Roblox Shares Drop: Is Wall Street’s Honeymoon in the Metaverse Over?

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As Fortune100 companies around the world hire self-proclaimed Web3 consultants to set their “metaverse strategy,” Roblox’s stock is experiencing some serious lows. The oft-labeled “Covid stock” sees “back to normal” in a different light, as kids go back to classrooms and practice football (soccer!). Meanwhile, venture capital continues to rush into blockchain games ($1 billion in funding in the past month alone), and pretty much every starter pitch deck that mentions “Web3 Disruption” on the front page.

When Adidas buys virtual countries in The Sandbox and partners with Bored Apes, and when Nike acquires RTKFT and co-drops the first NFT, it may feel like 2021 But make no mistake. Roblox remains, by a mile, the closest thing to a “metaverse” where people actually spend time doing things at scale. In the chaos of virtual real estate booms and NFT ponzi schemes, can Roblox’s strategy of not chasing the latest buzzwords and cash grab opportunities help them win in the long run?

Roblox is the digital economy of the future today

When we refer to video games as the tipping edge of the metaverse, we usually think of a place where people hang out for more than just playing, participating in events and showing off their outfits. Roblox is already moving forward with an early version of a structured and sustainable virtual economy. One with goods and services, tools to make them, a currency and marketplace to sell and re-sell them (last year a virtual Gucci handbag sold for +$4000, more than the actual bag), all resulting in the creating real jobs.

It is also a community that grew 40% year over year, managed to attract demographics higher than pretien (17-24 years grew +51%) and tapped into new markets – India and Japan grew by more than +100 %. And with the recent launch of Roblox Education, which includes a $10 million fund to support developers who provide educational Roblox experiences for teachers to use in the classroom, the platform could help an entire generation see Roblox as the future of not only play, but also work.


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Roblox was never about chasing the hype anyway

Roblox isn’t the only metaverse stock to underperform. Facebook’s Meta, Nvidia, Marvell, Microsoft are all in free fall. Zuckerberg’s announcement to rebrand Facebook as Meta was the turning point for the market, and it may have done the entire ecosystem a disservice. Shortly thereafter, the price for Decentraland’s virtual currency MANA skyrocketed, ultimately resulting in a $2.4 million land sale. The Sandbox received a $96 million investment from Softbank and $4.5 million was spent in-game to acquire a plot of land adjacent to Snoop Dogg’s virtual mansion. Axie Infinity just made $4 billion in NFT sales.

Yet in practice these worlds still feel very much like early access versions (not to say ghost towns) with an often expensive entrance ticket. That’s the dream we sold recently. Not the dream of a virtual world where we can escape and have fun, the illusion that if we bet on the right piece of land, game asset or expensive JPG, we can cash out and live happily ever after. Lately, the story around the metaverse has been obsessed with short-term money grabs, while Roblox has innovated brick by brick around a clear vision over the past 17 years.

Roblox’s position on NFTs has yet to be determined

The elephant in the room is this: can Roblox win without making some of their assets NFTs, giving players the value they put into the games to gain access to a wider secondary market or even (let’s dream big) potential interoperability between other worlds?

For now, Roblox states that transactions outside the platform are impossible to monitor and block claims. Given how particularly young Roblox’s audience is, the company has always taken security very seriously (something blockchain-based worlds can learn from too).

However, it is not clear that Roblox is kicking NFTs off the platform. Certain Roblox experiences are currently making digital assets available on NFT marketplaces such as OpenSeas. What’s certain is that if the company continues to experiment – it won’t jump on the NFT train just because it’s the new feature that needs to be added to be considered metaverse-ready (or to make forecasting analysts happy).

NFT enthusiasts will argue that Roblox wants to control and lock players into the ecosystem, preventing a more lucrative economy for players. NFT skeptics will say that unless digital ownership can add real value and usability to the actual Roblox gameplay, why risk seeing a sustainable built-in virtual economy turn into a gambling platform?

The next iterations should be enough for markets to get excited about

Rolbox is not participating in the NFT debate for the time being, it seems. Instead, the company is making progress on more important fronts: what players, not just investors, care about. In the coming months, updates will make in-game mode much more realistic and engaging, developers will be able to test new facial animation features, and voice chat will continue to improve and roll out. Interestingly, Roblox also makes it easier for players to drop and re-sell limited-edition items — that is, non-NFT assets, all within the Roblox ecosystem.

“Self-identity is a critical pillar of the metaverse,” said David Baszucki, CEO of Roblox. Ask a 14-year-old if they care if that identity is built on the blockchain or not. It will then become apparent that for now, amid the propensities of Wall Street and Silicon Valley to live up to themselves, no one is shining a light on our future digital lives like Roblox.

Samuel Grinfeder, creative strategy director and metaverse enthusiast at Superunion.

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