Roblox replaced a stale subscription with a creator economy

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 37:45

   And so this keeps marching on. And then finally we say, OK, how can we start making some money on this thing? It's growing. We have costs, all of that. Interestingly enough, this is another example of we had a big intuition around virtual economy. We said, we can get this out a little faster if we build this club membership thing. At that time, Club Penguin had a club membership. Can we just charge people five bucks a month or something?

2. 38:22

   So we worked on that for a while. And so we had this thing called Builders Club. It was kind of fun. We started monetizing. Exact same thing as when we started. We had this really fun moment where I was on a camping trip. and um i could i could check in how many people are buying builders club every day first day it was five and then it was four then it was six then it was three then it was eight then it was 15 so we're like okay we're monetizing this is great um and so um builders club keeps going and then for about a year or two um because it was working so well wow it's just all viral growth viral builders club is starting to work. Let's just keep working on the system, making it better and better. It was interesting though, just like in the early days when we started the puzzle game and then said, finally, the market has shown us that's not the ultimate system. Let's build what

3. 39:20

   we really believe. Something very similar happened with the builders club. And we entered this interesting period where user growth was going like this, but revenue and bookings was kind of going like this. And so what that meant is Builders Club was getting a little old and stale. And for the wider range of users, it was really not the right thing. And in retrospect, it's funny because when we started the company, we used taglines like, you make the game. And that's a really good early tagline, it's ask inspirational, everyone's making games on Roblox.

4. 40:03

   It's definitely not the reality of, you know, a billion users. And in a billion users, communication for many people would be very important without having to make a game, you know? There's a lot of people that just want to show up and play something. Yeah, I think right now you said, the last number I saw, you have like, I don't know, 150 million daily active users or something, 140, whatever the last public number was.

5. 40:29

   Out of those 150, how many are building games? 150 million. I don't know if we give out our latest Roblox Studio numbers, but it's definitely a lot of people, but it's not 10 million. It's one or 2 million. And I would say the good news is that vision may actually return because I do think over time with AI acceleration and all of the things we're working on, just like maybe in the very early days of video or YouTube, was mostly consumptive.

6. 41:00

   There was a little bit of this early, you know, creation. And then with short form video, I think we've much more, everyone's starting to make videos. I do think there's that potential for something like Roblox. Yeah, especially if they can do it in natural language. Exactly. So along the way, we kind of had this revelation that while maybe the way Reason Builders Club is getting tired is not everyone wants to be a builder.

7. 41:23

   A lot of people just want to have a lot of fun. And so we had had also a big intuitive vision, what would really be cool, another perpetual motion machine is virtual economy. And people spend money, they buy Robux. If we can allow the creators to figure out all the different ways someone might buy Robux without hurting their experience or making it any less fun, then a small portion of users will buy some Robux.

8. 41:54

   they'll spend it in the game the creator will accumulate those robux and their roblox robux bank account they'll cash them out for real money and that should create another perpetual motion loop interestingly enough we actually had a lot of board discussions like is that a good idea or not and the um the board came around like i i was probably the biggest pusher of it because I believe some people who were hobbyists would then be able to go and earn a living.

9. 42:27

   Like you could go from hobbyists to earning a living on Roblox if you could do this. So we did that very similar to the Roblox studio situation. We had a full closed loop system and the closed loop system means I'm a creator. I can make a game or an experience. You can buy something extra for Robux. Could be a flashlight. for something as a user i can go buy some robux with a credit card i can buy that um and also from a discovery standpoint we started showing top games where people are spending robux so same thing within about an hour or two going live oh my gosh that's the top game where people are spending roblox or robux more people went into that and that's going to scale with user growth in a way that the builders caught would never.

10. 43:20

    And what we basically hit is an elegant, you know, economy that pretty much scales more than linearly with ours, basically. And what we have found without, you know, still optimizing generally for engagement and retention, not for money, is that developer incentive to balance engagement and money. If everyone needs to spend money to have fun, your game isn't viral um so creators have kind of figured that out and so that's been another