Roblox IPO Success Draws Attention
Experts Say "Must Secure Revenue Streams"
An American elementary school student playing the metaverse game 'Roblox' [Image source=Reuters Yonhap News]
[Asia Economy Reporter Kim Suhwan] "We live and breathe in Roblox"
Megan Letter, an American YouTuber with over 3 million subscribers, described the virtual world game Roblox, which she plays, in this way. Letter gained considerable popularity playing a game called 'Adopt Me' with virtual pets in Roblox. She is known as a 'Roblox star' as her subscriber count surged after sharing videos of her interacting with friends in Roblox on YouTube.
This year, Roblox's developer, considered a major IPO on the New York Stock Exchange, succeeded immediately upon going public on the 10th. Its market capitalization surpassed $38 billion (43 trillion KRW) right after listing, instantly overtaking Electronic Arts (EA), a leading global game company with a 38-year history and creator of games like The Sims, SimCity, Battlefield, and Star Wars, whose market cap was $37.5 billion.
Focus on Metaverse Interest Following Roblox's Success
Roblox's successful IPO has drawn attention to the metaverse, which inspired Roblox. The metaverse is a compound word of 'meta' (virtual) and 'universe,' meaning a three-dimensional virtual world. It is a game-type virtual world where gamers connected to this world can interact with other gamers.
The technology research group ASF classified the metaverse into four categories. These include 'augmented reality,' which overlays virtual objects onto real spaces like Pok?mon Go; 'life-logging,' where people share their daily lives digitally on platforms like Facebook; 'mirror worlds,' which depict and allow manipulation of the real world as seen in Google Earth; and 'virtual worlds,' where people engage in social activities with others in different worlds, such as Roblox.
The metaverse first appeared in Neal Stephenson's 1992 sci-fi novel Snow Crash. In 1993, the first game utilizing the metaverse concept, a text-based virtual world game called 'The Metaverse,' was released. This game allowed players to create virtual objects through coding and share them with other players.
Following that, the online game Second Life, launched in 2003, is regarded as the first case of metaverse popularization, recording millions of simultaneous users. In Second Life, players create their own virtual avatars and can engage in social activities such as eating, working, and going to clubs with other players within the virtual world.
The augmented reality game Pok?mon Go, released in 2016, also achieved great success by utilizing the metaverse concept. The 2017 film Ready Player One, directed by Steven Spielberg, was the first sci-fi blockbuster to focus on the metaverse concept, earning $600 million worldwide and achieving box office success.
As interest in the metaverse grows, major IT companies are also entering metaverse technology development. Jensen Huang, CEO of Nvidia, the world's largest graphics card manufacturer, stated at a developer conference last October, "The metaverse is coming," setting the implementation of this technology as one of the company's core goals. Facebook, the world's largest social networking service (SNS), also officially entered the metaverse industry last year by launching 'Facebook Horizon,' a service where users wearing VR (virtual reality) devices can hold meetings and chat with other users in a virtual world.
On the 2nd, Soonchunhyang University held a freshman entrance ceremony in a virtual world space through SK Telecom's metaverse platform 'JumpVR' [Image source=Yonhap News]
Our government is also increasing investment in the metaverse industry. The Ministry of Science and ICT announced on the 11th that it will open a project for the expansion of virtual convergence reality (XR) worth 45 billion KRW. Specifically, it plans to develop a fire response system using XR content, an integrated education and training system for the Air Force, and expand support for digital therapeutics to treat depression caused by COVID-19. Additionally, private sector metaverse industry entry is accelerating, as seen with Suncheonhyang University recently collaborating with SK Telecom to hold a freshman entrance ceremony in a metaverse space.
Mixed Outlook for the Metaverse Industry
Following Roblox's better-than-expected IPO success, experts continue to debate the future of Roblox and metaverse games.
Supporters of the metaverse describe this new concept as a revolutionary change that can expand the gaming industry into the broader digital industry. Recently, the pop band 'Why Don't We' held an exclusive music release event on Roblox.
Another metaverse game, the American 'Fortnite,' recently released a dedicated music video by BTS. Players held dance parties in the virtual space matching the music video.
A player in the popular American game 'Fortnite' is seen controlling their avatar to dance along to a BTS music video. [Image source=Twitter]
NPR predicted, "Metaverse games like Roblox will not remain just games but will expand into other fields such as music platforms, building digital empires." Yahoo Finance noted, "The metaverse allows users to create games themselves for others to enjoy, enabling interactive communication between players and developers. This breaks away from the one-dimensional interaction where gamers only play games made by developers, marking a revolutionary change in the gaming industry."
On the other hand, skeptics argue that the metaverse concept is difficult to implement and that developers face challenges in generating profits. Although commercial VR devices have been available for over five years, their high prices and low usability have prevented them from gaining a foothold in the market. Roblox also recorded a loss of $250 million last year.
IT media VentureBeat criticized Roblox as overvalued, stating, "Last year's loss tripled from $71 million the previous year, and considering the current market capitalization, the price-to-sales ratio is as high as 30 times, far exceeding the average of 3 times for other game companies." Bloomberg also noted, "With COVID-19 under control due to vaccine rollouts and children returning to school, Roblox is likely to lose its main user base. The future growth prospects of metaverse games remain uncertain."
Experts agree that for the metaverse industry to grow following Roblox, securing revenue-generating pathways is crucial. VentureBeat reported, "Roblox is currently preparing to launch paid subscription services and music events to strengthen profitability. It also needs to secure various revenue streams, such as providing barter services in the metaverse space using NFTs (non-fungible tokens), a type of digital asset gaining popularity, and collecting transaction fees."
Roblox's Popularity Surged During the Pandemic
Meanwhile, Roblox is a game where players create their own characters and interact with other players in a virtual world. Here, players can enjoy various daily activities such as visiting virtual theme parks with friends, attending concerts, playing games created by other players, and raising virtual pets. David Baszucki, CEO of Roblox, explained, "Roblox is the answer to the question of how to connect people worldwide."
Roblox's initial journey was not smooth. After Roblox Corporation was founded in 2004, it launched the Roblox PC game in 2006 to start its service. In 2012, it expanded to the mobile market by releasing an iPhone-only version, diversifying its platform. However, the player base did not grow, and losses continued, raising concerns about the company's survival. The game was even criticized as a "lost game" with a bleak outlook. The turning point that miraculously saved the game was the COVID-19 pandemic.
When many elementary school students in the U.S. were unable to attend school due to COVID-19 last year, Roblox began to be used as a channel for children staying at home to communicate with others. As of December 31, the average daily active users surged 85% year-over-year to 35.2 million. According to Roblox, 75% of American children under 12 had played Roblox at least once. Last year's revenue rose 82% year-over-year to $924 million.
P.J. McNealy, CEO of IT consulting firm Digital World Research, told NPR, "Roblox became a babysitter for kids staying home during the pandemic."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
