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The seemingly unstoppable force that isRoblox might not be so unstoppable after all. The company share price has dropped by 70% following the publication of its second-quarter earnings, which show a decline in players and lower-than-expected monetisation.
In an earnings call Roblox CFO Naveen Chopra said the company attributed the shortfall to a dearth of “vintage viral games”, with players shifting attention to “new and evergreen experiences with lower hourly monetisation”. This was exacerbated by changes in Roblox’s recommendation algorithm, which Chopra says “optimises for long-term retention” at the expense of “near-term monetisation”
While Roblox still has an enormous audience of 123 million daily players, this number has declined steadily across the previous three quarters from a high of 152 million. Monthly uniqueplayers have also fallen by 10 million in the last two quarters, with the number currently at 27 million.
Roblox doesn’t expect these winds to change in the near future, either. The company forecasts a year-on-year decline of between 14% and 18% in its third quarter, with Chopra saying that “monetisation weakness is likely to continue.” It also opted against providing an earning estimate for the rest of the year, citing “increasing variability” in the fourth quarter.
Chopra conceded that the company’s expectations for the year had “changed considerably” but maintained Roblox’s “conviction” that it was making the right decisions to secure the platform‘s future. And of course, this includes theintegration of AI into Roblox, which is interesting considering Chopra mentions Roblox’s heavy AI investment as part of the reason behind its less than impressive results.
One would like to think that players are leaving Roblox on account of seeing it as acynical skinner-box designed to squeeze as much money out of its young audience as is possible. That’s not to mention the extensive concerns over child safety on the platform, though Roblox has at leastmade some attempt to address this in recent months.
