One aspect of the Roblox flywheel effect is underestimated, and that is research and development.
Roblox’s total revenue increased by 2.2 times (book revenue increased by 1.6 times) from the first quarter before the outbreak of the new crown. However, Roblox effectively maintained (or increased) the share of R&D investment in total revenue and book revenue.
Roblox’s development speed
In the fourth quarter of 2021, Roblox’s R&D expenditure may exceed the book income of the first quarter of 2020. Calculated by the growth rate, the annual investment is 600 million US dollars. In 2022 alone, Roblox‘s investment in its current platform may exceed “Red Dead Redemption 2”. The full production budget for 2010-2018.
This is an amazing but sustainable investment model. R&D brings better features, attracts more game developers and produces a better gaming experience. A better gaming experience attracts more players and more game spending. It will attract more developers and game development spending.
When AOL acquired ICQ in 1998, it had 12 million “fixed users.” Ten years later, Facebook has 1 million monthly active users. After another 13 years, Facebook has 2 billion daily active users and 3 billion monthly active users. Even the biggest bulls have difficulty seeing this future.
Today, Roblox has approximately 50 million daily active users and 20 million monthly active users. In the next few decades, billions of people will start using virtual worlds every day. It is conservatively estimated that 140 million new players are born every year. So now we are still in the ICQ scale stage.
Even if I delete the last seven quarters from the chart below, the previous trend is still surprising. This is the point. Perhaps in the next few years, we will look at the growth rate of the last seven quarters, just as we look at the previous growth rate of 2018-2020. It doesn’t feel very shocking.