Technology

Welcome to Metaverse, the sci-fi dream behind Roblox’s $ 38 billion valuation

welcome-to-metaverse-the-sci-fi-dream-behind-robloxs-38-billion-valuation

Ready player one

Source: Warner Bros.

Gambling company Roblox went public on Wednesday, ending its first trading session with a staggering market cap of $ 38 billion.

It is of course questionable why a losing money company that makes video games for an audience of mostly children and teenagers got such a high rating. (Though the impressive growth during the pandemic-sparked gaming boom in 2020 certainly helped.)

This is where the metaverse comes in. It’s a concept that has been tossed around in science fiction for decades. The metaverse is hard to understand unless you’re a big geek. So let’s use the most accessible pop culture example. Imagine the virtual world depicted in the novel and film “Ready Player One” actually existed. This is what Roblox is trying to build.

Roblox’s real long-term goal is to create a metaverse where millions (or billions!) Can rally to participate in games, meetings, collaborative work, and even Roblox’s own virtual economy powered by the Robux currency .

Welcome to Bloxburg

Roblox

Looking through the prospectus and comments from the company’s CEO and investors will give you a clearer picture of Roblox’s great vision. Roblox doesn’t just make a game that gobbles up your hard-earned dollars on virtual items. The company is closer to a futuristic Facebook than, for example, a Zynga.

This is how Roblox described this vision in its brochure:

We built Roblox from the start as a single platform, name, and focus company that would one day serve billions of users. The ultimate “product specification” has always been to model reality based on the belief that the more accurately we can simulate the real world, the more useful we can offer. Looking ahead, we want to maintain that focus as a single platform company, even as we expand the ways people around the world can play, learn, and collaborate.

In short, Roblox wants to give its users the building blocks for a metaverse, who in turn will create the digital world at their own discretion. And as an economy in the Metaverse continues to grow and develop, Roblox will receive a portion of every transaction.

Roblox isn’t the only one exploring the metaverse concept.

Epic Games, the company behind the popular shooter game Fortnite, has set itself the goal of creating a metaverse. It’s already preoccupied with experiences outside of its core shooting game, such as a Travis Scott concert and the premiere of a clip from the last Star Wars movie in the Fortnite world. (Roblox also hosted a virtual concert with Lil Nas X.) Microsoft is also involved in the Metaverse thanks to the purchase of Minecraft developer Mojang for $ 2.5 billion in 2014.

So where does Roblox go from here?

It will not be easy. The company did pretty well the gaming portion of the Metaverse. It’s about live events. The next challenge, however, will be to convince people outside of Roblox’s core group of children and teenagers to come to Roblox for new experiences.

Part of this challenge arises from the limitations of today’s technology. Metaverse’s biggest followers are turning to Augmented Reality (AR) and Virtual Reality (VR) technology to improve themselves in a way that creates a real sense of presence when you immerse yourself in a digital world. However, today’s headsets are too bulky to wear for long periods of time. Your screens aren’t sharp enough to deliver realistic, pixel-free images. And most of them make you look like a member of Daft Punk. Good luck walking down the street like this.

Microsoft HoloLens 2.

Andrew Evers | CNBC

Still, almost every big tech company is pumping money into AR and VR with the belief that it will usher in a new computing wave and perhaps one day eliminate the need to carry around a smartphone in favor of computer glasses.

Facebook has been the most open about its plans in AR and plans to release its first AR glasses later this year. CEO Mark Zuckerberg is particularly optimistic about the technology. He bought the VR start-up Oculus in 2014 for $ 2 billion and has been building on this technology ever since. In a podcast interview with The Information earlier this week, Zuckerberg expanded his plans for AR and VR, describing a world in which we can virtually “teleport” anywhere and socialize from a distance while still maintaining a sense of presence .

Microsoft has its own AR headset called the HoloLens, which is mostly used for business applications these days. At over $ 3,000 in price, it’s inaccessible to the average person. Apple has made its headset plans much more secretive, but many credible reports point to 2022 as the year it will launch its first device.

But even there, there is a risk for companies like Roblox. If Facebook or Apple control the dominant AR and VR platforms, companies like Roblox will continue to be forced to follow a competitor’s rules and continue to pay a portion of all sales made in the app to someone else.

Roblox is likely to be fine with this. The focus is on the foundation of the more than 31 million people who use Roblox every day and create the world others play in. Millions of them are developers building and selling experiences in Roblox. And these developers make their living just building for the world of Roblox.

Neil Rimer, co-founder of Index Ventures (which owns more than 10% of Roblox shares) and a board member of Roblox, told CNBC in an interview Wednesday that the energy surrounding the Metaverse will come from these users, not the company.

“No single company can create a metaverse,” said Rimer. “It has to be a community. The metaverse will exist when it reflects the world in a sense, when there is so much variety that you can choose to do what you want on a given day, just like in the real world World.”

– CNBC’s Ari Levy contributed to this report.

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Katherine Clark