Roblox Seeks to Harness AI and Metaverse Network Effects

Three of the biggest trends in the 21st century are the metaverse, creator economy, and artificial intelligence (AI).

Roblox, a video game developer, finds itself at the intersection of all three, having enjoyed its first-ever quarter with over $1 billion in bookings.

This occurred as Roblox announced its fourth-quarter and full-year 2023 financial and operational results on Wednesday (Feb. 7), before market open.

Roblox founder and CEO, David Baszucki, told investors, “We finished 2023 with another strong quarter of growth as we continue to drive innovation and new experiences across the Roblox platform. We enter 2024 with even more conviction of being able to achieve our long-term goal of attracting over 1 billion daily active users with optimism and civility. We continue to benefit from the strong network effects in content, social connection, and communication, as well as our investments in immersive experiences, advertising, and AI.”

The company’s stock is up over 10% Wednesday, and it is expected that they can maintain 20% year-over-year topline growth through 2027.

Capturing the Network Effects of Disruptive Technologies

In the most recent Q4, Roblox became available on the Meta Quest VR headset as well as Sony Playstation, and during the Q&A portion of the earnings call, many investors pressed Roblox about the recent launch of the Apple Vision Pro mixed-reality (MR) headset.

Users spent 15.5 billion hours engaged on Roblox, up 21% year-over-year, and a number that executives said they expect to continue growing as lifetime installs on new AR/VR/MR devices grow.

As for AI, CEO Baszucki told investors, “Our own AI model is powering real-time chat translation allowing people around the world to communicate with people who are chatting in a different language … we’re also seeing more penetration on voice chat.”

“We continue to roll out more AI on real-time image, voice, and chat moderation, making our whole safety platform much more efficient,” said Baszucki.

Executives also indicated that they expect to scale Roblox’s brand-related microtransaction and advertising business over time as more companies invest in building presence on Roblox, but declined to break out the numbers for the ongoing advertising initiative.

The video game platform is looking to grow and expand its audience beyond the under-13 age demographic it was founded on.

“Older users tend to monetize better, cohorted by time spent on the platform,” Roblox’s CFO said. “A slow and steady improvement in the core technology has allowed our developer communities to build better stuff … [which has] naturally attracted an older audience.”