Jailbreak! Live the life of a Police Officer or a Criminal. Stop crimes or cause them. Uphold the law or break the law. In this world, the choice is yours.” Hook in a user with micro-transactions and they can quickly lose track of how much they are paying.

Which business model the developer chooses will often come down to a sales strategy. Unless you have a killer game or a big reputation then why would a user want to pay to play when there are so many other free options to choose from? On the flip-side though, there are many people who are just completely fed up with the micro-transaction model that is now so prevalent in gaming and would much prefer to make a one-off purchase and then not have to worry about paying to play. If you can convince users that you have a fabulous game and should pay upfront, and also manage to convince them to buy in-game objects then you are sitting on a golden goose.

So, How Much Robux?

The Roblox developer program is expected to pay out somewhere in the vicinity of $70 million this year. This has almost doubled from the $30m in payouts that was floated around in 2017.

You could just be lazy and divide that $70 million amongst lets say 2 million different developers on the platform and come up with a payout of $35 per person. But as is so often the case with any type of online business, the numbers are heavily skewed towards a small number of people. And to really generalise, those who are just mucking around with the platform are unlikely to win big. But treat it like a business, with focussed effort, and this system has the chance of a Vegas style payout /cue imagery of coins flying out of a slot machine. There is BIG money to be made, this isn’t silver spoon collecting money.

A small number of developers, and we are only talking about the sorts of numbers that you could count on your fingers …or toes, if you aren’t wearing socks, will pocket upwards of $3 million each. That’s not chump change. That’s f%ck you money right there!

Feeling Sorry For Roblox Corporation?

No. Nobody feels sorry for anyone with “Corporation” in their name. It reminds me of E. Corp from Mr Robot.

Just in case you hadn’t sensed it already, there is a bigger winner in this grand ol’ game, and that is Roblox Corporation (who are the kind folks behind Roblox) along with their investors. In addition to the game itself there is of course a line of figurines that you can purchase too, available from all good toy stores, that will sure to be much in demand in the playground …and then quickly turn to landfill not long after.

As of 2017 Roblox had raised $102 million from investors including Index Ventures and Meritech Capital Partners and current estimates put a valuation on the company at $2.4 billion.

And you wanna know the kicker with this whole story? Keeping in mind that this is a game that has existed for 15+ years, is worth $2.4 billion and has 64 million monthly active users …up until a week ago I had never even heard of it.

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