Roblox is the biggest game in the world, but is unprofitable
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Re: Roblox is the biggest game in the world, but is unprofitable
#2reminds me of the path Minecraft could have taken - they also had a massive amount of community developers building servers, but instead of encouraging monetization and taking a cut, they banned it and cracked down aggressively
Of course, unlike Roblox, Minecraft was profitable
Re: Roblox is the biggest game in the world, but is unprofitable
#3Toxic corporate culture isn’t helping
Re: Roblox is the biggest game in the world, but is unprofitable
#4> Though Roblox isn’t profitable, there are some significant caveats to the situation. Over the last twelve months, operating cash flow—a far more important measure than accounting-defined profits—were $650MM, about 20% of revenue. Roblox has been cash-positive for at least twenty-four quarters.
This feels like an example of the phenomenon highlighted in another recent post: https://news.ycombinator.com/item?id=41263855
Namely, that as long as Roblox's cash flow is increasing year-over-year, they probably don't care about profit. (And if cash flow ever does stop increasing, they can always get back to sustainability by pumping the brakes on reinvestment spending.)
Re: Roblox is the biggest game in the world, but is unprofitable
#5If you struck gold, don’t stop digging. If you hit growth, don’t stop reinvesting.
Re: Roblox is the biggest game in the world, but is unprofitable
#6This feels like reading finance fan fiction (which it kind of is, given the author's profession?) and uses a lot of text to reach the part that lays out the actual problem: the average operating costs based on daily active users are $18 per user per quarter, and the average amount made is only $13. so either operating costs need to come down, charges need to go up, or they need (more, stable) external revenue (e.g. ads).
This article tries to, foremost, sell you on the idea that its author is someone you should listen to for financial analyses.
Re: Roblox is the biggest game in the world, but is unprofitable
#7If you struck gold, don’t stop digging. If you hit growth, don’t stop reinvesting.
Any game has an inherently limited and temporary TAM, unless you can license the engine to other companies.
Re: Roblox is the biggest game in the world, but is unprofitable
#8If you struck gold, don’t stop digging. If you hit growth, don’t stop reinvesting.
Future growth won’t keep the lights on, unless you sell part of your future growth, and you probably won’t get a good deal.
Which is why large companies are so ideally positioned to do internal ZIRP funding of growth…except they are often culturally unable to do it.
Re: Roblox is the biggest game in the world, but is unprofitable
#9TL;DR; if you discount the way their accounting is done (which artificially lowers their profits), it's not profitable because Apple and Google are eating 30% of their sales on their App stores.
Re: Roblox is the biggest game in the world, but is unprofitable
#10If you struck gold, don’t stop digging. If you hit growth, don’t stop reinvesting.
Future growth won’t keep the lights on, unless you sell part of your future growth, and you probably won’t get a good deal. Which is why large companies are so ideally positioned to do internal ZIRP funding of growth…except they are often culturally unable to do it.
Given that they are paying their employees with shares (53% of employees compensation are share, only 47% in cash), future growth is indeed keeping the light on.