Roblox is everyone’s little cousin’s favorite game, but the interactive platform is ramping up efforts to charm a new kind of user—the kind that will spend money.
At its tenth annual developer conference on Friday, Roblox unveiled a slew of new features and initiatives designed to lure creators and developers to its premium, paid tier and to encourage transactions on the platform.
Pointing to a global gaming market that generates more than $180 billion in annual revenue, CEO David Baszucki told creators that Roblox’s “next frontier” involves capturing 10% of the market. Manuel Bronstein, Roblox’s chief product officer, did not give a timeline for the ambitious goal in an interview with Fortune. But he said it promised to bring “material growth for Roblox” plus “significant growth for our community.”
Finding the key to unlock new revenue is a special and delicate challenge for Roblox, which was founded 20 years ago to teach children the basics of game-making and has exploded in popularity in recent years. The majority of the content that Roblox’s 80 million users interact with today is free, and Roblox, which went public in 2021, has yet to turn a profit. By making it easier and more rewarding for developers to sell games on the platform, by facilitating other types of transactions, such as shopping, and by attracting older users, the company hopes to uplevel its own financial results.
“We need to build a platform for everyone, and we need to increasingly bring users of all ages to the platform,” Bronstein said.
Bigger payouts for developers
While Roblox ditched the “metaverse” moniker a while ago, Bronstein notes that the company’s heart is still in immersive, three-dimensional gaming. And with new perks for game developers and players, it hopes to be a platform for everyone, not just the tough-to-crack Gen Z and Gen Alpha.
“We realize how much gaming is happening on our platform and how big an opportunity that is,” Bronstein said.
Under a new, tiered revenue share model announced on Friday, developers who build on Roblox’s paid-access tier will get larger payouts. Developers will get a 50% cut from games that sell for $9.99 or more, a 60% cut for games costing $29.99 or more, or a 70% cut for games $49.99 or more.
That’s a big step up from the roughly 30% share that developers previously collected. The new model will also allow developers to sell their games for real money on desktop computers, rather than just the Robux virtual currency.
The increase in payouts to developers for the costlier games is new for Roblox, but Bronstein said it’s bringing the platform in line with what they’re seeing for games in the broader market. The goal is for Roblox to be seen as “a very viable platform,” he said.
“The games and experiences that they are creating is what will allow us to grow at that scale,” Bronstein said.
Paying developers will have access to a price optimization feature, which would allow younger, less experienced developers who want to create paid games could opt in to an automated price recommendation rather than guess or try to run their own price analysis.
The incentives for developers will seep into gamer loyalty, Bronstein believes. During research for the price optimization feature, most of the pricing recommendations to developers were to lower, not raise, game costs, meaning more gamers bought into the games and made developers more money.
“And there tends to be a good correlation between people who buy and people who retain and stay longer in the experience,” Bronstein said, meaning developers are “just getting more people to do better on their platform.”
Roblox is also appealing to hobby developers — a new open source AI tool it plans to introduce, will make it easy for anyone to build and evolve three-dimensional scenery with just a text-based prompt.
Not just a place for young kids
Roblox’s platform has evolved into a vast virtual playground in which users spent 17.4 billion hours last quarter. That translated into quarterly revenue of $893.5 million, up 31% year-over-year, and average bookings of $12.01 per user, up 1% from the year before.
But operating the virtual playground is not cheap. Roblox posted a net loss of roughly $206 million in the second quarter, while its accumulated deficit totalled $3.5 billion.
And as Roblox looks for new ways to generate revenue, it must navigate some of the challenges and responsibilities that come with operating an expansive digital platform that’s especially popular with kids and teens.
The company has faced scrutiny from children’s privacy advocates, who in April 2022 urged the Federal Trade Commission to investigate Roblox for “deceptive marketing” to young players, prompting Roblox to hide ads from preteens. Earlier this year, Bloomberg investigated Roblox’s failure to fight child abuse, with former trust and safety employees sharing that Roblox prioritizes user growth over child safety. Turkey banned Roblox last month over child safety concerns.
Bronstein notes that its audience is getting older: Today, 58% of Roblox users are older than 13 years old, compared to 48% in 2021. The change is “very indicative of where we’re moving.”
The company’s overall user base is also growing relatively rapidly compared to competitors, with daily users increasing at a rate of 20% or higher each year in key markets like the U.S., Canada and Asia, according to Bronstein.
A new creator-affiliate program will reward creators who bring new users onto Roblox from other platforms, awarding creators with up to 50% of Robux purchases made by a new user who joined from their affiliate link for that user’s first six months, up to $100.
In Roblox’s “next frontier,” around 20% of users will be there to shop, watch entertainment, and talk with friends, the company predicts. Today, U.S. users can buy a ticket for “Beetlejuice, Beetlejuice” from a virtual Fandango box office on Roblox to go see the movie when it’s out in real-life theaters. Roblox also tested out physical commerce with Walmart and e.l.f. Cosmetics earlier this year.
There’s more IRL commerce coming to the platform in 2025, Bronstein said. Early next year, creators will be able to sell their own merchandise through Roblox through a partnership with Shopify. But right now those commercial projects, like its developing video ads business, are only targeting the 13-and-up crowd.
This story was originally featured on Fortune.com
