DoP Deep: Unpacking Roblox’s new monetization strategies
How Roblox is developing a new creator economy and what it means for product builders
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Hi product people 👋,
Rich here from the Department of Product! In this week’s weekly briefing I shared the announcement from Roblox about how the company intends to build a new digital economy. In 2023, Roblox is at the forefront of monetization in the creator economy. And it's big business; the company recently confirmed that its top 10 creators in 2022 made an average of $23 million each - and that almost every creator in the top 500 earned at least $150,000. Not bad for a video game platform for teens.
Given that the vast majority of Roblox users are very young, it can be a little overwhelming to keep up with a) what Roblox is b) how it makes money and c) what its success tells us about the future of the creator economy. Unless you have kids of your own or are a big Roblox fan, you might not know much about Roblox as a company.
In this DoP Deep Dive, we’ll explore Roblox’s recent announcement, and more specifically:
What is Roblox?
How does it make money?
What are some useful, practical lessons to learn from Roblox’s approach to monetization?
OK, let’s dig deep.
What is Roblox anyway?
I first came across Roblox a few years ago when my niece proudly told me that she owned a Jeep. She was 9 years old at the time, so at first I wondered whether owning a Jeep was the new owning an iPhone for kids. But no, the Jeep she was referring to didn’t exist in the physical world. Instead, it was part of a game she played on her Roblox account.
As someone who aims to stay on top of all that’s happening in product and tech (that is my job, after all!), I was a little surprised that I’d not heard that much about Roblox. So I took it upon myself to find out just what on earth it was.
Founded by David Baszucki and Erik Cassel, Roblox was officially launched in 2006 under the name "Dynablocks." It was later renamed to "Roblox" in 2005, combining the words "robots" and "blocks." Roblox's unique value proposition is in its user-generated content, which is designed to empower the millions of players who use Roblox to design and build their own games, which in turn creates a vast, virtual world.
In its early years, Roblox experienced gradual growth, attracting a dedicated community of developers and players who contributed to its content ecosystem. The platform's simple game creation tools and social features made it particularly popular among young gamers.
As the product evolved, it gained momentum, reaching significant milestones by hitting 1 million monthly active users in 2011 and surpassing 30 million in 2014.
Roblox's exponential growth continued, and by the early 2020s, it had become a cultural phenomenon, boasting over 200 million monthly active users, rivaling some of the biggest gaming platforms in the world. Its success has been further fueled by the rise of gaming content creators on platforms like YouTube and Twitch.
So what does it do?
At a very basic level, Roblox is a platform upon which amateur (or professional) creators can build games. These games run exclusively on Roblox which can be accessed via the web or on Roblox’s native mobile apps.
The games span multiple categories. Some of the most popular game franchises on Roblox include:
Brookhaven - a life simulation game that lets players create and customize their homes, interact with other players, and engage in various social activities.
Jailbreak - players can choose to be either criminals trying to escape from prison or law enforcement trying to prevent them from escaping.
Adopt Me! - a role-playing game where players can adopt and raise virtual pets, trade them, and explore a colorful world.
Alongside more traditional games, Roblox also hosts a random assortment of weird and wacky titles, too.
I ran a quick search and came across this gem of a game called Hungry Pig, for example. The wackier and stranger the game, the more chance of it going viral - which helps creators and the Roblox marketplace alike.
How to create a game on Roblox
If a user wants to build a game on Roblox, all they need to do is sign up to be a creator. This gives the creator access to a set of studio creation tools that enable them to build immersive 3D environments.
Once a game is published, it’s immediately available to the 200m+ monthly active Roblox users. But, just like the app store, competition for eyeballs is fierce.
If a creator is lucky enough to build a hit, the next step is monetization. And luckily for creators, Roblox has baked a variety of monetization strategies into its core product offerings. I personally find these monetization strategies pretty fascinating as a glimpse into the future of what monetization could look like so let’s explore each of these in a bit more detail.