Roblox (RBLX) goes public with a bet on metavers

Gaming company Roblox went public on Wednesday and ended its first trading session with a market cap of $ 38 billion.

It is natural to wonder why a company that loses money, that makes video games for an audience made up mainly of children and teenagers, has attracted such a high rating. (Although its impressive growth throughout the pandemic-fueled boom in 2020 has certainly helped.)

This is where the metaverse comes in. It is a concept that has been thrown into science fiction for decades. The metaverse is hard to understand, unless you’re a huge geek, so let’s use the most accessible example of pop culture. Imagine if the virtual world described 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 metavers in which millions (or billions!) Can gather to participate in games, meetings, collaborations, and even Roblox’s own virtual economy fueled by its currency called Robux.

Take a look at the company’s prospectus and the comments of the CEO and investors and you will get a clearer picture of Roblox’s great vision. Roblox is not just about making a game that saves you hard earned money for virtual objects. The company is closer to a futuristic Facebook than, say, a Zynga.

Here is how Roblox described that vision in his prospectus:

In short, Roblox wants to provide the basics for a metavers to its users, who in turn will create the digital world as they see fit. And as a metavers economy continues to grow and develop, Roblox will receive a share of every transaction.

Roblox is not the only one exploring the concept of metavers.

Epic Games, the company behind the popular shooting game Fortnite, aims to create a metavers. He is already full of experiences outside of his main shooting game, hosting a Travis Scott concert and the premiere of a clip from the latest Star Wars movie in the world of Fortnite, for example. (Roblox also held a virtual concert with Lil Nas X.) Microsoft is also involved in metavers, thanks to the acquisition of the developer Minecraft Mojang for 2.5 billion dollars in 2014.

So where does Roblox go from here?

It will not be easy. The company has the game part of the metaverse locked up pretty well. Get involved in live events. But the next challenge will be to convince people outside the core demographics of Roblox children and teens to come to Roblox for new types of experiences.

Part of this challenge stems from the limitations of current technology. The biggest believers in metaverse rely on augmented reality (AR) and virtual reality (VR) technology to improve enough to provide a true sense of presence when moving into a digital world. But today’s headphones are too strange to be worn for long periods of time. Their screens are not clear enough to provide realistic images without pixels. And most of them make you look like a member of Daft Punk. Good luck walking down the street like that.

However, almost every Big Tech company is pumping money into AR and VR with the belief that it will introduce a new wave of computing and, one day, eliminate the need to carry a smartphone in favor of computer glasses.

Facebook has been most open about its plans in AR and plans to launch its first pair of AR glasses later this year. CEO Mark Zuckerberg is particularly optimistic about the technology. He bought VR company Oculus in 2014 for $ 2 billion and has been relying on this technology ever since. In a podcast interview with The Information earlier this week, Zuckerberg expanded his plans for AR and VR, presenting a world where we can “teleport” virtually anywhere and socialize remotely, while still maintaining a sense of presence.

Microsoft has its own set of AR headphones called HoloLens, which is mostly used for business applications nowadays. In addition, at a price of over $ 3,000, it is not accessible to an ordinary person. Apple has been much more secretive about its headset plans, but many credible reports indicate 2022 as the year it will launch its first device.

But there is also a risk for companies like Roblox. If Facebook or Apple control the dominant AR and VR platforms, then companies like Roblox will still be forced to play by a competitor’s rules and still pay a discount on all sales generated in someone else’s app.

Roblox is probably fine with that. It focuses on its over 31 million people who use Roblox every day, which creates the world in which others play. Millions of them are developers who build and sell experiences in Roblox. And those developers make a living building exclusively for the Roblox world.

Neil Rimer, co-founder of Index Ventures (which owns more than 10% of Roblox’s shares) and a board member of Roblox, told CNBC on Wednesday that the energy around the metaverse will come from those users, not the company.

“No company can build a metavers,” Rimer said. “It has to be a community. The metaverse will exist when it reflects the world in a certain way, when there is so much variety that on a certain day you can decide to do whatever you want to do, just like in the real world.”

– CNBC’s Ari Levy contributed to this report.