Roblox Is Going Public Just as the Pandemic Video Game Boom Is Ending


Hey yall, its Austin. Millions of people are getting vaccinated every day, and the world is getting a glimpse of life after the coronavirus pandemic. For many technology businesses that benefited from lockdowns, the boom times will soon be over. . . Before then, companies are trying to establish themselves as fixtures of peoples everyday lives. For one, Roblox Corp. is seeking to transform from a video game beloved by tweens and teens into a social meeting place for kids and adults alike. The game maker is planning to go public Wednesday at a price that could give the company a $30 billion market value, and needs to prove to investors that it can thrive once children are back in school full time. . . Financial disclosures offer an early preview of whats nextand how to navigate the transition back to normalcy. Roblox warned investors last week that growth of daily active users is projected to slow in the spring to between 3% and 9%, while hours engaged on the platform may decline as much as 11%. . . For companies that have flown high during Covid-19 lockdowns, thats a sobering shift. Stay-at-home stocks Netflix Inc. , Zoom Video Communications Inc. , Peloton Interactive Inc. soared through much of the pandemic with customers stuck indoors superglued to their products. Their shares are all down in recent weeks as vaccinations have accelerated. . . With few exceptions, executives arent willing to predict what the waning days of the virus will look like. Please note the impact and extent of the Covid-19 pandemic and people returning to in-person contact still remain largely unknown, Kelly Steckelberg, the chief financial officer of Zoom, said last week. . . The question is unavoidable in the games industry, which had a banner year in 2020. Roblox, a social platform that enables players to create their own quirky online games and mess around together in virtual worlds, secured a ridiculously strong hold on Generation Z. The company has said two-thirds of U. S. kids aged 9 to 12 use Roblox, which makes it uniquely vulnerable to tweens venturing back to classrooms and screen-free hangouts. . . Roblox is still forecasting huge growth rates of more than 60% for the quarter ending March 31. But the spring will look markedly different. We headed into 2020 with strong organic growth, which was further bolstered by social distancing restrictions, Roblox CFO Michael Guthrie said in a recent statement. As those restrictions ease, we expect the rates of growth in 2021 will be well below the rates in 2020. . . Gaming demand will likely plateau, but its unclear how much engagement will be affected, said Mat Piscatella, a video game industry analyst for NPD Group. Delays of blockbuster titles and shortages of next-generation consoles may help sustain growth whenever supply rebounds. But more significant could be how engrained the digital social habits of the last year become for adolescent Roblox addicts or older Call of Duty loyalists. . . The long-term impact of the pandemic is the rise of social gaming and the rise of communicating online, Piscatella said. Even when we get back to whatever the new normal is, that social stickiness is really hard to shake off. . . So the biggest game publishers are doubling down on community building, creating products that arent just an entertainment escape but a social network. Electronic Arts Inc. Chief Executive Officer Andrew Wilson, who was asked twice by analysts on a conference call last month about how The Sims maker could adopt more Roblox-like features, said social gaming and user-generated content is now front and center for his teams. On Activision Blizzard Inc. s earnings call around the same time, President Daniel Alegre said many of his games saw a surge in usage during the lockdown, which really oscillated in countries where restrictions were later lifted. Yet, he added, On our more social titles, engagement remained at an elevated level. . . Some new habits may be permanent. Its really difficult to say, Hey, the pandemic is easing, people are going out, and theyre not going to play Fortnite, said Piscatella. I dont think that math quite works. Austin Carr

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