Technology

Roblox is chasing older users for games and virtual concerts as it gears up for direct listing

Roblox CEO David Baszucki

Roblox

Roblox is counting on adults to buy its stock when the company goes public next month. But it also wants them as customers.

Roblox has become one of the top-grossing apps on Apple and Google devices through its millions of user-created games that allow kids to hang out with their friends while navigating theme parks, racing on speedways and adopting pets.

With children stuck at home during the pandemic, revenue in 2020 surged 82% to $923.9 million, while the number of hours spent on the platform more than doubled to 30.6 billion. Players spend money to dress up their avatars and get advanced features in games.

In looking to a future of sustained expansion and less reliability on kids, particularly as classrooms and real-world theme parks reopen, Roblox is targeting older users and non-gamers. As the company says in its prospectus, people over the age of 13 have “a higher propensity to spend on content, and our ability to increase penetration in, and user contribution from, this demographic will affect our ability to grow revenue.”

It was one of the key messages in Roblox’s online investor presentation on Friday, ahead of the company’s stock market debut scheduled for March 10.

A rendering of the in-game action from the hit Roblox game “Jailbreak.”

Source: Roblox

“We’re increasingly appealing to an older user base,” CFO Mike Guthrie said in the video. He said usage among people age 13 and older more than doubled last year and that demographic now accounts for 44% of daily active users.

However, even a 13-year old is well shy of being a self-sufficient adult, and the company hasn’t said how many users are in their 20s, 30s and beyond.

Roblox is pursuing several avenues to expand its reach beyond kids. Within gaming, it’s bolstering its technology so users can create more feature-rich content and the types of immersive titles that appeal to older gamers.

But CEO David Baszucki, who started Roblox in 2004, wants people to stop thinking about the company as a gaming site and, rather, to consider all the ways the so-called metaverse can be used in entertainment, education and other types of live events.

“When we experience concerts together, we dance together, we chat with our friends, we dress up,” Baszucki said in the investor presentation. “Concerts aren’t just something we consume. They really are naturally something we do together.”

Roblox has already started to showoff its capabilities for hosting virtual concerts. For two nights in November, the rapper Lis Nas X held a virtual performance in Roblox that attracted over 30 million visits. Attendees saw the artist’s avatar enter the scene to the sound of his hit song, “Old Town Road.”

Baszucki said the company held its holiday party on Roblox, with some employees sticking to the main stage, others chatting in various locations, while a few chose to “hang out in the virtual bar.”

Beyond entertainment and events, Baszucki envisions schools using Roblox for immersive educational lessons. Rather than sitting on a video call with dozens of other students learning about physics, we can “together jump into the physics experiment,” he said. Or instead of learning about birds, “we can together be birds” hunting for food and seeing what it’s like trying to survive, he said.

In the question and answer section of the presentation, Roblox executives said they will provide forward financial guidance next week.

For now, Roblox is a gaming app beloved by kids and tolerated by parents looking for ways to keep their children engaged. That’s what’s driven the valuation up to $29.5 billion, according to a January funding round.

Roblox spent $201.4 million in research and development last year, up 88% from 2019, in part to move into new types of products. Whether older users prove willing to pay for those virtual experiences in the same way they pay for their kids’ entertainment is a big question for investors as they consider how to value the stock.

In the risk factors section of its prospectus, the company says one key factor that could harm future growth is if “we do not develop and establish the social features of our platform, allowing it to more broadly serve the entertainment, education, and business markets.”

WATCH: How Roblox became a massively popular gaming platform worth $30 billion

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