Roblox results reflect tough environment and a need for advertising | WARC | The Feed

Roblox results reflect tough environment and a need for advertising

Roblox, the gaming and creation platform, has had another tricky quarter as overall revenue and user increases couldn’t make up for a dip in the critical “bookings” metric.

Why it matters

Roblox is the closest platform to a functioning metaverse (despite not being interoperable with other platforms) in which users can move between virtual experiences with an economic layer that binds it.

This is where bookings come in, as they cover what users have spent on Roblox’s virtual currency, Robux. As such, in previous earnings seasons WARC has explored the firm’s results from the perspective of consumer will to spend money on virtual items at a time of heightened interest in the metaverse.

Roblox has also been interesting from a brand perspective, as the company continues to entice investors with details of a self-service brand offer.

By the numbers

While the markets have reacted badly to a dip in bookings, it’s part of a wider slowdown in video gaming, which had naturally seen a huge boost during lockdowns when lots of gamers had nothing else to do. More recently, a more general dip in discretionary spending in the face of inflation has also affected the company.

Ahead of its earnings call, the company told the markets the following highlights for Q2 (all year-on-year):

• Revenue up 30% to $591.2m
• Bookings down 4% to $639.9m
• DAUs (daily active users) up 21% to 52.2m
• Hours engaged were up 16%.
• Bookings per DAU were down 21% to $12.25

While there is still a serious business in the economy of virtual currency and goods that the bookings signify, the many engaged users who are playing but not necessarily spending suggest a serious opportunity in advertising.

How advertising is going

Following the company’s explanation of validated brand accounts and boosted experiences in May (full details here) David Baszucki, Roblox chief executive outlined the investment going into the project:

“The product direction for this advertising system will also be self-service, but it will be complemented by our amazing brands. We have a great team. It's scaling. We have amazing people who are working with the Gucci and the Tommy Hilfiger […]  in this new form of advertising to the platform,” he told investors.

“We expect to continue building this amazing brand team. It will not be a sales team, it will be a consultative team to help people who are doing self-service and exploring our platform.”

He added that Roblox will be “testing our immersive advertising system sometime this year, we believe.”

A development flywheel

Part of the self-service ideal would mean brands seeking out experienced developers without even necessarily going through Roblox by using its talent hub – “that's the dynamic that we want to see, and as that demand comes from brands that will spur on more developers,” explained CFO Mike Guthrie, adding: “I wouldn't be surprised to see agencies off of it as well.”

Sourced from BusinessWire, Motley Fool, WARC