Ready Player One
Source: Warner Bros.
Game company Roblox went public on Wednesday and closed its first trading session with a dazzling market cap of $ 38 billion.
It makes sense to wonder why a company losing money making video games for an audience of mostly kids and teens got such a high rating. (Although the impressive growth during the pandemic gambling boom in 2020 certainly helped.)
That’s where the metaverse comes into play. It’s a concept that has been used in science fiction for decades. The metaverse is hard to understand unless you’re a big geek, so let’s use pop culture’s most accessible example. Imagine if the virtual world depicted in the novel and movie “Ready Player One” actually existed. That’s what Roblox is trying to build.
The real long-term goal for Roblox 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 powered by its currency called Robux.
Welcome to Bloxburg
Roblox
Take a look at the company’s prospectus and comments from the CEO and investors, and you’ll get a clearer picture of Roblox’s grand vision. Roblox doesn’t just make a game that gulps down your hard-earned dollars for virtual items. The company is closer to a futuristic Facebook than, say, a Zynga.
Here’s how Roblox described that vision in its prospectus:
We built Roblox from the ground up as a one platform, one name, and one focus company that would one day support billions of users. The ultimate “product specification” has always been to model reality, based on the belief that the more accurately we could simulate the real world, the more usability we could provide. Looking ahead, we plan to maintain this focus as a single platform company, even as we expand the ways we enable people around the world to play, learn and collaborate.
In short, Roblox wants to give the building blocks for a metaverse to its users, who in turn create the digital world as they see fit. And as an economy in the metaverse continues to grow and develop, Roblox gets a slice of every transaction.
Roblox isn’t alone in exploring the metaverse concept.
Epic Games, the company behind the hit shooting game Fortnite, has set its own sights on creating a metaverse. It’s already been riddled with experiences outside of the core shooting game by hosting, say, a Travis Scott concert and the premiere of a clip from the latest Star Wars movie set in the Fortnite world. (Roblox also held a virtual concert, with 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 won’t be easy. The company has locked down the gaming portion of the metaverse pretty well. It dabbles in live events. But the next challenge will be to convince people outside of Roblox’s core demographics of children and teens to come to Roblox for new kinds of experiences.
Part of that challenge stems from the limitations of current technology. The biggest believers in the metaverse are looking for augmented reality (AR) and virtual reality (VR) technology to improve enough to give a real sense of presence when you jump into a digital world. But today’s headsets are too clunky to wear for extended periods of time. Their screens are not sharp enough to deliver realistic pixel-free images. And most of them make you look like a member of Daft Punk. Good luck walking down the street like that.
HoloLens 2 from Microsoft.
Andrew Evers | CNBC
Still, almost every Big Tech company is pumping money into AR and VR with the belief that it will usher in a new computer wave and maybe one day eliminate the need to haul a smartphone in favor of computer-controlled glasses.
Facebook has been most open about its plans in AR and plans to release its first AR glasses later this year. CEO Mark Zuckerberg is especially optimistic about the technology. He bought VR start-up Oculus in 2014 for $ 2 billion and has been building on that technology ever since. In a podcast interview with The Information earlier this week, Zuckerberg expanded on his plans for AR and VR, describing a world where we can “teleport” and socialize virtually anywhere over a distance while still retaining a sense of presence.
Microsoft has its own AR headset called the HoloLens, which is mainly used for business applications today. Plus, at a price of over $ 3,000, it’s not accessible to 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 a risk for companies such as Roblox. If Facebook or Apple runs the dominant AR and VR platforms, companies like Roblox will still be forced to play by a competitor’s rules and continue to pay a share of all sales generated in the app to someone different.
Roblox is probably fine with that. The focus is on the foundation of more than 31 million people who use Roblox every day and who create the world in which others play. Millions of them are developers building and selling experiences within Roblox. And those developers earn their living exclusively by building for the world of Roblox.
Neil Rimer, co-founder of Index Ventures (which owns more than 10% of Roblox stock) and a Roblox board member, told CNBC in an interview on Wednesday that the energy around those users’ metaverse will come, not from the company. .
“No company can build a metaverse,” said Rimer. “It has to be a community. The metaverse will exist when it reflects the world in a sense, when there is so much variety that you can decide on any given day to do whatever you want, just like in the real world. “
–CNBC’s Ari Levy contributed to this report.