Author | Gin
Data support | Pythagorean Big Data (www.gogudata.com)
Founded in 2006, Roblox went public in March this year and currently has a market capitalization of about $47.6 billion. Because of its cross-platform, open world, UGC, economic ecology and other attributes, it is known as the first share of the metaverse concept.
Key Highlights:
(1) 43.2 million DAUs (daily active users), the average DAU use time per day is 2.63 hours - the amount of interaction and energy density is extremely large. At present, users are younger, about 50% are under 13 years old, but the speed of breaking the circle is accelerating, and the growth rate of users over 13 years old is significantly higher than that of 13 years old.
(2) Open up the terminal cross-platform, PC, mobile phone, tablet, Xbox and other different platform users can play together, anywhere attributes make the metaverse possible.
(3) Open world, UGC (user-built content), more than 20 million games and 8 million developers, the amount of interaction is higher than PGC - from the case of Douyin vs iQiyi, it can be seen that UGC has hit PGC in dimensionality reduction. Compared to PGC, it is easy to use, less expensive and less risky to develop.
(4) Form a closed-loop economic ecology with the virtual currency Robux.
(5) Advertising revenue is implied options, but management does not seem to be in a hurry.
(6) The booking system to calculate the current valuation is not cheap but not expensive, and the core of the future realization potential is concerned about the progress of the circle and when the implied advertising options can be realized.
<h3>01 The Story of roblox metaverse</h3>
According to Roblox CEO Dave Baszuk, metaverse is the next disruptive medium for telephony communication and the Internet era, with key features including identity, social, immersive experience, low-latency communication, diversity, anywhere, economic systems, and civilization.
From these dimensions, Roblox is indeed more metaverse than other blockbuster games, and its core advantages are reflected in the massive UGC (user-built content) and interactive, anywhere and economic systems. UGC has more than 20 million games and 8 million developers, with a phenomenal amount of interactions. In terms of anywhere, Roblox is one of the very few companies that has opened up the game terminal, and players can play together on computers, mobile phones, Xboxes, etc., unlike other game phones and computers that are developed separately and cannot be common.
In particular, Roblox's economic system is not available in other blockbuster games such as World of Warcraft and Glory of kings, Roblox forms an economic ecological closed loop through Robux coins, and collects senivo taxes from both developers and users (users will most likely make other consumption in the platform after earning Robux content).
However, in terms of immersive experience, Epic (Tencent accounts for 40%) fortite is currently better. Another big hit Soul (Tencent accounts for 49.9% of the shares) who temporarily canceled the listing some time ago is stronger in social attributes, and other aspects are relatively immature.
Compared with the traditional games and the metaverse games represented by Roblox, the traditional games are oriented to the content developed by professional developers, the profit model is a single transaction, and the terminal game platforms are not interoperable, and marketing is only traditional means, such as advertising. While metaverse games incorporate more social attributes and more and more players participate in development, UGC generates an unprecedented amount of interaction. At the same time, all terminal game platforms were opened up, concentrated in the cloud, and the marketing model shifted to KOI (Key Opinion Influencer, such as planting grass) and social network fission.
In the new era of creation, self-expression, socialization, and entertainment, Roblox has undoubtedly won a wide audience. Roblox's DAU (daily active users) is currently 43.2 million DAUs, and the average DAU is 2.63 hours per day – an extremely high amount of interaction and energy density.
Based on 16 hours of non-sleep time per day, Roblox's DAU spends an average of 16.4% of its time on the platform – an already phenomenal amount of interaction. In contrast, Facebook and Youtube's DAUs are used for an average of 40 and 58 minutes per day, respectively.
Judging from the dimensionality reduction blow of short videos to long videos, greater traffic and interaction volume mean greater monetization potential. However, at present, Roblox's monetization rate is not high, and the monetization method is mainly in-game recharge. It is worth mentioning that Roblox's revenue is deferred, because many users do not make a one-time purchase after booking. But logically speaking, users will not take it out after they recharge, so Booking can also be regarded as revenue.
In terms of revenue contributions per user, Roblox's 20-year ABPDAU (average booking per DAU) was $57.80. Future advertising revenue is an implicit option, and from the perspective of such a large amount of user interaction, the advertising monetization rate is at least phenomenal.
However, Roblox's management does not seem to be in a hurry for this cake, and similar advertising is progressing slowly, such as rapper Lil Nas X at the end of last year, which held the first online concert in Roblox's history. And in May, Roblox held an online new song launch event for Swedish pop diva Zara larsson, which was attended by about 36 million users.
<h3>02 Roblox's operations</h3>
DAU grew 152.6% from 17.1 million in 19Q2 to 43.2 million in 21Q2, while Booking revenue rose 342.8% from 150 million to $665 million over the same period – the rapid growth in user volume was accompanied by an increase in average user contribution revenue, which is a good signal for the business model – ABPDAU grew from $8.8 in 19Q2 to $15.4 in 21Q2, an increase of 75%.
Cohort: The number of new users in the current period.
As shown in the figure, the above conclusion can also be verified: the farther left of each sub-chart represents the newer the user, and the steeper the slope of the farther left can be seen, representing the higher the consumption of new users on the platform. At the same time, the consumption of old users also increases linearly with time and is relatively stable.
Conclusion: Roblox's user stickiness remains at a high level, and its operation continues to improve.
In addition, as we have compared earlier, Roblox's user usage time is phenomenal in the phenomenon level, and the stickiness is very high: Q2 data averages 158 minutes of DAU usage per day. Compare about 58 minutes on Facebook, about 53 minutes on Instagram, about 52 minutes on Tiktok, about 49 minutes on Snapchat, and about 40 minutes on Youtube.
Compare UGC (user-built content) and PGC (professional practitioners to produce content), you can refer to Unity (game production engine, 80% of mobile games use it, including glory of kings, etc.).
Compared with PGC, the UGC game development threshold represented by Roblox is low, and children can get started after simple learning, and the corresponding cost and development risk are also very low. But the problem is that it is difficult to achieve the content quality of PGC.
From the perspective of business model, Unity's three-rate ratio continues to be very high, and it is still difficult to make a profit in the foreseeable future. In contrast, Roblox's 20-year cost (as a percentage of Booking) consists of 25% of revenue costs, 17.5% of developer share, 14% of infrastructure expenses, 10.7% of research and development expenses, 5.2% of management expenses, and 3.1% of marketing expenses.
The first significant difference is that Roblox's infrastructure and R&D expenses account for 24.7%, and this proportion will further decline with the scale effect, which is lower than Unity's R&D expenses. In addition, the level of Roblox marketing and management expenses is very low, considering the high growth of DAU, such a low marketing expense (and the proportion has a downward trend year by year), the cost of customer acquisition CAC is very low, almost in vain.
Cost control outlook: Roblox's app is indispensable to Apple and Google, other costs with the scale effect decline, of which R & D, infrastructure, developer costs are limited, referring to mature technology companies, ideally can be reduced to about 8%, 5%, 15% of revenue. This means that under the Booking system, Roblox's net profit margin can reach about 25%-35%.
<h3>03 tam with out of the loop</h3>
At present, Roblox's DAU has reached 43.2 million, but this volume is still a bit naïve for the metaverse. From the perspective of the endgame, the tam (market space) of the metacosm is roughly the number of users of Facebook + WeChat. To move in this direction, Roblox out of the circle is a must.
The comparison shows that the age group of Facebook users is concentrated in 18-44 years old, accounting for 71.9%; roblox age group is concentrated in under 16 years old, accounting for 67%, and 25 years old and over 14%.
Overall, Roblox users are on the younger side. However, 30% of those over 17 years old have broken the cognition of many people - the country mainly accepts AAA games, and subjectively believes that there is no market for low-quality games (Roblox Lego's picture quality is childish in many people's cognition).
In addition, as shown in the figure above, the growth rate of users over the age of 13 has been significantly higher than that of the age of 13 in the past year, and Roblox is in the process of going out of the circle. So where is the likelihood that Roblox will continue to be out of the loop? We believe that the main consideration is white-collar, home-based baby, school education, retired old cadres, meta-universe and VR, of which white-collar workers may be the primary direction.
According to the 2021 Mobile Game Market Report released by App Annie, casual games are far ahead of other categories in terms of downloads, accounting for 78% of all game downloads, while hardcore games account for only 20%. Last year's phenomenal Among Us in October 2020, the game had about 295 million monthly active users worldwide.
From the demand side of white-collar workers, casual games are easier to alleviate work pressure, kill bits and pieces of time, and bring some social attributes, such as small programs such as jumping. From the supply side, Roblox's advantage is that like the App Store, it reduces the time cost of user search, and can quickly fission through social networking like The WeChat Mini Program game, in addition, UGC continues to produce content every day to ensure effective supply.
White-collar out-of-the-loop is logically feasible, and the high probability is already progressing and breaking through, although Roblox has not released the corresponding data.
In addition, staying at home with children, school education, retired old cadres, etc. are also groups that Roblox can go out of the circle. According to a 2021 techRepublic survey, 4,000 people from 8 countries were interviewed, indicating that 46-60-year-old game users accounted for up to 29% - retiring in the Internet era, games are becoming more and more in demand. Finally, the expansion of the user scene will also come from VR, similar to the movie "Ready Player One". Of course, this one is still far away, just a potential option.
<h3>04 Conclusion</h3>
From a P/Booking perspective, the current Roblox valuation is 19.41x. Considering that there is still a good growth rate (assuming a 5-year CAGR of 25% in revenue) and a potential net profit margin of 25%-35%, this valuation is not expensive. The core of future market capitalization improvement comes from the expansion of tam (especially out of the circle - if roblox publishes more segmented user age group data, it will be more convincing), and the realization of advertising options.
Ps: The management of the advertising business does not seem to be in a hurry at all, which is in line with the tone of the company's past development, take it slow, and do the right thing. But that's not necessarily a good thing for capital markets and investors – trying to keep trying, even if it fails, may be a better signal.
Note: This article is original by the US stock research agency team, please indicate the source when reprinting, thank you!