Roblox (Ep. 27)

[MUSIC] Hello and welcome to the GameCraft podcast. I'm your host, Mitch Lasky. I'm Blake Robbins. And this is episode two season four, where we're going to take on the subject of Roblox. [MUSIC] Oh man, this is a long time coming. >> Yeah, it is a long time coming. I think we've been thinking about doing a Roblox episode since the end of season one. And certainly Roblox was an important company that we thought about when we were doing some of the themes in season one. And I think even the last episode, when we were talking about yearly trends, we finally felt that Roblox was so undeniable and that it matured to the point where we could really say some stuff about it that kind of now captured I think in its essence. And you called it the most important company in gaming and I don't entirely disagree with you. [MUSIC] >> Well, I'm flattered that you agree with me on that at least. >> So like we said, we've been watching this company pretty closely for the last seven or eight years, I think, probably at least pre-pandemic. It was clear that something was working. And I think coming out of the pandemic and into the mid-2020s, it's clear that this company is really taking share broadly in the games market. And I think that's incredibly significant. And I think it's worth then digging in and talking about how it works, particularly from an economic standpoint, but also how it works from a kind of competitive advantage standpoint because it has some extraordinarily unique competitive advantages that I think really pluck some of the strings that we've been talking about over the past three years, really, on the podcast. And so I think for those long-time listeners, you'll hear a lot of resonance in the Roblox story with some of the things that we think are important to the modern games business. And I think Roblox had combined them in a very unique way that's really given it that turbo boost of competitive advantage in a very difficult market. In many ways, it's one of the few things that is working in this market. Yeah, I mean, I think Roblox is sort of took on maybe the double black diamond of gaming startups that they're sort of in a world of their own. We'll for sure get into that, but it's pretty remarkable just where it's at today. And I think there's still a lot of misinformation or not so much misinformation, but misapprehension about Roblox out in the community and that really because it came out of this very UGC kind of janky creator economy that has been that sort of lingered around growing slowly for almost a decade before it really had its meaningful inflection. I think there is a tendency to view it through this lens of like Club Penguin or one of these other kids gaming platforms from the past. And it really is a completely different animal. And I think it's really worth explaining it in its fullness because I think that perception that a lot of people have which really comes through the traditional lens of PC, console or even modern mobile gaming, frankly, that that reaction to it's what it looks like and what it feels like isn't entirely wrong. It does look chaotic. It does look amateurish sometimes in its content. But I think those things really don't function as criticisms for me, right? They are in fact, I think part of the charm. Yeah, completely. I mean, I think it's you look at it and it's really easy to write off what are these experiences or these actually games, you know, all of that, which I think totally would make sense as an outsider. But obviously, you know, as you and I have dug in, it's clear there's a lot more happening here. Yeah, and I think, you know, the mobile game experience over its early life is a good proxy for this, right? I mean, having been there when mobile games were still pretty janky, pre-iPhone, and having encountered executives from the traditional industries from console and PC. I remember one meeting in particular with a senior executive, senior studio executive from one of the incumbents who came to take a look at the products as an anticipation of either investing in Jamdad or actually acquiring Jamdad. They walked around the table and looked at all of our games and they basically said, you know, these aren't even games. The monkey could make these games. And famously, Michael Marquetti, RCFO, quipped. Yeah, but a monkey couldn't distribute them. And I think there is something to that in terms of how Roblox has been judged. It's really been judged through the content lens and that distribution piece has been largely missed. Yeah, that's, it's such a good call out of, I mean, by the way, I think a decent chunk of the, you know, let's say professional game developer world still looks at mobile as this completely other size of world. Yeah, that's mobile that's now half the video basically. Exactly. And, you know, they still will be a little standoffice of whether mobile games are, you know, really games or not. And yeah, here we are. It's 50% of all gaming revenue. So again, I think for all of these reasons, this is a company that's worth watching. And I want to just be a friend about a little disclosure, which is, while neither of us invested in Roblox's private company, although I will tell the story about having heard the pitch at the very, very beginning when he was just getting started with it. But we do both on the stock. So take that for what it's worth. But yeah, we, we both have accumulated positions in this company over the, over time as a public company. So just to have that out there and disclosed. Yeah, and, and I guess, you know, with that, this is clearly not financial advice. And so we'll do that. We'll do the formal disclaimer here that this is, this is not financial advice at all. So in our conversations before we sat down to outline this episode, one of the things that you said really stuck with me. And that is that this may be the first company in the history of gaming that successfully combines game creation, user aggregation, the play experience itself, and monetization at massive scale inside of a single platform. All four of those things simultaneously. And in some ways, that creates this almost dreamlike network effect where you've locked developers, players, and payers into this closed loop platform. And in some ways, it allows them to have really non-standard economics inside of that platform, something that we'll get to later. I think is one of the strengths in some ways and perhaps Achilles heels of the Roblox strategy. But they extract money at every step of the platform, right? At every phase of platform, from development all the way through to a developer trying to take cash out of the platform, every step of that ways taxed and taxed pretty heavily. And yet they have massive developer roles of companies and individuals who are willing to create content for them and take their chances in the marketplace. And it's just remarkable on a certain level that they've been able to achieve this. And I agree with you. I do think that that is its greatest strength, which is the way it's woven together these things that would be competitive advantages for a company on their own. But in combination, they're insane. Yeah, I mean, I think about it for better or worse. I'm just such a student of software businesses. And I think about early social networks. And the main thing there, or let's just say, marketplaces is do you have the flywheel on the supplier and buyer side and then do you have network effects? And obviously, Bill Grille, your partner has wrote so much about this stuff. And it's just actually think Roblox might be the only company in the world that has all of these things. It has the marketplace that they own. It has the creation tool. And it has monetization at scale. And it has network effects of social. And so as we're writing this and we're talking about it, we've obviously picked up on so many of these pieces, like individual pieces for other companies within the gaming industry. But it's so rare, even in traditional software to see any dynamic like this. So before we jump in and start to look at it in detail, why don't you give us just a top line look? Because I think if you're unfamiliar with this company, or you've heard about it anecdotally, you know it's important, et cetera, these numbers will be meaningful in terms of assessing its importance before we really go and dig into its strategy. Yeah, so we'll go off of just the most recent earnings, which is for Q4 of 2025. And that puts them at roughly 144 million daily active. And we're talking about growing really at scale. That's up almost 70% year over year. Top line bookings is 6.8 billion and revenue is 4.9 billion. And I suspect at some point in this episode, we'll break down that. We will talk about that. But bookings are meaningful here. I mean, having been in these sorts of businesses, particularly some of these virtual goods businesses, revenue recognition is still catching up with the reality of these businesses. And there are still deferred revenues that are required by GAP in order to account for some of these things that don't really make a lot of sense. I mean, they were written to account for durable goods, like farm equipment wearing out and stuff. And it's like very different from like a gun in Team Fortress. You know anything? But nevertheless, the accounting rules haven't really fully captured that. So while bookings are meaningful, I think, again, a lot of times the real old school Wall Street types will be like, "Well, bookings just bullshit because it's really the only thing that's worth looking at here is gap." But I think in this case, bookings are reasonably relevant because of the revenue recognition rules are so weird. Yes. And let's say 37 million monthly unique payers, which is just someone's crazy number. Yeah. So of the 144 million Dow, they don't report the mile or the monthly active users. We know that 37 million of those are actually paying for something on Roblox per month, which is pretty remarkable. I saw a sensor tower graph that tried to estimate the mile and it was off the charts, right? I thought it was 500 million monthly, monthly, monthly, active. But I don't have any idea how I fully believe it. I don't think about 144 million Dow. That is insane scale. Yeah. It depends. It's not, it has elements of a social network for its younger users. And so again, you look at the discord situation, for example, where their MAU and DAU are like 2 to 1 ratio basically. You wouldn't be that surprised to see this be 3 to 1. Yeah. Yeah. And that speaks to just even the social dynamics here, which is you might actually view this closer to social network numbers. And we're talking about an individual game hitting 140 million Dow. We would be like, okay, that's the biggest game in the world. Yeah. And he's the biggest game in the world. Yeah. It's pretty remarkable that we're going to be viewing this closer to a social network lens where I don't know Snapchat or someone else has crazy number of Dow and Discord has crazy number of Dow as well. And so, yeah. So that's high level. The other one worth calling out here is they reported 4.8 million active creators. So let's just say someone has created an individual experience or an item on the marketplace for Roblox and they paid out over a billion and a half in creator payouts in 2025. Yeah. That's a big number. And we'll come back to that number because that number is going to be interesting to look at in light of the 5 billion in top line. And what that really represents in terms of what their content cost really looks like, not what they expressly say. Their content cost looks like in terms of the 70/30 split that they claim to be paying out. Yes. But the really interesting number is, you know, it's the 4.8 million active creator number, right? Yes. Because the, the, the DEVX, which is their, really their premier developers for lack of a, I mean, I don't know, you were probably closer to this. What, how would you characterize the DEVX users? I view DEVX as like the equivalent of being eligible for ad sense on YouTube. So like once you hit or maybe a Twitch streamer that is qualified for getting payouts. And so it's more of a like requirements threshold to then go and pay out into US dollars. So, right. But it probably meaningfully represents sort of the, the Pareto optimal, you know, 20% of the, of the developer class and probably more like, but I think, I think you quoted a number to me. I don't know if this was accurate and correct me if I'm wrong. But somewhere in the neighborhood of 30,000 DEVX developers. Yes. Yes. So I, there's actually this is from a December 2025 piece that they put out from Roblox investor relations. And then the footnote, I'll read the exact line, which is our creator ecosystem includes many hobbyists of the millions of creators monetizing on Roblox. 29,000 are part of our DEVX program. Yeah. So, you know, let's just say this 4.8 million active creators, only 29,000 of those are in the DEVX program. And again, DEVX actually means to qualify to take to US dollars, which we'll get into at some point as well. But that means that they are actually taking money home. So only 29,000 of those are actually taking US dollars off to, off to themselves. So let's turn to a very rapid look at the history of this company. And I think it's important, normally we would skip this, but in the case of Roblox, the other part of this story that I think is largely not understood is that this company's 20 years old. Yes. Yes. Yes. This is not a recent meteoric rise here. This was a long grind from 2006 to the present. And it was not always a lot of linear growth, right? There was really a point of inflection, like a two, three year point of inflection in the 20 teens that we'll talk about. But otherwise, I think we wouldn't necessarily necessarily go through this, but you can start in the early days. And I'll talk a little bit about the middle piece of this grind, when I encountered the company. For sure. Yeah. And the co-founders of Roblox, Dave Zuki and Eric Sell, they actually started a company together in the early 90s that was for physics simulation software to sell the schools. And that was maybe closer to a platform or on some level, maybe closer to even Roblox early days. And they sold that in 1998 for $20 million. That company was called Knowledge Revolution. And when you hear Dave talk about that time, he actually cites that it's pretty clear they were playing within that software, rather than even just running experiments and gave a lot of the insights to go and start what would later become Roblox. And so initially he started the prototype in 2003. I think they called it Dyna Blox and then renamed Roblox and then actually the platform goes live in 2006. So a really important piece I think worth calling out is this was always a creation platform on day one. They were always building the creative tooling and they never came out with the first party of games themselves and very different than what's a save valve, which obviously leads with Half Life and we've covered that story of Bunch or Minecraft, which then spends out a bunch of modders and becomes a playground. This was purely a creation platform and sort of putting up the constraints of what you could create, but far closer to a platform on day zero. I think that's really meaningful because I think that really informs this next phase of the company's development, which was I think you called it Belonggrine from 2006 to 2017. And I think that that was informed by the fact that they didn't have that platform based publishing strategy of an anchor tenant, a major piece of content that they could launch with and then use as a magnet for aggregating users, which they could then sort of bring into the platform fold and monetize in other ways. So we've seen that story and we talked about it ad nauseam in over the three years of this podcast about that particular way of getting a platform primed, which is come to the market with a bit of hit content and then make sure that you kind of keep that user engaged and then migrate them along the line from legal legends to Valorant or from Fortnite to Fortnite creative or to Fortnite Lego or whatever, but they didn't do that, right? They never got tempted to do first party. And as a result, they were utterly reliant on the games. And so to tell that story a little bit, which I had met Dave in 2007 with Bob Cagle. I think the summer of 2007 when he was first raising some institutional capital. I think he'd raised an early round and this was the second round he was looking to raise. And Bob and I met him. Bob actually really liked it. Again, I saw some of the early content that was on the platform. Dave was obviously incredibly charismatic and really able to kind of tell the story well. But the content just seemed so janky at the time. And the pattern that I had in my head was you can't just sweet generous build a platform. You need some incentive for the users to come in because if there's no fish there, then you're not going to get the developers to come and fish where the fish are. And so you kind of you had that kind of chicken egg cold start problem. And I didn't see content that was being made because of those early games and I'll put them in air quotes. We're really physics experiments in many ways. Very much akin to the kinds of stuff that people were building in his original knowledge revolution physics engine. They were a ramp and you were the bicycle and it would fall off and it would hit the ground and it would break and whatever. It was like, okay, that's cool. But they were kind of rubbed goldberg in a way and they didn't necessarily, they didn't point in the direction of this sort of area that would improve rapidly in terms of quality. And in fact, to be honest, that wasn't a bad call because frankly, it took the better part of a decade. I mean, seven years, seven, seven, eight years before you started to see the outlines of the inflection in really a 10 years, maybe 12 before it was fully realized and you could come out the other end of that and say, wow, this is going to work. Like this is going to work at scale in a really big way. Yeah, I imagine there's also a little bit which is, we talk about in the beginning of this episode of people look at and maybe compare it to Club Penguin. I imagine the lens that you might have had at that time, at least what I would have had if I was an investor again, it is like, okay, we've seen Neopats, we've seen Club Penguin, we've seen things like that. Those actually all lead with first party content. And like the pitch of, we're just going to build the creation tools and let people figure out what to build is. a really hard pitch. And a lot of ways sounds impossible, and they've defied all the odds. - They certainly have. And yeah, look, again, with the rhythms of the games business that existed in that period with mobile taking off and some of the social stuff taking off. And I invested in companies and sold them for 10X returns within this 10 year period that they were figuring out their underlying growth strategy and their platform strategy largely. So to kind of hit what they did, so what caused them to inflect, it was really a combination of a couple of things. And both of them interestingly enough were kind of traditional gaming type things, right? Like they weren't, they had a lot of the other stuff in place, a lot of the platform stuff. The virtual economy launched pretty much contemporaneously with the platform itself. The social platform was in place, DeVex was in place in 2013. They were always relatively cross platform, although those platforms were originally quite limited. But then starting in November of 2013, 14, they had an iPhone version in the market by the end of 2013, and they had Android in the market by the end of 2014 into 2015. And those were incredibly important. Because if you look at that sensor tower chart about their MAU, 90% of their traffic is mobile and a massive portion of that is Android, right? It's low-end mobile. It's not the kind of premium buyer, iPhone type user that is coveted on the iOS platform, for example, because of their spending power. Instead, it's really broad and really all encompassing. And I think getting onto mobile, and it took them, I mean, again, they weren't fully deployed on mobile until they were nine years into the journey. And that obviously made a huge difference. And then I think contemporaneous with that, they really invested in improving the graphics on the platform. From 2013 through about 2018, they really invested in the shader, they invested in lighting, they invested in better textures, all of which really improved the play experience and kind of got them out of that really early blocky, sort of eight-bit-looking stuff. It still looked primitive by AAA gaming standards, but nevertheless, it got better. And it got enough better where they started to get really good content on the platform. Games like Blocksburg, for example, which I think launched around 2013, 2014, sort of in the early, the beginning of this inflection point, those games started to aggregate real pools of paying users. And I think that really got the flywheel going. It's really interesting, just to look at their, they put out a chart in one of their IR briefings of the growth, or maybe it was in their S1 of the growth of their valuation over time. - This is actually from first round, in their retrospective. This is Chris Froullac, when he wrote his post when they were going public, he put this chart together showing like, when they invested, which was 2009 at a $14 million valuation, and just how it's been, yeah, the punch line is valuation growth as a linear. - Yeah, that's the, but that's the, that's the most, the simplest and not particularly the most interesting way of looking at this. But I think, but to really extend that a little bit, you could have invested in around in January of 2017 at a $500 million valuation, right? - Yes. - And again, I was selling games companies of, that were much less interesting, right, during this period for higher numbers than that. (laughing) And I think that was, I mean, if there's, if I have any regrets, it's not missing the 2007 investment, it's missing the 2017 investment, because we both believe, look, we're not futurists, and we say that all the time, we are not predictors of the future as venture capitalists. What our goal is is to see the present very, very clearly. And I think in, by 2017, you could have seen Roblox way more clearly than we did, and that $500 million round would have looked like a bargain. - Yeah, it's fun to think about, 'cause like you said, most of the users, what's assumed were on mobile, I suspect that by the time that round's happening, Roblox is number one on the app store for a year plus straight. (laughing) And yet we're all, we're all sort of just looking at it again, is like, what is this thing? It's not real, it's just kids, whatever we want to, whatever narrative we want to use in hindsight. But 100%, there was clear signs at that point that network effects were taken off, and the games, again, people might not view those as games like Wilkins, Blacksburg, or some of the others that were popping off at that time, but they were clearly resonating. And there's an interesting piece with the NIST, and maybe we'll talk about it later on, which is they clearly resonated with kids, and it was young kids, and that was always another sort of counter narrative within this time. - Yeah, and we'll talk about that when we talk about some of the bear case arguments against Roblox, but I think that you're right. I mean, the kids thing is always a problem, because you have a, the, you know, the nagware issue of, like the only way to really get spending on the platform is for the kids without credit cards to go to their parents, and have their parents buy them gift cards or credit cards. And so there is that component of this kind of extra friction in the monetization engine on the one hand, and then there, we'll talk about it in much greater detail, but then there's just the difficulties with Copa and age verification of dealing with children under the age of 13, 15, et cetera. And then you have the graduation problem, which is that all of the previous attempts at this, the sort of, you know, we've used Club Penguin as an example, but there were many others. In each of these cases, you had a, you hit a wall with your users at, you know, at age 13, 12, 14, somewhere around there, where suddenly what was aspirational for them wasn't playing the children's games on their existing children's platform, but graduating, if you will, to play Xbox and PlayStation games or PC games with their older siblings or with friends or whatever. And Roblox has navigated that graduation problem pretty defiantly. - Yes, yes. - Yeah, and it's worth, it's worth calling out, and just also COVID within all of this, which is, maybe it's rate accelerant of Roblox. You know, I think it's the Dow pre-COVID was 19 million, and by Q4 2020, Dow was already up to 42 million, and then, you know, a year later, they IPO at 41 billion as a company. And so the really important part to call out here, though, is like, unlike almost all of the other, you know, hot companies during COVID that saw this rapid growth, you know, were pulled forward, there was all sorts of narratives during COVID. Roblox actually just kept sustaining and kept compounding. Like we said, you know, they're now up to 144 million daily active, and it's clear that like they're continuing the compound where a lot of the companies that benefited from COVID just really fell off. And so maybe just another nod to how strong the network effects actually are here. Yeah, and by the way, they're back down to that 41 billion dollar market cap, right? I mean, they traded all the way up to what 120 billion. Yes, they, well, there was, yeah, they just recently hit their five years as a public company, and the market celebrated, but basically putting them back at IPO prices, which is pretty remarkable. Well, you know, look, we're going to get to this in later, when we talk about their profitability, but the market broadly has changed its tune and has stopped really looking at software companies as revenue growth stories and started looking at them as potentially EBITDA stories. And Roblox's EBITDA story is not a good one. Yes, yes, yes. Yeah, and look, I mean, we talked a little bit of like, Roblox built this platform as a platform on day zero. And that's really what the company is. They built this virtual economy. They built a developer economy. There's so many subtle design decisions though that I think are worth calling out, which is one thing that Roblox really got right from a cross platform and even cross experience is the design of all these games and it's unclear whether that's intentional by them or just the creators copy each other and learn from each other, which is, the controls actually stay pretty fluid between each of these experiences. And so when you jump between it, you know, Blocksburg or Grow Garden or whatever it is, anyone who plays those sort of knows what the best practices are of, okay, it's gonna be joystick and AB or whatever the equivalent would be. And so those pieces feel really smart and then there's obviously the persistent avatar. And they actually don't force you to make these games with the persistent avatar or this Roblox-y looking avatar. There's different versions of the avatar that you can build with. But those have all set up sort of best practices. And so just going back to like, maybe there's some Darwin-esque elements of the platform of survival to fitness and people have learned best practices, but it's very clear they've solved what is usually a big pain point in UGC platforms. - Yeah, I think that's right. But I think it all really comes back to your point that you made early on when we were talking about this, which is when we were talking about Valve versus Roblox and two of the hot companies in the space, two of the companies that have really started to take share from the incumbents and have are really posing a problem in gaming these days. in a good way. And you made the point, I mean, we were talking about Valve and Valve has, you know, Valve strategy, obviously the platform is a very important component of their, I mean, it is their business, right, on a certain level. But it isn't necessarily like 100% of their product, whereas for Roblox, the platform is the product. And I think that is unique in gaming at the moment, right? Because you, not even the console manufacturers have gone that far, right, as to be like, okay, here's a piece of hardware, here's an open market. We're going to take a cut for this, but we're just going to let you run with it. It's like even they are making first party content, second party content, et cetera. It's like Roblox is just concentrated on the platform. And in many ways, I think that is their greatest strength. Yeah, for sure. And, you know, they can subtly put their finger on the scale on maybe recommendation or algorithm or certainly on regulations around what should be pushed or not. But for the most part, they're building creator tools and then sort of the overall architecture of how to increase network effects and, you know, actually revenue, which is so different than the mind of someone typically inside a games company. So let's look at some of their competitive advantages. I think the first and most obvious right is that it is free to play. Free to play is really the enabler and social is really kind of the engine. And so, you know, you ask the question, like, you know, how do you do discovery when you have 18 million experiences, 18 million games on your, on the platform that are just available in this mosaic on your, on your homepage? And the answer is really, you make everything free. It's like if there's ever, if there was ever an argument for free to play, it's this, right? It's like, and again, we've seen, we've seen it in other platforms and other social consumption platforms. It's like free is really, really important. It's that low barrier to entry, low switching costs. Get in, we'll try it. Do you like it? No. Like, in many ways, the, the app store has historically function in this way, although as distribution on the mobile app stores has gotten more attenuated and more difficult and more expensive, this, this behavior has diminished in terms of its importance. And the early days of mobile, it was like download 10 things, try them out, then stick to playing one of them for a month or so. And maybe you start to monetize and it becomes a habit or whatever. Here you have that, like at scale. Yes. And well, there's, you know, you just called out the important piece, which is normal narrative within games is, I don't know, the top 10 games have basically stayed the same. And, you know, everyone's sticking to their same five games that they play for life. And Roblox is like completely showing counter to that, which is, in the Q4 earnings, they actually say that users are average 24 unique experiences per month. And that's a double digits year over year, which is just, that's a, I can't remember the last time I played 24 different games on Steam, for example. Like that, that's not a thing. I think I'd ever play it. Is it more than 24? Yeah, exactly. Yeah. I don't know if I've ever played more than 24 games. And so the long tail here is just so, so interesting as an unlock. And obviously that necrates a bunch of flywheels. But I think it's just worth calling that out. And you add social on top of that. And that was really turbocharged during the pandemic in the sense that, you know, it didn't just function as the virtual playground during the pandemic. It was the actual playground. It was the only place that you could, you could hang out with your friends. And I think that social component, you know, that your friends playing something, you can play it for free. You see something new, you tell your friends, or eight, that whole dynamic. Because a lot of, I mean, I remember my kids, particularly my youngest, was really a Roblox kid. And she would really go in and hang out and chat almost with the game being a side show. Like it was, it was a lot like, like the runescapes and some of the other games from the early 2000s that were hangouts. Yes. Yes. And it's worth, it's worth calling out that a lot of the narrative of these users being young has been a like bad thing or, you know, for X, Y and Z reason. And I would argue in this case, like them being introduced to a platform where everything is free and social in games is, that is a really hard thing to combat when, you know, someone selling you, hey, go buy this council and go spend $60 on, you know, call of duty or something. Well, no, like, what do you mean? I have, I have free and you're already on here. All my friends are on here, which is just a completely different mindset for, you know, your average gamer, especially if this is how they're being introduced to the world of games. Agreed. So all of this leads to a really interesting distribution story, right? Which is, you've got tooling on the platform, which is not unique, right? Unity provides tooling, UEFN and Unreal provide tooling. Microsoft provides tooling in a manner of speaking. The platform, you know, there's SDKs for the, for the consoles, et cetera. That's not that unique, but it's the, it's how broadly distributed these tools are within the community, right? That you get nearly 5 million users who are capable of making product. Now, obviously some of those experiences are probably worth 10 seconds of your time or less, but nevertheless, that, that, that, that enormous sort of bottom of the pyramid is really, really useful because it gives a lot of people their incentive and hope that they can start climbing up that pyramid. And in many ways, it's not dissimilar to the way that some of the sort of social content platforms function, which we'll get to later in this podcast because I think it's really, really interesting to think about them and to think about Roblox in that way. Low-barried entry to making content, broadly, broadly accessible tooling, broadly accessible creation engines and off you go, right? And so you get all, you get all of this content, all of this fresh content constantly. And again, like we said, most of it is probably not worth the, worth your time, but some of it is. Yes. And, and, and, and it's also, you know, this might be a provocative top, but it's actually one of the only ways as a, as a new indie creator, actually, this is, I actually feel pretty strongly of this as a, as an indie, it might be the only platform in the world where you can launch a free-to-play multiplayer game and that launching a free-to-play multiplayer indie game on steam, for example, is you're taking a lot of risk and it's unclear if you're going to ever solve discovery or mobile, surely that's not going to happen. Or even, or even the live services piece of it. Yeah, yeah. Yeah. And so, it's kind of an infrastructure that's required in order to run a multi massively, multiplayer online game. Or, yeah, even if not massively multiplayer, multiplayer online game at scale. Yeah, even just spinning up a, a, a, w, s servers and like, and, and several blocks solves all of those pieces just from an infrastructure side. They also help you solve the discovery side. And so, a part of me is just like, wow, okay, like structurally, that is a really amazing, thing that should continue to compound where if we know free-to-play is one of the main ways to solve distribution, while they also are aggregating all the users, I would also maybe argue that you're, you have the highest chance of getting 100 people to play your game on, on Roblox versus releasing that just blindly on, on steam or blindly on, on, like, if you, if you just put a game on, on steam or you put a game on, on the app store, I could almost like guarantee you will not just get a thousand people in your game, but, you know, a month, whereas I, my guess is on Roblox that will be far closer to actually getting a thousand people to try it out. Yeah. And because of the youthful audience and the scale, you, they, they also have essentially what Minecraft had on YouTube, right, which is this sort of external community of people reviewing people, pointing in the direction of interesting content, people sharing their play experiences, people doing tutorials in linear media, right? I mean, they have, they're creeping up between YouTube and TikTok on the Minecraft number of a trillion video views. Yes. Yes. Yeah. I think there's, there's a crazy stat, which I actually forgot to put in, in our outline, which is one in five videos, gaming videos on, on TikTok is actually a Roblox related video. Yeah. Doesn't surprise me, actually. Which is just incredible. But again, like we're describing a platform. And so it's, it's, you know, there's, there's so much content that you can create around this and that, you know, it's not that different than Minecraft in that sense. But again, they also have a discovery engine. They also can put their finger on the scale of recommended to have social elements. And so you can automatically go and see what games Mitch is playing if your friends with him and jump in with him. So those pieces make this all compound in a really interesting way. Yeah, we're going to talk about this later, but you think about the advantage that Minecraft had in that pre-COVID period. You think about the advantages that UEFN has, has attempted to create on their platform, which is, you know, mimicking this in, in a lot of ways, but obviously in a, with, for a different user, potentially, and with a lot of different content intentions. Nevertheless, it's like this one is winning at a level that's not even, I mean, the other ones are not even close, right? Yeah, they're rounding areas relative to Roblasa scale. And it's really a shame because like you think about the inherent advantages that Minecraft had in those early days and yet their inflexibility around things like the, like free-to-play, for example, right? Where they stayed a 26-year-old product forever, right? That it was in us. they never. never really folded the server economy and the mod economy into a more unified platform. And then Microsoft steps in and buys it in a splashy way, but then orphans it in a lot of ways inside of the organization. And like they just lost all of the competitive advantages that Roblox accrued. It was really unfortunate in that regard. And we'll talk a little bit about UEFN later. They had their own issues. But just the way that these reinforcing competitive advantages have really brought Roblox to the forefront of the industry is I think the big story. Yeah. And I think a lot of it comes back to this free to play and distribution piece of the built the right tooling. But not to our own horn, but a lot of what we've talked about in the past three years is how do you solve distribution? How do you get people to your platform or to your games? And Roblox has surely figured that out almost better than anyone. Yeah. I mean, we've talked about it. We talked about an episode a couple of seasons ago about the game enabling platforms, right? The app leavens, the discords, the companies that don't make games, but that are really important in the value chain. And I think Roblox is sort of the alpha predator of that group in terms of just the number of competitive advantages. And for a company, again, one of the most important companies in the games business does not make or publish games. Yes. Yes. Well, we've talked a lot about maybe the bull cases. And I know you tease that we're going to cover some of the bear cases here as well. Oh, yeah, let's do it. I think it's worth calling out maybe some of the few of like, why is it still a $40 billion company in the public park or why is it back to, let's say the IPO valuation? And there's a lot of smart people that have very strong views on why they resist this thesis. And so I think it's worth calling out and talking to a couple of those. Absolutely. I mean, you want to start or you want me to start? Yeah, yeah. I think the one common one would be just like, is the quality good enough? And can these compete with AAA quality games? And I don't know. Because of the way that Roblox games look and feel, well, they ever compete with an Alden Ring or GTA. And I think you and I both probably have our own views on that. But in many ways, I think those are completely different personas. And my view would be closer to Roblox is because it's going to just, the tooling should get better and better and the technology behind it should get better and better. There's no reason why you shouldn't have GTA within Roblox. It might not look like GTA, but for all tense purposes, like it should feel like this massive open world where you're doing whatever you would do in GTA. But usually I think this gets brought up as a sort of a subheading underneath the graduation problem to a certain extent, which is like, are you going to have content relevant enough for teen, later teens, young adults, adults who may not be attracted by the kind of amateurish graphics that is charming to children, potentially. I mean, that's kind of the negative case that people make about it. And I would say two things to that. One is, a, they're getting a lot better at the high end, right? And I've seen shooters and racing games and other stuff pitched to me that are Roblox native that look, okay, maybe not, you know, as good as the AAA, but certainly AA or A or whatever the next wrong of that chain would be. So I don't think that that's necessarily going to hold them back on the one hand. And then the other thing is, as we've seen, the taste of the community has really changed, right? And the last five years, I feel like the willingness of core gamers to play games that look like throwbacks, that look retro, that look like games from the 80s or the 90s or whatever. And in both a combination of nostalgia, but also in a way of like, hey, let's get back to what's really important, which is gameplay. Let's strip out all of the bullshit, like all the graphics and all of the cutscenes and all of this other stuff and really just get back to basics. And in a lot of ways, it may be that they, like we said earlier, they're lack of quality. And I don't really mean that in the way that it sounds. But the fact that it doesn't meet AAA standards of quality may not matter. It really may not matter to the end user. Yeah, and look, it's actually sort of funny you call that the right thing, which is, I would argue the graphics isn't really constrained of the engine. It's actually just a revealed preference of the community is like, okay, we want these at other games and look and feel like other Roblox games. And so, yeah, like even I both see, you know, call a duty, maybe that level of call duty, but certainly looks like and feels like called duty. And you know, it hasn't really resonated with the community, which is, again, it's all the starwind within this. And I do think it's a lot of what you're saying, though, is the revealed preference here is they don't really care and they're used to it. I think another piece calling out here is I've talked to a few Roblox creators who have sort of blatantly copied breakout indie games on Steam, where maybe they innovate on some specific play pattern. And you know, that's a $5 or $10 indie game, that's single player and they'll just bring it over to Roblox. Have it be free to play in multiplayer and run it like a live services game. And they're making more money than that other indie on Steam, which is again, like the revealed preference is they'd rather have to free. They'd rather have to multiplayer. So interesting. Okay, let's talk about another element of the bear case. And that is the grinding friction of the creator economics, right? Which is something worth talking about because for if you're a developer out there listening to this podcast and you're like, oh, wow, this thing sounds amazing. I need to jump into this with both feet. It's like, you might want to take a listen to this next section because if you think that the app stores are bad and that, you know, Epic is kind of quick, so I can glorious battle against Apple and Google to open up the the app stores and change the economics at a 30% rate. The 30 like creators within the Roblox economy would dream would would long for those economics that you could get on those other platforms that we consider outrageous. This is the highest tax gaming platform that I am aware of. And it's interesting because it's highly obfuscated, right? It's very difficult to unpack on a micro level what the payouts look like, right? They claim that it's a 70 30 split. Yeah, that's where we start. And then we start to keep taxing for a long time. So I think really when I look at the creator economics, what I look at is gross payout and gross revenue. Gross revenue is roughly five billion gross payouts, roughly a billion five, which means it's roughly a 30% payout. So it's the flip of the normal economics looks more like packaged goods publishing economics. It's 30% to the developer, 70% to the platform. Now why is there that distinction like why is that why can Roblox on the one hand claim that they're paying 70 30 and yet when you look at it from 40,000 feet, they're paying 3070. So let's get into it. Yes. Obviously, you have the biggest problem. And I think the biggest thing that most analysts miss when they look at this company and look at its long term prospects when they're analyzing the economics of Roblox because ultimately remember that Roblox is a virtual economy like, wow, like a lot of these sort of old fashioned virtual economy type games in the sense that everything in the world happens in Roblox, right? You get paid as a developer on the platform in Roblox. And you need to ultimately convert those payments, those Roblox payments into fee out currency at the end of the day in order to get paid in, you know, pay your mortgage, pay for food. And that conversion is taxed, right? And there's many other little subtle taxes that are that you pay through this process, which net you down to that sort of 29 to 31% that is typically people typically sort of cluster around when they say what their actual take home rates are from this platform. The lock into the Roblox currency is so brilliant on the one hand as a business strategy because it provides such an enormous incentive to spend the money that you earn on the platform. So for all but those 30,000 developers, 29,000 developers that you mentioned at the beginning of this episode who are in their their DEVX program who are really probably taking out really meaningful revenue, right? In some cases, life changing revenue probably from this platform for the other 4.785 million people or whatever the number is that are that are making games on the platform and monetizing them in the in the tens of dollars or hundreds of dollars, that money is not really coming out of the platform probably that money is probably staying on the platform and in a lot of ways it's this is going to be a little bit controversial, but it it feels like kind of you know, early 20th century sharecropping. It's like you got you get paid in script and you have to you can only spend that script in the company store. And so you're recycling this you know, you've got a false economics at work essentially in here because you're not really seeing the output of your labors in in the coin of the realm in US dollars or euros or whatever it is that your local currency would be. And therefore that lock in and that ability to keep those dollars inside the platform and rather and not leaking out of the platform. And you combine that with the fact that they have on various occasions change the exchange rate between row bucks and fiat currency. That's just a double whammy because that gives you the proverbial, you know, if they could ever really get profitable, that gives you an incredible earnings drawer that you can go to right in the future where you can where you can really modify the economics in real time because you're playing with a virtual currency as opposed to with a fiat currency. Yeah. And look, I mean, it's it's it's worth calling out still though that like despite all of that, I mean, we know this is very Pareto driven, but despite all of that, you know, the top 1000 creators still I think average 1.3 million in 2025. And so despite all of that agreed just take rate to still if you're if you have a if you're a top 1000 creator on Roblox, you're making a million dollars a year, making these games. Well, I would I would both celebrate that on the one hand, but also say like look at Zekers, right? So Zekers was a young man who grew up on the Roblox platform and in his early, his late teens early 20s was making games on Roblox and decided to go off Roblox to make lethal company and he didn't make 1.3 million. He made probably more like 130 million. Yes. Yes. Yes. And I hold 11 million copies. So yeah, that sounds about right. That's the risk here, right? And I think that's the fundamental risk to Roblox, which is that, you know what, over time, they've got to add they've got to continue to curate and add value to the platform such that the value to the creator for being on the platform exceeds the value for being off the platform, right? Because as these developers mature, they're going to have the option to make games for steam, to make games for PlayStation, to make games for Xbox, to make games for mobile phones. And Roblox really needs a way to keep them on the platform. And I do think that that ultimately, I do think that there that you see it enough in analyst reports from the really smart analysts that that is a concern. And I think that Wall Street has out there that they're not going to be able to preserve these economics forever. And that, you know, that they're that the 30% of gross revenues that they've paid out is going to be an increasing number, which is going to start to eat into profitability if they ever reach profitability. Yeah. I think it's, it's a really good thing to call out. And, you know, on some level, it's actually interesting. If you go and follow Zekers, you know, really experiences that he made on Roblox, they were these horror type content games. And, you know, they've reached some level of scale, but not anywhere near lethal company scale. Right. And there's, there's a question of like if Roblox had had maybe realized the potential of this creator early on or maybe of that genre, should they have been been promoting him more and is that to discover a problem or, and would he have stayed or is that just, you know, simply Zekers is more in best practices and had ambitions to be an indie dev. And this is like a, it brings up a lot of the, you know, what do you actually aspiration I want to do on these platforms? My guess is a lot of these Roblox developers start on here without fully even realizing they're making games. You know, like they're, they're sort of having funds, you know, just doing it with their friends. And then at some point it becomes much more of a real real business for them. Yeah, but the tilt, I mean, if it's true that the top thousand average 1.3 million, right? You have 1.3 billion in revenue that's accruing to that group, which is a pretty strong, you know, for a thousand people, a thousand out of 4.8 million are making. Yeah, yes, yes, all for a day. I mean, it's like extreme. For a day. Yeah, it's a third of the revenue on the platform is essentially being generated by a tiny percentage of the, of the developers. And so one would think, and I think that they have done this, right? Because they have announced, like for example, that they will play around with the exchange rate for their higher end developers. Yes. So they do seem willing to engage here on a certain level. But being that dependent, that a third of your revenue is effectively coming from a thousand developers. One could view that as a risk. And I think Wall Street does view that to some extent as a risk. I think the bigger risk we'll get to next is the safety and moderation risk. And that is something that all platforms that are, that are open to children on one, in one form or another face. And that is the looming regulatory change that will bring age verification to the table. Because if it's true, and I don't know, you know, again, I haven't seen the true demographics of Roblox, but I would assume that a third of them are under 13. Yes. They actually, they successfully rolled out persona on the age verification side. And so it's actually fully live on the platform now. So the Q4 number is. But just within the last 45 days, basically, I mean, it hasn't been done for a long time. Yeah, yeah. So it's, we will have more data on maybe just the verified stuff very soon. But like, for example, when I went into Roblox the other day, which I hadn't played in a while, it made me take a selfie of myself and guest my age. And so they're definitely trying to lean into it. And, you know, it is, it will be interesting to see the like age verified numbers that come out with an earnings that's presumably in Q1. I mean, look, it's, it's, it's very important that this happened. I mean, I think these age verification is a necessary thing. So don't get me wrong. I don't, I'm not arguing against age verification. I think it's really important, particularly on platforms like this where there have been a history of predators. And I'm sure it's a very, very small number of, of real incidents, although one never knows, right? It's like a lot of these things are probably, you know, litigated confidentially and like, you don't really hear about them or whatever. But like, it is a problem. And it's something that we really do need to, as a society invest in. And so I'm glad that, that this is happening. But from a financial standpoint, it's going to result likely in more friction to on-board users and, and maybe a loss of users, maybe not even at the margins, maybe more fundamentally than that. And it'll be interesting to see when they have to report whether it's this quarter, next quarter, they're sort of fully age verified DAU and MAU. And again, not no financial advice here, but like I'm looking at it as a potential buying opportunity because I think if they come back with, you know, a 10% or 15% like MAU drop as a result of age verification, it's going to hammer the stock. Yep. Yep. And look, I think it's, it's a lot of the narrative that they've been, been telling the street is like, this solves a lot of core things over time where, you know, interior dis makes this way more social. Oh, no, no, no, no, they're absolutely right. The long term benefits of age verification far outweigh the short term hit. But I'm just suggesting that the short term hit will have probably happened. Yes, yes, yes, yes. I, and I think that's right. And look, it's unfortunately the double edged sword of having, you know, 33% or whatever the percentage of your DAU under 13 is, it is a real risk. And you're going to be under a lot of regulatory scrutiny. And, but it's part of what makes it a little bit of a moat over time as well, which is, there's not easy stuff to deal with. This is real issues. And yeah, so I understand why Wall Street is hesitant and look, there's talks of it being potentially banned and Philippines and all these places, which again, I get, I understand what's going to happen. But again, just to reiterate, it's, this is, there's, it's the reason that this is so important is because they're so dependent on 13 under 13s, right? Yes, it's like, we're talking about more than a third of their users and the fastest growing segments since 2020, right? Yes. Are, are under 13 year olds. And I think that combination, right? It's like, it's their growth engine. It's their, it's the bottom of the pyramid. It's where they're getting people in and habituated and on the platform and spending through their parents' credit cards, at least initially or what are through gift, gifting Christmas cards and, you know, store value cards. However, they are highly, highly dependent on that, on the young market. And as our government, I think correctly, makes it more difficult to, you know, deal with underage users on your platform. It's going to make, it's going to have a big effect on them and they can, they can hand wave it all they want, but it's going to, it's going to happen. And again, as we both said, it's the, in the long run for the better. Yes, yes, it is, but it definitely is short to medium term disruptive. Chaos, yes, yes. Let's talk about the last bit and then I want to get into a couple of, because we're going, we're going, we're going long, but I think it's worth it in this case because this company is so interesting and has so many different angles. I mean, look, we could, we could, we could do probably like four hours on this, on this company because there's so much to tell that we, we, we haven't even touched on. But the, the other part of the bear case that I think is worth addressing is the profitability issue, right? And I think it's really interesting because for a number of reasons, first of all, just to reiterate, Roblox has not generated a gap profit gap for those of you don't know is the generally accepted accounting principles. And it is sort of the gold standard of conservative accounting. If you've ever seen those sort of bullshit charts where they're like, you know, if you have cash profits, you report cash profits. If you don't have cash profits, you report revenue. If you don't have revenue, you report number of users, you know, that, that sort of cascade of bullshit. [BLANK_AUDIO] This company has a cascade of bullshit because they do not generate a gap profit. They in fact do not generate EBITDA profit either, right? I mean, they do not, they're, even they're adjusted earnings, if you will, which is always a worth worth unpacking when you see that, that term used in a financial statement. Their adjusted earnings are not actually that good either. I mean, they lost about a billion dollars, 1.13 billion, right around a billion, billion one in 2025, both as a net loss and as in their EBITDA loss. So not good on 4.9 billion, right? So they're still spending, they're still spending a lot of money. And you know, some of the bulls point to their decent cash flows, right? They did 1.3 billion in free cash flow and 1.8 billion in operating cash flow in 2025, which look like good numbers. But I wanted to suggest that they're not that good, right? In the, in the following sense, I think that they are hiding the fact that this company has one of the most outrageous stock based compensation numbers of a public company, an early stage public company that I've seen. I think maybe Twitter back in the day was worse. But like this company is an absolute pig in terms of its use of stock based compensation. 23% of revenues, 1.13 billion in stock based compensation in 2025, up 11% year over year, and 23% of revenues for the period. So you think about that. If you don't, if that makes no sense to you, let me try and explain why that's important. The reason that's important is because what they're essentially doing is instead of paying cash to people to their employees, they're giving them stock in a hot company. And that stock is increasing in value. And they're able to retain their employees with this wealth creation because they've got, because their stock is functioning and because they're able to grant what was last year, 4% dilution. Essentially, they diluted their entire shareholder base by 4% in order to transfer that value to their own employees and not pay them the equivalent amount of cash. They paid that equivalent amount and cash last year. That cash flow number would have dwindled to a couple of hundred million maybe, right? It doesn't look that good if you assume that that cash flow is being juiced by stock based compensation. And so look, it's a minor drag on the share price, but it's a major enhancer of what looks like a good cash flow number. And I think I would just caution everybody to read between the lines on that one because that cash flow number isn't pure. That cash flow number is taking the steroids of stock based compensation pretty heavily. And when the stock cools off and they're forced to start shifting their comp more towards cash as all growth companies ultimately become value companies over time, as that shifts and they start to have to pay more and more cash to their users, that's going to start to be a drag on that cash flow number and a drag on earnings. And it'll be really interesting to see. I would have expected at the scale that they've already gotten to five billion in revenue that they should be gap profitable, at least in, at least, you know, like Amazon used to be, you know, would come to the table and be gap profitable. Like it's tiny, tiny amount just to show Wall Street that they could. And then they would go back to losing money, investing in infrastructure, et cetera. I think this company needs to sort of prove it to Wall Street before they kind of get the benefit because at the moment they're trading it, what we'd looked seven, eight times revenue. Yeah, about eight times. And, you know, revenue multiples are bullshit. Everyone knows that, but they're interesting because they've been such a constant in the game's business over the last 20, 30 years that a lot of companies trade either publicly or privately in the kind of five to seven range of revenues. And the fact that Roblox is trading at seven, eight times revenues, which looks like the high end of conventional is kind of outrageous, right? Because this company has so many inherent advantages. And the fact that these competitive advantages are not showing up in the PNL. And again, Dave may come on here and say, dude, we're investing in infrastructure and we're going to, we're, it's a 10 year plan. I get it. But 20 years in, I'd like to see more drop into the bottom line. Yeah, I mean, I think for sure the pushback from either a bull or from Dave would just be how much they're investing in R&D technically. And, you know, when you and I both know that line item, you know, there's a lot picked into what is R&D, but certainly seems like allocating towards data centers and a lot of that infrastructure. And so, you know, maybe different than even even a traditional game studio. They're actually rolling up their own data centers. They're, they built a lot of their own infrastructure. But I am 100% with you. I mean, whatever. It's like, make a profit. Let's turn and look at a couple of examples of kind of crazy shit that's happened on Roblox over the last year or two. Because again, I think for the users who have, or the listeners who haven't been either Roblox users or have not been paying much attention to this platform, I think you will be startled by some of the numbers of some of the games that have launched over the last 12, 18 months on the platform and what they've achieved. So you want to jump in your little closer to that? Yeah. Yeah. There's two games that certainly, you know, if you have young kids, you would be familiar with that have just completely sort of taken over anyone under 18 has heard of these games. And those are Grow Garden and Steel of BrainRot. And those were the two big breakout games for Roblox last year. Grow Garden is, you know, for the older generation, almost farmville-esque, very simple social gardening trading, buying game. But there's some really smart mechanics that I think are worth calling out in it, which is they really lean into socials so you get bonuses when you invite your friends. And so you can earn more and earn faster when you have friends in your lobby. And the other thing is the shop refreshes every five minutes. And so you're almost like forced to stay in there every five minutes because it's RNG of what random fruit or vegetables going to show up for your garden. Yeah. It's like these weekend drops that they were doing like Saturday morning drops. I can't remember like it's replacing cartoons for young children, right? And like it from my era. And they're, they were getting these crazy concurrencies. Like they would, because the drops required you to be there at a time certain. Yeah. So, so you're bringing up this like really emerging part of Roblox that the biggest creators have sort of discovered or invented, which is, they call it admin abuse, which is this idea that the creator or the admin actually joins the game at a specific time. Maybe they post on TikTok or Discord or wherever that they're going to be in the game at a specific time. They're not really in the game, but they write a script and mess with it. And they basically give away the rarest items. So for for grow garden, the big creator there was a name, Jandal. And he posted on TikTok early on saying like Saturdays at 12 p.m. Eastern time I'm going in and I'm going to go and do admin abuse for five minutes. And during those five minutes, he'd go and give away basically all the rarest items. So if you wanted to ever get access to those rare items, you needed to be there. And that's how you end up with what they peaked at, which was 22 million concurrence. And for context, Fortnite's peak is 15 million concurrent players. And so we're talking about a singular Roblox game, just completely breaking, you know, all, all conventional records. I don't think it's totally meaningful, but I do think that it is a bit of, it's not apples to oranges, but it's sort of like green apples to red apples or something like because the Fortnite concurrence are actually people playing Fortnite. Whereas I sort of looked at the numbers and the concurrency reports for Roblox are not entirely in gate like you could be in the lobby waiting to go into the game or whatever and still get counted as a, as a concurrent, but regardless, it's a huge, huge number. Yeah. And look, obviously, it's also than 5%, but you know, it's a huge number. And look, the nature of those games are obviously completely different as well. And so it's, it's, it's definitely not completely apples to apples, but I do think it's more of, to me, the most interesting aspect of that is, is around this like admin abuse admin more thing that happened, which was, you know, actually, that's a twist on live ops, you know, in the traditional sense of how you and I would think of live ops is, you know, make it Christmas edition and make some skins and blah, blah, blah. Or maybe even closer to like events, right? Yes. In some of the MMOs where like, you know, that where they, where they, where they have these sort of, you know, global events that take place or whatever, like these function almost in that way for the, for the, for the user base. Yeah. And so like, I don't know, Travis Scott Fortnite, you know, is one, one very extreme version of that. Whereas this is like the equivalent of Elka from Supercell joining a Clash Royale game, you know, and being like, Hey, here's, here's your like, you know, free skins or free items. That really like blends this playground and stage elements that you and I have talked so much about. But in this sense, it's actually making the creator a real celebrity, you know, jandled the creative grow garden as 10 million followers on TikTok, which is sort of unheard of. Like he's like a true star and people want to figure out when he's going to go and what, what his next game is going to be and, and his create a whole bunch of leverage on that side. Yeah. You had steal a brain rot, which even the, the, the, those concurrencies, what you describe that game a little bit. Yeah. So still brain rot is this like even more funky version of this world and, you know, brain rot is sort of play on this meme culture of Italian brain rot where I can't even go down that ramp. But yeah, it's using this like sort of open IP out there in the world and almost a collector game But a little bit of PPP you actually let's say Grow garden is very just like single player, but you're in the same lobby as others steal brain rot is true PPP going compete with other people you can actually take their their their items and that game really broke the concurrence at 25 million concurrence And that actually happened on the day where Sammy the creator of steel brain rot and jandled the creative grow garden actually went to war on you know on social media and Discord where their community sort of Chose which one they want to support for their admin abuse they both ran at the exact same time on a Saturday And that's when they fully broke the Roblox concurrence so overall Roblox concurrence at 47 million and on that day And that was in August of 2025 which is a cool which is more than the Travis Scott concert on Ford Yes, yes, yes, I mean 47 million concurrent users is insane and you know sort of kudos to Roblox that nothing really broke You would assume that at some point to scale all the servers which is melt But they were able to handle it which is which is pretty remarkable Yeah, I want to talk a little bit about the discord connection because we saw it on our end, right? Yeah, yeah, discord and that was that you had 20 million when they flipped the switch and they they told their users to go into into Roblox On to the platform and into these various games where they which achieved this four put 47.4 million concurrent user number like 20 million of a migrated over from discord like in like at once, right and and it is interesting right It's not widely known, but discord is the largest supplier of inbound links to Roblox on an ongoing basis, right that more than Google more than TikTok more than Instagram Which are larger platforms, but the but discord supplies the most inbound clicks to disc to Roblox and vice versa is also true that Roblox is the most likely click out of Roblox Yes, that's crazy, which is kind of interesting Really interesting so all good. I think Let's wrap this up. I think we've gone long enough We there's many other topics. We'll come back to some of these things like throughout the season I think you know one of them is the is the launch of advertising. There's been recent movement in the form of Roblox stepping up to kind of broker big brands I mean, I know I've talked to a lot of big company big IP holders You know the sort of Disney Warner Brothers level film company etc Who really want access to this to this Roblox audience and opportunity to get in and sort of you know get their content in front of Impressionable children if you will at an early age And it's very difficult for them because they they are subject to the same kinds of Frictions that independent developers on the platform are under right there is no first party So there is no really sort of premium launch area that they can that they could you know the velvet rope that they could get The Roblox management team to build for them instead what appears to be happening is is that Roblox is going to do these licensing deals And then they're going to federate that content out to select developers and share revenue With those developers, but it is interesting because it comes with a concurrent ban on use of third party IP by Come by those independent developers right or at least a At least an attempt to do that and so I guess it sort of further reinforces this company store mentality of You know everything is really a crewing value to Roblox the the the organization and the developers are kind of you know working for what they can get Yeah, and look I think from a Roblox perspective you could you could argue all day that you know them controlling the IP and Being the people to deal with these brands is incredibly beneficial at long term But it does cause a lot of uproar from the individual developers who maybe we're brokering these deals on themselves You got that going on you do have the the ongoing challenge from ufn the the fortnight creative and fortnight creative and I think We'll see how that plays out. I don't think it's really that meaningful right now although you know the the fortnight ufn community is growing and But it you know it's still very much smaller in comparison to to Roblox and The the variety of games that you see on Roblox is still not really there on ufn at least to this point So I do think that is worth watching Yeah, and I and and I think you know there is a there is a moment if there was ever a moment for Roblox to be vulnerable at least in the current scale they might just be around the eye and and games creation and you know how fast they they move into that or not Because there will certainly be quite a few startups that I've already seen Pitching the try and go after that side, but again, I you know Roblox scale is so massive that it's not quite a Something they should be a little something that alarm on yet and the last sort of potential little area of growth Not a little by any stretch, but the last the last one to look at is China. Yes Looks like they're poised to go back into the market through 10 cent yes Yes with a with a ref roughly even split and we'll see how that goes Obviously that gives them a much much bigger addressable market may bring more restrictions and regulation on in terms of the way that they can Approach the users in China. We'll see, but it is a potential step function in terms of their growth Yeah, and and and they just continues to be signs that that is that is happening so I saw a job posting yesterday that that someone posted from 10 cent where it's actually was like a Roblox publishing manager that Ten cent was hiring on their careers page and so just all signs are pointing towards that that is that is coming to fruition Cool. Well, let's wrap this up by Kind of drawing an analogy. I think this is you know when we're at the very beginning of this episode we talked about the competitive advantage that they have from combining this like ease of creation on the one hand This you know ease of publishing the user aggregation the monetization and even the play experience into a single platform and we talked about how we haven't really seen that at scale anywhere ever in the games business before And we started to think about places in the rest of capitalism where we potentially have seen this happen and you mentioned And I think I agree that YouTube may be the most apt comparison here, right? Which is while they didn't they weren't out selling cameras they weren't out like you know They weren't developing that that part of the market that part of the creation end of the market They did have tooling Editing tools and and publishing tools and transcoding tools and other things that took advantage of the fact that they could rely on Their user base or a large percentage that are user base either having access to cameras or having a camera in their pocket That they could film content on that could be uploaded So they had this ability to this ease of creation sort of inherently in the system number one number two They had the play experience captured because you're watching those videos either on youtuber on youtube and beds that they're getting Advertising credit for which is their monetization engine and then that's the third tier right the third piece of the puzzle Which is that they have monetization for their users and that aspirational American dream thing that you pointed to earlier in the in this podcast of you know these that anybody could become a star on the platform and Also the the the fact that they opened up the creative content to such a much broader variety of games experiences Like YouTube Which you know we always joke about the fact that like if you go back to 2005 and you told somebody that Unboxing videos would be a multi billion dollar business advertising business on On a on a linear media platform people would have laughed at you and yet that occurred and so that same opportunity really Exists there for roblox as well and then of course the user aggregation and Again like the video game business you go back to 2005 2006 and you'd look at you talk to tv executives and they didn't take it seriously They were like it's a piracy platform youtube. We're talking about it's a piracy platform. It's Amateurish content who's going to want to watch people in their bedrooms talking into micro into cameras and microphones Well, the answer is billions of people and you know, so That same dismissiveness that we heard from linear media executives back 20 years ago about youtube We're hearing or we heard over the over the many decade of the several decades that roblox has been in existence about roblox right? It's very very similar and You know right now you look at the linear media landscape and youtube and netflix are the Like top of the food chain right those are the companies that are growing that have aggregated these massive audiences They have like they've eaten television right television netflix and youtube are essentially a proxy for television as we as we speak It's like all the other stuff pcock and paramount plus and hbo and all the other stuff is a rounding error compared to the scale of netflix and youtube And I think you could look at valve and Roblox as being kind of the netflix and youtube of games and if that's the case That's pretty scary because the amount of light that they've sucked out of the universe in the the youtube's and the and the netflix is in the linear media space If that starts happening in the games business That's good. That's that and I think it is happening by and large Yeah, I couldn't agree more with everything you said. I mean, you know roblox today is 3% of the gaming market and it's going to be fun to look back at this episode a decade from now. and see where it is because all signs from my perspective really point towards the flywheels are spinning. Yeah, I wouldn't be surprised if it's double digits in a number of years. So, they represent a meaningful piece of it. You look at Valve and Valve's revenue and I think Valve have seen some analyst predictions. Nobody really knows because again, it's obfuscated behind the private company. And it's probably 7-8% of the video game business, right? So that kind of makes sense. You know, 10-11 billion top line. So yeah, really interesting time. So again, hopefully that this has been somewhat enlightening for those of you who didn't know that much about Roblox. It's a fascinating company. I really encourage people to dig in a little bit more and particularly in this highly chaotic time in the video game business, I wouldn't necessarily look at Roblox as an easy way to make money, but I think with appropriate study and with the appropriate ability to kind of go native in that environment, there are opportunities and it is worth looking at. And I think, you know, if those creator economics in particular shift a little bit more in the direction of creators, it could be really attractive platform. I couldn't agree more. And yeah, this is fun. And I am a huge student of the game here. And for me, Roblox is one of the most interesting companies in the world, not even just in gaming. That's a view I definitely share. All right, Blake, thank you so much. And we'll be back next week with another episode of GameRound.