How game developers built a $ 30 billion platform

Ethan Gawronski was about ten years old when he discovered Roblox. He delved into his games, mostly to socialize with other children.

Now in his 20s, Gawronski has his own Roblox game that he works full time with his girlfriend, Elle Deppe. The couple, who met in the app, earned more than $ 49,000 last month with their action game, Bad Business, with the sale of costumes and weapons that players can use to make their characters they look fresher and perform better.

“In the private developer communities, there were people earning stupid amounts of money and we thought we could do it,” Deppe, who is also 20, said in a recent interview.

Bad Business is among the millions of games created by users on Roblox, the children’s entertainment that will go public on Wednesday after being valued at $ 29.5 billion in January. The company has created one of the highest-income apps for Apple and Google devices by turning young users into game creators without forcing them to learn complicated coding. The company rewards developers by sharing 30% of virtual shopping revenue.

Roblox said in the latest update to its brochure that it paid developers $ 328.7 million last year, nearly 200% over 2019. This far exceeded the company’s sales growth of 82%. last year, when it grossed $ 923.9 million.

More than 1,250 developers earned at least $ 10,000 in Robux digital currency, which can be converted into cash. More than 300 have earned $ 100,000 or more.

Roblox tells potential shareholders to feel comfortable with their strong payments. In its presentation to investors last week, the company said it plans to further distribute creators to encourage higher quality content and fund larger teams of engineers, designers, artists and producers.

“What was once a hobby has become a job for an individual person, and is now increasingly becoming the basis of incredibly creative big studios that are emerging on our platform,” the director said. General David Baszucki, who founded Roblox in 2004.

Gawronski dropped out of college last semester after pursuing two years of courses at Grand State State University, where he changed careers several times. Deppe finished his two-year associate degree in Portland, Oregon, and decided that was enough. They have been living together since last year in an apartment in Grand Rapids, Michigan.

The couple first met in person in 2017 at a Roblox developer conference. They soon began working together and were invited to an acceleration program at Roblox two years later, on the company’s campus in San Mateo, California. This is where they started building Bad Business.

“The goal of the accelerator program for us was to build something that was profitable enough to be set up together,” Gawronski said, adding that monthly revenue has been increasing by about 30% since September. “It was a bit of a gamble but it worked.”

Gawronski and Deppe have been updating the game approximately every week with new weapons, maps and other features. Along the way, they have been able to add another full-time employee and eight contractors.

Roblox has been a big beneficiary of the Covid-19 shutdowns, which forced children out of the classroom and away from their friends. Having not attended school and canceled the birthday parties, the children resorted to Roblox, where they can socialize virtually, surf the theme parks, attend concerts and play action games, while staying get in touch with its popular text chat feature.

Daily active users jumped 85% in 2020 to 32.6 million. The number of hours players spent on the app doubled to 30.6 billion.

This unexpected and unprecedented growth has created some challenges around its developer community. The company has had to fight the influx of spammers and scammers who want to take advantage of some of the millions of children who are ready and willing to spend their parents ’money on Robux.

The game’s pop-up windows lure users with the promise of free Robux if they fill out a survey, only to redirect them to other places where there is no Robux and even more spam. In some cases, Roblox developers unknowingly install a malicious add-on from the game development studio, infecting their own game.

“Because of the popularity of our platform, we believe we are an attractive target for such attacks,” Roblox said in his prospectus. The company said it invests to make sure third parties cannot access users ’data and to avoid fishing, spam and malware as much as possible.

Roblox’s second biggest expense, behind developer fees, is infrastructure, privacy and security. These costs rose 69% last year to $ 264.2 million.

Alexander Hicks, developer of the role-playing game Robloxian High School, said he noticed an increase in spam at the start of the pandemic when there was an increase in new users. But he said the company acted fairly quickly to restore order.

Hicks has a deep economic interest in keeping Roblox in its clean and prosperous place. In 2020, its gaming studio, RedManta, doubled the site’s revenue to $ 2 million.

In addition to Robloxian High School, RedManta is the developer of World // Zero, where kids come together to fight monsters. Hicks started the business in 2018 after leaving Carleton University, Canada, and moving to Silicon Valley. He was already earning $ 50,000 a month with the high school game and was willing to reinvest his profits to build a business.

It hasn’t been all up and to the right. As an ambitious player with no real business experience, Hicks hired about 15 people, none over 22 years old. His company’s initial efforts to double the success of Robloxian High School failed, and RedManta burned money so quickly he had to say goodbye. many of its first employees.

“I had contracted at our fingertips, so when the game started to do that I couldn’t see a future where we wouldn’t have money in the bank to continue funding it,” Hicks said. “This experience gave us the foresight of how to climb without taking too much risk.”

Hicks ’business grew last year both because of the growth of the pandemic-driven Roblox and the success of its second game, which has 1.2 million monthly active users, according to its website. He also closed the Silicon Valley office on foster care and moved at least temporarily to Los Angeles, where he rents a house with friends.

RedManta now has ten people, spread across the United States and Canada, who are adding features to both games, while also working on the next prototype.

“The goal is to increase so that we have multiple games and multiple teams to keep us diversified, so if one game sees its popularity fall, we’re safe with others,” he said.

It may be that Roblox will soon give developers another way to diversify: in-game ads.

To date, almost all of Roblox’s revenue comes from virtual items. More recently, the company launched a premium subscription service so users could get a certain amount of Robux each month.

But Roblox has started playing with branded content, allowing companies like Warner Bros., Netflix and Marvel to market their products through virtual experiences. Pop group Why Don’t We held an exclusive release party at Roblox over the weekend for their new album.

Sam Drozdov, a former Facebook product designer, sees a potentially greater opportunity for advertising. In January, it launched Bloxbiz to allow game developers to display ads within their games, using 3D posters and posters.

Drozdov said some developers have done it all by themselves, posting static ads to their games. But there has been no advertising network to connect companies with hundreds or thousands of Roblox titles in an automated way, although in-game advertising is a fast-growing business through mobile games, consoles and computers.

Bloxbiz is still testing the technology and has yet to start making money. A key challenge is to allow brands to reach many users as they target the types of games they want to reach and avoid those they don’t. For example, they may want to stay away from violent games or focus more on those related to food.

Drozdov said Bloxbiz will share revenue with developers and, above all, it pursues those who have popular games but don’t make enough money through Robux to turn it into their full-time job.

“Roblox wants them to make money, but many of them are not yet at a point where their livelihoods are,” Drozdov said. “We were interested to know how we can speed it up and create a new monetization option for Roblox game developers.”

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