Roblox (RBLX) goes public with a bet on the metaverse

Gaming company Roblox went public on Wednesday and ended its first trading session with a market capitalization of $ 38 billion.

It’s natural to wonder why a loss-making company that makes video games for a predominantly child and youth audience attracted such a high rating. (While its impressive growth over the pandemic-fueled gaming boom in 2020 certainly helped).

That’s where the metaverse comes in. It is a concept that has been thrown into science fiction for decades. The metaverse is hard to understand unless you’re a huge geek, so let’s use the most accessible pop culture example. Imagine if the virtual world depicted in the novel and the movie “Ready Player One” really existed. This is what Roblox is trying to build.

Roblox’s real long-term goal is to build a metaverse where millions (or billions!) Can come together to participate in games, meetings, collaborative work, and even Roblox’s own virtual economy fueled by its currency called Robux.

Check out the company brochure and CEO and investor feedback and get a clearer picture of Roblox’s great vision. Roblox is not just about creating a game that surpasses your dollars earned by virtual objects. The company is closer to a futuristic Facebook than, say, a Zynga.

This is how Roblox described this vision in his pamphlet:

In short, Roblox wants to give the basic blogs for a metaverse to its users, who in turn will create the digital world as they see fit. And as the metavers economy continues to grow and develop, Roblox will get a portion of each transaction.

Roblox is not the only one who explores the concept of metaverse.

Epic Games, the company behind the popular shooting game Fortnite, aims to create a metaverse. He’s already full of experiences outside of his basic shooting game organizing a Travis Scott concert and the premiere of a clip from the latest Star Wars movie inside the Fortnite world, for example. (Roblox also held a virtual concert, featuring Lil Nas X.) Microsoft is also involved in the metaverse, thanks to the purchase of Minecraft developer Mojang for $ 2.5 billion in 2014.

So where does Roblox go from here?

It will not be easy. The company has the game part of the metavers locked up pretty well. These are live events. But the next challenge will be to convince people who don’t belong to the basic demographics of Roblox children and teens to come into Roblox for new experiences.

Part of this challenge comes from the limitations of current technology. The larger believers in metavers are advocating augmented reality (RA) and virtual reality (VR) technology to improve enough to provide a true sense of presence when you enter the digital world. But current headphones are too clumsy to wear for extended periods of time. Its screens are not sharp enough to provide realistic, pixel-free images. And most make you look like a member of Daft Punk. Good luck walking down the street like that.

However, almost every Big Tech company makes money in AR and VR with the belief that they will introduce a new wave of computing and perhaps one day eliminate the need to wear a smartphone in favor of glasses. computerized.

Facebook has been the most open about its plans in RA and plans to launch its first pair of AR glasses later this year. CEO Mark Zuckerberg is especially optimistic about this technology. He bought the new VR company Oculus in 2014 for $ 2 billion and has been relying on that technology ever since. In a podcast interview with The Information earlier this week, Zuckerberg expanded his plans for AR and VR, detailing a world where we can “teleport” anywhere virtually and socialize remotely, while maintaining the sense of presence.

Microsoft has its own RA headphones called HoloLens, which are currently used primarily for business applications. Also, priced at over $ 3,000, it’s not affordable for the average person. Apple has been much more secretive about its headset plans, but many credible reports point to 2022 as the year it will launch its first device.

But there is also risk for companies like Roblox. If Facebook or Apple control the dominant AR and VR platforms, then companies like Roblox will still be forced to follow a competitor’s rules and continue to pay a reduction on all sales generated in the app to someone else.

Roblox is probably fine with that. His focus is on his base of more than 31 million people who use Roblox every day and create the world in which others play. Millions of them are developers who build and sell experiences at Roblox. And these developers make a living building exclusively for the world of Roblox.

Neil Rimer, co-founder of Index Ventures (which owns more than 10% of Roblox’s shares) and a member of Roblox’s board of directors, told CNBC in an interview Wednesday that the energy around the metaverse will come from these users, not the company.

“No company can build a metaverse,” Rimer said. “It has to be a community. The metavers will exist when it reflects the world in some way, when there is so much variety that on a given day you can decide to do what you want to do, like in the real world.”

CNBC’s Ari Levy contributed to this report.