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Roblox is the biggest game in the world, but is unprofitable

matthewball.co

211–220 of 590 posts

Re: Roblox is the biggest game in the world, but is unprofitable

#211

Earlier quoted context omitted.

You’re right. What else? Roblox games absolutely utterly suck. Little else matters.

50+ million daily active users pretty much instantly invalidates that claim (hell, even a million daily actives would have, AAA games dream of these numbers =) It's not for you and me, we just see a garbage "game", but holy shit is there a large demographic that loves what Roblox gives them.

Just because something that sucks is popular doesn’t invalidate the claim that it sucks (and Roblox does suck hard). Junk food is terrible for your health and is also very popular.

Re: Roblox is the biggest game in the world, but is unprofitable

#212

The bigger question about Roblox is how and why they got their special treatment from Apple. The whole concept of Roblox is in blatant violation of Apple's App Store policies. I believe they are significantly shielded from competition because who else can get that kind of ongoing and reliable relief from Apple's famously picky and capricious App Store reviewers? Maybe Roblox is happy to pay Apple their 30% in exchang…

I think the same argument could be made for Twitter/X. The app stores by Google and Apple specifically disallow pornographic material, yet the app is full of it. Once you're big and important enough, the rules mostly don't apply for you anymore. Of course, if they tried to circumvent the app store tax directly within the app, there would be consequences, but as long as Google/Apple can make a profit, it's okay it see…

I don't think I've ever actually seen any porn on eXtwitter. (Well, on main.)

Why was a perfectly fine Unicode Blackboard X filtered out of my post.

Re: Roblox is the biggest game in the world, but is unprofitable

#213
post #199

Earlier quoted context omitted.

Some time ago I read an article explaining that initially games used to sell upgrades which were making the player stronger in multi-player games. The net result was that the games were loosing players because that mechanic was seen as unfair (pay to win). So they switched to aesthetics enhancements only and that resulted the correct strategy to have in game sales and not loosing players. Unfortunately cannot remembe…

Meanwhile, Chinese and Korean kids widely DEMAND pay to win, and see people who complain about Pay2Win as "Losers in life", because, to them, it's just two valid paths, and if someone pays to win at a game, then it's just a mark of status. Btw, did you also know that parents in central china have protested over the right to cheat? Tons of really great stuff in eastern work culture that I miss now back in europe. But…

Thank you for bringing a different worldview to the discussion. I realize that my comment was Euro (or West) centric, but that wasn't intentional. I appreciate your perspective, as it adds valuable context and enriches the conversation. It's interesting to see how cultural differences shape attitudes toward gaming, and your insights have certainly given me something to think about. Thank you for that.

Re: Roblox is the biggest game in the world, but is unprofitable

#214

The bigger question about Roblox is how and why they got their special treatment from Apple. The whole concept of Roblox is in blatant violation of Apple's App Store policies. I believe they are significantly shielded from competition because who else can get that kind of ongoing and reliable relief from Apple's famously picky and capricious App Store reviewers? Maybe Roblox is happy to pay Apple their 30% in exchang…

I think the same argument could be made for Twitter/X. The app stores by Google and Apple specifically disallow pornographic material, yet the app is full of it. Once you're big and important enough, the rules mostly don't apply for you anymore. Of course, if they tried to circumvent the app store tax directly within the app, there would be consequences, but as long as Google/Apple can make a profit, it's okay it see…

[deleted]

Re: Roblox is the biggest game in the world, but is unprofitable

#216
post #193

Earlier quoted context omitted.

Because kids aren't utilitarian. They want shiny things impulsively now in whatever niche game they are playing at the moment. Or want to keep up with their friends who got cool stuff to keep status. Doesn't matter to them that they'll switch games in a week and lose everything.

It's not only kids that buy these. I know a lot of 40+ year old men that buy skins and useless junk in video games all the time. They spend a ton of money on cosmetic junk in short lived video games. It's puzzling to me, but i see it all the time.

I'm a 40+ year old man who buys cosmetics for CS2 (which has a resale market). If you are going to spend 200+ hours doing something you might as well have a nice environment to do it in.

There's a reason everyone isn't driving a Honda Civic.

Re: Roblox is the biggest game in the world, but is unprofitable

#217
post #74

Earlier quoted context omitted.

IDK about the stock but I’ve interviewed there and their cash comp is legit FU money. Am I misunderstanding you?

I'm a pretty senior IC at Roblox, and my new hire offer was 40% cash / 60% RSUs. It's now closer to 33/67 with refresher grants. Roblox pays very competitively (see levels.fyi). The apparent strategy is to try to hire lots of long-tenured L6+ Googlers (seriously, it's crazy how many former Googlers I work with).

Not a good sign for Roblox. Yes, many smart people, but they weren't industry changing (Google almost never loses) and they didn't get or turned down Google's renewal program to retain talent.

Looks like a lot who wanted the high pay, but coast along and leverage their past experience to not be dared questioned.

Re: Roblox is the biggest game in the world, but is unprofitable

#219

Earlier quoted context omitted.

Because kids aren't utilitarian. They want shiny things impulsively now in whatever niche game they are playing at the moment. Or want to keep up with their friends who got cool stuff to keep status. Doesn't matter to them that they'll switch games in a week and lose everything.

To add to this, for them money is like ice cream, comes from parents rarely and gives them temporary pleasure. That's why I think it is good to pay your kids for chores or good grades so that they start learning financial responsibility early. Sure they'll blow their money on useless stuff at first but then they'll have none for some other thing they wish they had money for and will learn to choose more wisely in the…

My dad let me gamble my allowance against himself in poker. Lost it all, obviously. Was quite heartbroken he wouldn't give it back, but I sure learned a lesson :)

Re: Roblox is the biggest game in the world, but is unprofitable

#220
post #197
post #15

Earlier quoted context omitted.

It's an accounting trick. 1) Make tons of cash. 2) Invest the cash back in the business. 3) Record this investment on the financials as an expense. 4) The expenses inflated by investment spending means you declare no profit and probably pay no tax on that profit you just hid. The alternative is: 1) declare profit 2) Pay tax on it 3) Reinvest what's left after the taxman took a cut. Which would you choose if you were…

The accountants can’t be bothered because your comment isn’t even using basic terms correctly. Your comment suggests that reinvested cash is being "hidden" as expenses, but in reality, these reinvestments are usually recorded as capital expenditures (CapEx) rather than operating expenses (OpEx), depending on the nature of the investment. While CapEx can be depreciated over time, it is not typically expensed immediate…

This is the whole point:

When you’re expanding rapidly and want to grow market share above all. Growing that market share with customer acquisition is economically an investment in the future revenue of the business. Advertising is one example of how this might be done.

You can classify investing in your business through advertising spend as an operating expenditure for accounting purposes. And potentially for tax purposes as well.

Now your large positive cashflow does not generate an accounting profit. Because you spent it on something that won’t be capitalised on the balance sheet.

There it is, the answer to OP’s question.

Note you can’t do that buying property plant and equipment (but some structured finance and leasing people might like a word - airlines don’t own their aircraft.)

Perhaps you can think of some examples where you’ve seen huge, massively cash-flow positive businesses in our field that weren’t generating accounting profit. Facebook, Amazon, ..?

The only other way you could sustain repeated loss ina new, growing business is capital raising.

Someone else on the thread mentioned Aswarth Damodoran’s “Free cash flow to equity” IMHO it’s worthwhile avoiding jargon when explaining things simply and concisely.

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