Digging into the Roblox Growth Strategy

TechCrunch, July 2019

 Could Roblox create a new entertainment and communication category, something it calls “human co-experience”?

When it was a small startup, few observers would have believed in that future. But after 15 years the company has accumulated 90 million users and a new $150 million venture funding war chest. It has captured the imagination of America’s youth, and become a startup darling in the entertainment space.

But what, exactly, is human co-experience? Well, it can’t be described precisely — because it’s still an emerging category. “It’s almost like that fable where the nine blind men are touching and describing an elephant.

Everyone has a slightly different view,” says co-founder and CEO Dave Baszucki. In Roblox’s view, co-experience means immersive environments where users play, explore, talk, hang out, and create an identity that’s as thoroughly fleshed out (if not as fleshy) as their offline, real life.

But the next decade at Roblox will also be its most challenging time yet, as it seeks to expand from 90 million users to, potentially, a billion or more. To do so, it needs to pull off two coups.

First, it needs to expand the age range of its players beyond its current tween and teen audience. Second, it must win the international market. Accomplishing both of these will be a puzzle with many moving parts.

What Roblox is today

 One thing Roblox has done very well is appeal to kids within a certain age range. The company says that a majority of all 9-to-12-year-old children in the United States are on its platform.

Within that youthful segment, Roblox has arguably already created the human co-experience category. Many games are more cooperative than competitive, or have goals that are unclear or don’t seem to matter much. One of Roblox’s most popular games, for instance, is MeepCity, where players can run around and chat in virtual environments like a high school without necessarily interacting with the game mechanics at all.

What else separates these environments from what you can see today on, say, the App Store or Steam? A few characteristics seem common.

For one, the environments look rough. One Robloxian put the company’s relaxed attitude toward looks as “not over-indexing on visual fidelity.”

Roblox games also ignore the design principles now espoused by nearly every game company. Tutorials are infrequent, user interfaces are unpolished, and one gets the sense that KPIs like retention and engagement are not being carefully measured.

That’s similar to how games on platforms like Facebook and the App Store started out, so it seems reasonable to say Roblox is just in a similarly early stage. It is — but it’s also competing directly with mobile games that are more rigorously designed. Over half of its players are on smartphones, where they could have chosen a free game that looks more polished, like Fortnite or Clash of Clans.

The more accurate explanation of why Roblox draws big player numbers is that there’s a gap in the kids entertainment market. So far, only Roblox fills that gap, despite its various shortcomings.

“The amount of unstructured, undirected play has been declining for decades. [Kids] have much more homework, and structured activities like theater after school.

One of the big unmet needs we solve is to give kids a place to have imagination,” explains Craig Donato, Roblox’s chief business officer. “If you play the experiences on our platform, you’re not playing to win. You go into these worlds with people you know and share an experience.”

Games like The Sims tried to do the same, but eventually faded in the children’s demo. Roblox’s trick has been continued growth: it provides kids with an endless array of games that unlock their imagination. But just like we don’t expect adults to have fun with Barbie dolls, it’s unlikely most adults would enjoy Roblox games.

Of course, it would be easy to point at Roblox and laugh off its ambitions to win over people of all ages. That laughter would also be short-sighted.

As David Sze, the Greylock Partners investor who led Roblox’s most recent round, pointed out: “When we invested in Facebook there was a huge amount of pushback that nobody would use it outside college.” Companies that have won over one demographic have a good chance of winning others.

Roblox has also proven its ability to evolve. At one time, the platform’s players were 90 percent male. Now, that’s down to about 60 percent. Roblox now has far more girls playing than the typical game platform.

Evolving to new demographics

To appeal to older users, Roblox is working to improve the look, feel and scale of its environments and characters.

“There’s a certain age range where things like visuals and scale start to matter, and we want to unlock that possibility,” says Adam Miller, one of three vice presidents of engineering at the company.

One initiative that Roblox is already working on, for instance, is an updated lighting engine. In any virtual environment, lighting is more important than it appears at first glance: it determines whether the environment looks and feels inspired. “Lighting materials together creates a sense of realism, and depth, so we prioritized it as an investment to up the visual quality of the games,” says Enrico D’Angelo, the VP of product.

Beyond the lighting engine, which is the part that Roblox is ready to talk about, I also got the idea that they’re working on many other aspects of the look and feel. The avatars, for instance, have already evolved from the early collection of squares and rectangles to more sophisticated R15 characters with more varied shapes and, as the name implies, 15 body parts. The next step would be finding ways to make the characters look even better and move more convincingly.

Environments, too, could be expanded. Today, a Roblox game can’t be the size of, say, an MMO like World of Warcraft, but the company is working on expanding both the possible environment size and the number of players that can fit at once (currently limited to 100).

“It’s a lot of performance work, making code efficient, multi-threading… I think we spend more time on performance than just about any other company, which is probably something that’s unexpected for a lot of people who look at Roblox,” says Adam Miller, a VP of engineering at the company. “They think oh, it’s just a kids game. Probably of the engineering team, three-quarters of them are focused on performance,”.

There’s one more direct control that Roblox has over its appeal to older audiences: the games that it shows them. Currently, the front page of Roblox is more or less the same for any visitor, whether they’re 12 or 24, male or female, unlike other UGC-driven sites like YouTube, which customize the view each user sees.

“There’s already quite a lot of content that will appeal to different age ranges, but it’s hard to find that,” says Miller. Once again, Roblox had nothing specific to announce, but it’s likely they’ll add customization to their search in the future.

An appeal to developers

All the aforesaid improvements are things that Roblox can do on its own. Enhanced lighting, for instance, can be applied to existing games with relatively little involvement from their owners. But for other improvements, the company has to rely on its game developers.

The developer community is already a huge area of focus. Roblox’s engagement and education efforts will reach over a million students this year, according to the company.

There’s a sizeable online knowledge base, and the company runs an accelerator, offers internships, and has its own yearly gathering, the Roblox Developer Conference. It trumpets rapidly growing yearly developer earnings ($30 million paid out in 2017, and $60 million paid out in 2018). All its efforts combined have added up to 2 million developers on the platform today.

Since the community is mainly kids developing for fun, it’s also more collaborative than many professional communities. “They’re not super competitive with one another. They help each other a lot. That lifts all boats… We have really strong champions in our community who understand helping each other. They will actually shift and work across different teams. They’re not permanently allocated to a single studio,” says Grace Francisco, the VP of developer relations.

But despite having been successful with a demographic of kids, Roblox still needs bigger, more professional teams to form and produce the kinds of larger experiences that older players will enjoy.

To an extent, studios are already forming in the existing developer community. Red Manta Studio, for instance, is a studio that seems to be more traditionally structured, with an owner and several employees, and a larger than typical Roblox game in development called World // Zero, which looks like a traditional MMO.

But Roblox could move faster by attracting studios from the larger game industry, where many indie studios are struggling. “The 5 to 20 people shops, in this day and age they’re building in Unity or Unreal and publishing on the App Store, and [marketing and player acquisition] are really hard for them. I think with Roblox, especially once we up the visual fidelity and size of the worlds, it becomes a really interesting opportunity,” says D’Angelo, the VP of product, whose background is at the AAA publisher Activision.

“In my mind, we’re a compelling value proposition for a small studio that maybe wants to build multiplayer games but doesn’t have backend engineering, or wants to build games that are super social but can’t attract users.”

The problem is that studios accustomed to Unity or Unreal may struggle to smoothly transition to the Roblox engine, which lacks features like source control (important to teams with multiple coders) or a store for third-party plugins and assets.

“As our developer community starts to grow a cohort of professional developers, they’re requesting and demanding professional tools. You see that in the quality of the games on the platform. Our most popular games like Jailbreak and MeepCity are probably 50 to 60 thousand lines of code. If you aren’t using some sort of game state management library when you’re writing 50k lines of [Roblox’s programming language] Lua, you’re gonna have incredible bugs,” says Claus Moberg, a senior director of engineering.

So Roblox is working to add functionality and smooth over rough spots — for instance, it has a new partnership with Playfab to provide analytics to developers. If it can build the right tools as well as continue demonstrating ever-higher earnings, it will undoubtedly attract at least some developers who are struggling to do well in the mobile and PC game markets.

Chances of success

In short, Roblox needs to improve multiple features to reach a wider demographic: graphics, performance, its game development tools and its developer community. The evidence that it can do so is the 15 years it spent building what it has today, with a significantly smaller team and fewer resources.

But even if Roblox pulls off everything it’s working on today, there’s no guarantee that an older group, such as the 18-to-25 demographic, will come to the platform. The 3D environments of the past don’t offer much, if any, guidance.

Second Life, for instance, still exists in the hazy territory between a game and a social environment. It peaked at around a million users in 2007 and reportedly had just 600,000 players in 2017, despite a decade of ongoing technical improvements.

Going back to Baszucki’s metaphor, the elephant is still invisible: we can’t see its final shape, or whether that shape will suit any audience other than kids. Roblox looks and feels entirely very different than Second Life; other points of comparison, such as social games on Facebook, are equally far off. While Roblox can improve its product across the board, some other, currently unknown ingredient may be required to expand the demographic.

That’s why user-generated content and outside developers are important: while the company itself can’t say exactly what an adult Roblox game would look like, a community of millions of developers might yet figure it out.

That’s not to say the company doesn’t have ideas. One of Baszucki’s favorite ideas is education: using virtual environments to make ideas interactive that today we can only read or watch a video about.

“I think there’s more emergence we will start to see. A long time ago when you studied the Civil War you’d study the encyclopedia. Now people go to videos or books. We’re imagining a future that you’re studying the Civil War, you go in and experience it and learn about it first hand,” says Baszucki.

Roblox, as an alternative to Wikipedia? Stranger things have happened. But until it does happen, we can only wait and watch what emerges on the platform.

Going international

Beyond expanding its age range, Roblox’s other major growth channel is going international, and winning over kids worldwide.

Once it has been localized for them, in theory kids anywhere will love Roblox just as much as kids in the United States. “I don’t think there’s ever been a period in human history where a 15-year-old is more the same,” says Donato.

On a trip, his family stayed with a Bhutanese family. “The adults couldn’t have been more different. Wildly different. My kids were almost the same as theirs. They’re on the internet, watching the same videos, studying the same things.”

That said, it’s not easy for Roblox to enter another country. Translation is just the first step, and even that isn’t easy, because the majority of content is produced by third-party developers who likely only speak one language.

“We can’t mandate and say OK, everyone has to translate their game. What makes it even more interesting is there’s nobody in the industry solving these problems at scale,” says Julian Walshaw-Vaughan, one of Roblox’s three vice presidents of engineering.

A handful of companies have translation initiatives — YouTube, for instance, has machine translation for videos — but Roblox has a much more comprehensive plan. Besides making hit games like MeepCity or Natural Disaster Survivalcomprehensible to a user no matter what country they’re from, the company also envisions a future where users from different countries can chat and interact with each other in their native languages.

Currently, Roblox makes translation somewhat easier for developers by storing all strings in tables, so that an additional column is filled out for each new language added, and it recently helped the top 150 games to localize into five languages. Even so, it still believes that developers have to put in too much effort.

“We want to make it work automatically for our community … It [will be] a mixture of employing machine learning, crowdsourcing, and traditional methods, and trying to blend those technologies,” says Walshaw-Vaughan. That’s “Across millions of games. That’s a big, huge problem to solve.”

Potentially more worrisome is the challenge of keeping chat and player interactions moderated, no matter the language.

As a platform that’s still primarily made up of kids, Roblox has to step carefully, especially in highly-regulated countries. Once it’s officially localized to a new language — say, German — it has to ensure it can catch subtly inappropriate interactions.

“Part of that complexity is, what are the things we have to look out for among kids in Germany, with their slang, their argot they’re using. We put a lot of R&D into that and it’s constantly evolving,” says Chris Misner, the company’s president of international.

So far, Roblox has escaped most of the negative attention that has hit other platforms over moderation. YouTube, for instance, has suffered multiple scandals around its YouTube Kids channel, even as it has ramped upmoderation staff to over 10,000 workers. Roblox, by contrast, has over 800 moderators worldwide.

And, since it’s focused on kids, Roblox could potentially suffer even more blowback than a mainly adult site like YouTube should anything go severely wrong on the platform. Stories like last year’s reported virtual rape of a 7-year-old — which ended up making only a small splash, with a fix quickly applied by the company — could easily spiral out of control.

For now, though, Roblox seems to be handling the threat well, and putting effort into ensuring that its moderation systems scale to its growing audience.

All in all, the likelihood of Roblox winning the kids international market looks pretty good. With a huge slice of the American kids market, and growing footholds in its new localized markets like Western European, this is Roblox’s game to lose. Even if Roblox is only able to grab its traditional tween and teen audience, it stands to pick up hundreds of millions of new players, especially in China, where it just inked a deal with Tencent.

As to whether Roblox could slowly expand the age range of its players, that depends on time, luck, and continued progress in both the development tools and developer community. There has not been a company quite like Roblox — willing to both make a game engine and offer a substantially sized platform to host the games. It will need a combination of scale, revenue, and technical ingenuity to win over a broad range of developers.

For today, Roblox is lucky to be riding a wave that has been long in the making: the platform is spreading by word of mouth among a dedicated, albeit young, user base.

While it still has a relatively small user base of 90 million users, what’s truly interesting about Roblox today is that it shows us a reality that almost didn’t exist. User-generated content and open-ended kids content have had few other champions, and none that are poised to grow into the hundreds of millions of users.

If Roblox can continue to grow, it will serve as a guiding example for a whole new generation of companies. And if it continues to evolve, it may yet prove that human co-experience is more than a fever dream. A whole generation of companies failed to create immersive social environments — but in the space between games and chat, Roblox may yet prove that there’s a whole new social category waiting to be discovered.