This Week in the Metaverse (W42.2022)
Roblox reports September 2022 Key Metrics; Merge between two independent Roblox studios; Yuga Labs, a web3-focused venture aspire to build a Roblox alternative; Building an Anti Dystopian Metaverse.
Welcome to Letters - commentary, analysis and ideas from Into The Metaverse.
Here are the items that captured my attention This Week in the Metaverse.
Roblox reports September 2022 Key Metrics
Merge between two independent Roblox studios
Yuga Labs, a web3-focused venture aspire to build a Roblox alternative
Building an Anti Dystopian Metaverse
Other news and announcements I read this week
Let’s dig in!
(1) Roblox Reports September 2022 Key Metrics
What’s Happening
As the case every month, Roblox Corporation ((NYSE: RBLX) announced its monthly metrics for September 2022, which not only strengthen its category leadership but also shows the in some key metrics that the platform is growing year-over-year despite concerns that in a “post-Covid” world, we will see decline in usage by its core demographics. The metrics:
Daily active users (DAUs) were 57.8 million, up 23% year-over-year.
Hours engaged were 4.0 billion, up 16% year-over-year.
Estimated bookings were between $212 million and $219 million, up 11% - 15% year-over-year1.
Estimated average bookings per daily active user (ABPDAU) were between $3.67 and $3.79, down 7% - 10% year-over-year.
Estimated revenue was between $171 million and $180 million, which represents a year-over-year change of -2% - +3%.
Why It Matters
With the metaverse continuing to be a concept and category in the making, it’s all about showing growth of core use cases. Interactive virtual worlds continue to be a core use case for a business or consumer application in the metaverse with Roblox currently continuing to be the clear category leader. Regardless of the disputes on the exact numbers of daily active users on blockchain-based platforms such as Sandbox and Decentraland, likely these platforms currently have thousands daily users. They may well grow in the coming years especially with greater adoption of web3 but in the meantime they currently don’t play a significant role in the marketplace. Fortnite on the other hand, which Epic Games is intending to evolve from a game into a platform with the integration of Unreal Editor into Fortnite Creative in 2023, had around 90 million monthly active users in 2021 (there’s no data on daily active users), while Roblox is estimated to be at around 300 million monthly active users (the company doesn’t publish official monthly user data).
Despite concerns about return to “normal” in 2022 post a tough 2021 Covid year and how this will impact usage of the Roblox platform by its core 8-24 demographics, we’re seeing growth of daily active users by 23% year-over-year with 57.8 million daily users on the platform at the end of September 2022. This is an impressive user growth.
You can complement this item with content published by Into The Metaverse -
(2) Merge between two independent Roblox studios
What’s Happening
In last week TWiM’s letter I wrote about the avalanche of brands launching branded experiences on Roblox, with now more than 100+ brands who launched a bespoke or time-based experience on the platform. As exciting as it may be, the Roblox platform is undoubtedly dominated from an engagement and monetization stand point by non-branded games and experiences, many of which are built by studios composed of developers who grew up on the platform and that haven’t raised any venture capital. Which is why I found the news about two independent Roblox studio merging to be an interesting event. The two studios - RedManta Games and Sonar Studios merged to form a new company, Twin Atlas.
Why It Matters
When we started Supersocial in June 2020 Roblox had around 25 million daily active users, there were barley any brands that experimented on the platform with a bespoke branded virtual world, and I could count on one hand the amount of professional, venture-backed studios that fully focused on building virtual worlds on Roblox (likely only Supersocial and Gamefam). Around 2.5 years later, Roblox now has nearly 58 million daily active users, multiple new professional studios have joined the platform (venture or not), and more than 100 brands launched bespoke brand experiences or activations. Most interestingly, the quality and depth of the developer ecosystem on Roblox continues to show that a key ecosystem of next-generation gaming and virtual worlds are built by creators who grew up on the Roblox platform. Some of them start and grow their own independent studios and some of them join companies like Supersocial where they take their career to the next level.
I believe that the Roblox platform is reaching an inflection point in the next 1-2 years in which its developer ecosystem is maturing not only in terms of its creativity but also its business potential. This coexists with the overall growth of the Roblox platform and fits my hypothesis that in the next 5 years we could see 2-3 companies that were born on the Roblox platform pursuing an IPO.
You can complement this item with content published by Into The Metaverse -
Roblox Developer Unit Economics (letter)
Assessing Roblox in the Long-Term (letter)
(3) Web3-focused ventures aspire to build Roblox alternatives
What’s Happening
A few news items about games and platforms built for web3 has caught my attention - such as: Bored Ape Co-Founders Want Otherside Metaverse to be ‘Web3-Native Roblox’ for Adults in which Yuga Labs founders express their desire to make Otherside project the “web3-native Roblox for adults”. On the back of their $450 million raise earlier this year, Yuga is apparently betting big on video games with NFT assets that will power their web3-centric metaverse ambition - Otherside.
Why It Matters
Yuga is not the only one that aspires to not only create a platform that will attract millions of people to play, explore, socialize, shop and express themselves but also the primary gateway for the first billion people to enter a web3-enabled Internet. While it remains to be seen how an open metaverse is built and how NFTs and games are integrated to create next-generation platforms for gamers and the wider Internet adult population, companies like Yuga Labs invest in rapid development of their own ambition. It took years for companies like Roblox to build a comprehensive, consistent platform with a thriving economy and developer ecosystem and so I do not expect Yuga’s Otherside to become a real contender to Roblox’s hegemony any time soon (regardless of the fact that Roblox’s core audience is 8-24 year olds). What continues to be clear is that when we think of a metaverse that serves anyone above age 25, currently there isn’t really a platform that provides what Roblox provides for the under 25 age demographic. Epic Games aspires to evolve Fortnite Creative into a platform and definitely has an older user base (albeit very much skewing towards male users) but it too is in the early stages of its evolution.
You can complement this item with content published by Into The Metaverse -
Paul Bettner (Wildcard Alliance) - Onboarding the First Billion Gamers to Web3 (show)
Ryan Wyatt (Polygon) on Cryptogaming and Blockchain-Powered Virtual Worlds (show)
(4) Building an Anti Dystopian Metaverse
What’s Happening
While recording a conversation last week for Into The Metaverse podcast show with Louis Rosenberg (to be published in the coming weeks), Louis described some of the dangers for what could go wrong once the metaverse is realized and how technology companies can take advantage of a scaled, immersive virtual realm to harvest our personal data with depth and at a magnitude unachievable and unimaginable before (he wrote about it here as well). As Louis was laying out his arguments and examples, I visualized some of them in real-time as we were talking. As a cinema fan and and an avid reader, different books and movies started to come to mind with a common theme - a description of a future that is quite dystopian.
Why It Matters
With much of our inspiration for what a “metaverse” could become being drawn from books and movies that are quite dystopian, we need a paradigm shift for where inspiration comes from and which stories we build on as a reference for the future we’d like to see being created. What are the stories and who are the theorists that creators and entrepreneurs should take inspiration from as we work tirelessly to shape a future we can all believe in and get excited about for ourselves and for those who will succeed us. I would like to see, watch and read more stories, theories and concepts that inspire me and give me a greater sense of orientation for what we should aspire to create, as individuals and as a collective. Building a more perfect metaverse, one that works for everyone, is one of our greatest challenges in the coming decades. While the challenge may not be existential to life on Earth as climate change, I nonetheless believe that what the metaverse shapes up to become will have a fundamental impact on our global society, the way we live, the way we govern ourselves - alas, on who we are. The metaverse may currently be a nascent concept of what the Internet could become but the actions we take every day, as creators and entrepreneurs, and more broadly as a society, will be the ones that shape what the metaverse will actually look like in the years to come.
Doing so with the right framework of inspiration is something we should all aspire to and be committed for. Our children are counting on us.
Dig in further about this topic in my recent letter: Building an Anti Dystopian Metaverse.
(5) Other news and announcements I read this week
Mmhmm’s new app turns your video calls into video games (link) → Phil Libin (previously creator of Evernote) is the founder and CEO of Mmhmm, a company making software for video creation and video chat, and he’s convinced that the future of work doesn’t involve putting on a headset every morning. While I agree that wearing a headset is not something the metaverse is going to be dependent on, I also find a lot of similarities between how he thinks about work in the metaverse and how Tim O’Reilly thinks about the metaverse (check out the podcast show I did with Tim here).
Meta’s $10B metaverse investment is ‘not enough’ according to Animoca Brands’ Yat Siu (link) → my take: there’s a lot to agree with Yat. For Meta to succeed in not only building a large scale ecosystem for metaverse experiences but also a new computing platform that is VR and AR-focused, billions of dollars will need to be invested. It won’t guarantee success for Meta but it’s definitely a key pillar which they are uniquely positioned to pursue given their incredible free cashflow generation. Read more here.
Real Estate Pro Breaks Down Property for Sale in the Metaverse (link) → complement this with a recent conversation on the podcast with the CEO of LandVault on why virtual land in the metaverse matters (link).
What DRESSX’s Partnership With Ready Player Me Means For Digital Fashion (link) → as virtual worlds continues to emerge as a key modality of interaction in the future of Internet, personal expression through 3D avatars will cement fashion and beauty as one of the primary use cases for what people use the “metaverse” for.
Digital Pop Stars, Virtual Influencers And The Future Of Music And Celebrities In The Metaverse (link).
The Peripheral’s creators and cast embraced the mainstreaming of nerdy metaverse culture (link).
EU Antitrust Officials Are Worried About Competition in the Metaverse (link).
Weirdly, Taylor Swift is extremely close to creating a true metaverse (link).
Lost in Roblox’s Fifa World – everything wrong with the metaverse in one place (link).
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Into The Metaverse covers companies, technologies and trends that are bringing this promise to life. Yonatan Raz-Fridman “Yon” (founder & CEO of Supersocial) interviews the brilliant minds building for, and investing in, the Metaverse.