🕹️ Welcome to the Roblox Revolution 🤖
Building the future of online experiences, one pizza restaurant at a time
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Hello!
It’s been rainy week here in Sydney, perfect weather to stay home and put on the latest episode of Fresh Capital.
As always, we’ve released two podcasts this week:
🤖 A deep dive into Roblox with special guest Matthew Berry
🚗 A simple sprout on EVs
In today’s newsletter:
The Roblox Revolution
Portfolio Updates
The Roblox Revolution
“Mum can I play Roblox?” rings through households around the US. It’s a phrase that has become synonymous with lockdown parenthood and homeschooling. Roblox is a is a cross-platform company that has created a platform where users can generate ‘experiences’ and digital worlds for other users to, well, experience online. It consists of three products:
Roblox Client - this is the application that allows users to explore 3D digital worlds
Roblox Studio - the platform that allows developers and creators to build, publish, and operate 3D experiences for the Roblox Client
Roblox Cloud - includes the services and infrastructure that power our human co-experience platform
Roblox has been the flavour of the month with their recent earnings report outlining their Q3 success, with revenue doubling and Daily Active Users (DAUs) growing by 31% to ~47m. They have ~7m developers creating content for Roblox users.
There are misconceptions about what Roblox is and what it can be - people analogise Roblox to a gaming company but it is much more than that. Roblox doesn’t create any games, they’ve created platform that enables users to generate their own content, experiences, games and digital words. Some of these may be games, but the data from the top Roblox experiences tell us that they aren’t games that people are playing.
For example, one of the most popular experiences is Pizza Place. Users work in a pizza restaurant, making pizzas for other users. It’s not a game in any real sense but it’s immensely popular on Roblox.
Roblox benefits from a hoard of developers constantly creating content - similar to YouTube or TikTok. These developers are incentivised financially and are rewarded based on the popularity of the experience they’ve created (similar to YouTube views). But having an army of developers means there is constantly new IP, experiences and digital content on the platform, targeting users from all walks of life. This creates an immense network effect for Roblox where their developers can create content tailored for users, and users can become developers or provide direct feedback to developers to improve experiences or add additional functionality.
So where does Roblox go from here with its 47m DAUs? Maybe it keeps creating pizza restaurants for users to virtually hang out, but Roblox has much more potential to offer.
With the increased emphasis on the Metaverse and Web 3.0, there is a future where Roblox becomes the place to play on the Metaverse. Brands such as Nike and Nascar are collaborating with Roblox to create customer content and experiences, including outfits, cars and other content.
As Roblox continues to gain popularity with users older than 13, there may be a world where Roblox competes with Facebook for the ‘metaverse’. This is no doubt their long term play and you can see how this starts to play out as Web 3.0 takes over the online world.
If you’re interested in learning more about Roblox, check out our latest episode!
Portfolio Updates
Earlier this month, the electric vehicle (EV) company Rivian went public, adding another major EV player to an increasingly saturated market. Rivian hasn’t yet generated any revenue from selling an EV but it has scored an exclusive 5-year deal with Amazon to produce EVs for the company. This was enough to sweeten the deal for investors and now Rivian is trading at almost double its IPO price.
Our take? We think it’s great to have another EV provider but they’re entering a competitive market with very high barriers to entry. While they have their deal with Amazon, Tesla has shown that it’s a challenge to manufacture EVs at scale and this is something Rivian will have to overcome.
🍔 Impossible Burger Lands in Australia
During our Beyond Meat episode, we discussed the commoditisation of plant-based meats and its impact on companies like Beyond Meat. This month, another alternative protein company entered the market here in Australia - Impossible Foods. They’ve launched through a partnership with Grill’d and could slowly enter grocery stores around the country.
Our take? Another player further solidifies our hypothesis that this area is becoming commoditised and could lead to a price compression in alternative protein market.
Closing Remarks
Our latest episode with Matt was a really insightful deep dive into Roblox, be sure to check it out while you hide from the rain this week!
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