3 lessons from Roblox’s growth to gaming dominance

Our recently published EC-1 on Roblox recounts the origin story and growth prospects of the company. But there’s one more piece to the story: what Roblox’s impact will be on gaming and the broader startup industry, if the company manages to multiply its current 90 million users.

roblox maus 1

Sources: TechCrunch, VentureBeat, Roblox

We’ve distilled three key ideas out of the EC-1 — lessons that may apply not only to game developers and gaming entrepreneurs, but also to the broader startup industry.

Lesson 1: UGC is a missed opportunity in games

Roblox has shown that user-generated content (UGC) is a missed opportunity for much of the game industry. The company aspires, in a way, to be the YouTube of games. And it is succeeding, with 2 million experiences to date.

The game industry generally has two problems with UGC. One is the games themselves: AAA games today are too complex, and lack the flexibility and simplicity needed for robust UGC. Roblox shows that a simpler look and feel is a valid alternative to today’s super-sized, beautiful AAA games. (Minecraft proved much the same.)

The other problem is the greater complexity of making games than, say, videos or music. Roblox solved this problem by building its own game engine, which is designed solely to output Roblox-style experiences.

But increasingly, engines like Unity are capable of accomplishing similar feats: games are getting easier to build. It’s now possible that savvy entrepreneurs could build a platform like Roblox, without building an entire game engine.

Lesson 2: New opportunities in gaming are still coming

The game industry is infamously cyclical. New platforms emerge, become promising, then grow overcrowded and competitive. Usually, this cycle relates to hardware (the iPhone, virtual reality helmets, game consoles like the Nintendo Switch) or massive changes in consumer behavior (the emergence of Facebook, the early growth of the internet). But Roblox, a pure software play, shows that exceptions could exist.

It’s still early days. Roblox reported that it paid out $30 million to game developers in 2017, doubling to $60 million in 2018. Since Roblox keeps 65 percent of revenue from its games, that means it made around $230 million total in 2018. Its top 10 developers made about $2.5 million each. Seven of its games have also entered a “billion plays” club:

Adopt Me, a newer game, hit 440,000 concurrent users in June, a new record for the platform.

When a new platform appears, it’s usually found by amateur developers first. That’s certainly the case with Roblox: its successes are being created almost exclusively by first-time game developers in their teens and twenties. At some point, professional developers are likely to conclude they can do at least as well. The current market is particularly exciting because many games are fairly simple and lightweight — recent breakout hits like Camping 2 and Weight Lifting Simulator 3 are significantly smaller than comparable games on other platforms.

For entrepreneurs interested in creating new platforms or portals Roblox’s success as a combined game engine and self-contained platform also shows that opportunities still exist — if you have the patience to wait for them to mature.

Lesson 3: Patience can create amazing growth cycles

It took Roblox 15 years to grow to its current point. But most of that growth is recent: as seen in the chart above, Roblox experienced 10x growth in about 3 years, from 9 million users in February 2016 to 90 million in April 2019.

So what went into the decade or so during which Roblox was a much smaller platform? As we tell it in the origin story: a great deal of work, and very little paid acquisition.

In its early years, Roblox did buy users, to seed a user base while it worked on an impossibly large vision that included a game engine, platform, social features, a creator community, and its own games. But after a few years, it stopped buying users.

All of its growth since has been organic. That’s from two main sources: word of mouth, and YouTube users who watch one of the many Roblox streamers. Of course, any company can try to do the same. But Roblox had the patience to build a unique product — one which took years of work to even reach partial completion.

The key to it all was long-term adherence to a long-term goal: the creation of a new category, which it calls “human coexperience”. Today, Roblox still can’t be called part of a new category; it’s a game platform. But with more years of work, it may eventually get there.

For more on the Roblox story, see Part 1: The Origin Story, and Part 2: The Business Plan.

A chat with Niantic CEO John Hanke on the launch of Harry Potter: Wizards Unite

Just shy of three years ago, Pokémon GO took over the world. Players filled the sidewalks, and crowds of trainers flooded parks and landmarks. Anywhere you looked, people were throwing Pokéballs and chasing Snorlax.

As the game grew, so did the company behind it. Niantic had started its life as an experimental “lab” within Google — an effort on Google’s part to keep the team’s founder, John Hanke, from parting ways to start his own thing. In the months surrounding GO’s launch, Niantic’s team shrank dramatically, spun out of Google, and then rapidly expanded… all while trying to keep GO’s servers from buckling under demand and to keep this massive influx of players happy. Want to know more about the company’s story so far? Check out the Niantic EC-1 on ExtraCrunch here.

Now Niantic is back with its next title, Harry Potter: Wizards Unite. Built in collaboration with WB Games, it’s a reimagining of Pokémon GO’s real-world, location-based gaming concept through the lens of JK Rowling’s Harry Potter universe.

I got a chance to catch up with John Hanke for a few minutes earlier this week — just ahead of the game’s US/UK launch this morning. We talked about how they prepared for this game’s launch, how it’s built upon a platform they’ve been developing across their other titles for years, and how Niantic’s partnership with WB Games works creatively and financially. Here’s the transcript:

Greg Kumparak: Can you tell me a bit about how all this came to be?

John Hanke: Yeah, you know.. we did Ingress first, and we were thinking about other projects we could build. Pokémon was one that came up early, so we jumped on that — but the other one that was always there from the beginning, of the projects we wanted to do, was Harry Potter. I mean, it’s universally beloved. My kids love the books and movies, so it’s something I always wanted to do.

Like Pokémon, it was an IP we felt was a great fit for [augmented reality]. That line between the “muggle” world and the “magic” world was paper thin in the fiction, so imagining breaking through that fourth wall and experiencing that magic through AR seemed like a great way to use the technology to fulfill an awesome fan fantasy.

The definitive Niantic reading guide

In just a few years, Niantic has evolved from internal side project into an independent industry trailblazer. Having reached tremendous scale in such a short period of time, Niantic acts as a poignant crash course for founders and company builders. As our EC-1 deep-dive into the company shows, lessons from the team’s experience building the Niantic’s product offering remain just as fresh as painful flashbacks to the problems encountered along the way.

As we did for our Patreon EC-1, we’ve poured through every analysis we could find on Niantic and have compiled a supplemental list of resources and readings that are particularly useful for getting up to speed on the company.

Reading time for this article is about 9.5 minutes. It is part of the Extra Crunch EC-1 on Niantic. Feature illustration by Bryce Durbin / TechCrunch.

I. Background: The Story of Niantic

Google-Incubated Niantic, Maker of Ingress, Stepping Out on Its Own | August 2015 | In August of 2015, Niantic announced that it would spin out from Google and become an independent company. As discussed in WSJ’s coverage of the news, Niantic looked at the spin out as a way to accelerate growth and collaborate with the broader entertainment ecosystem.

Razer soups up its gaming smartphone

Razer is quick to refute any suggestions that its second phone is little more than an iterative update. Sure, the thing looks remarkably identical to its predecessor from the front, but the innards are certainly souped up — and there’s a snazzy new back to match.

As the company puts in the Razer Phone 2 press materials, “we wanted to keep the core Razer industrial design intact with a CNC aluminum frame flanked by powerful dual front-firing stereo speakers.”

Fair enough. The first Razer Phone wasn’t the prettiest handset on the market, but that was never the point. The gaming peripheral company entered the mobile market with one very clear motive in mind: helping usher in a new age of serious smartphone gaming. It follows, then, that the Razer Phone 2 sports some beefy specs to match.

Razer’s not quite at the point in its mobile story where custom silicon makes sense, so the company’s relying on the the latest Snapdragon (845), instead. What is custom, however, is the vapor-chamber cooling system inside, which dissipates surface heat for intense game play. In all, the company says it’s able to eke out a 30 percent bump in performance over gen one. 

The battery is the same size, at a still impressive 4,000mAh — though this time coupled with Qi for fast wireless charging. It’s a beefy battery in a beefy phone. It’s not the slickest design out there, compared to flagships by Apple and Samsung, but it’s built like a damn tank. It’s also IP67 rated water-resistant and dust proof. 

As mentioned above, the front-facing speakers are still intact from the first generation, and they can get plenty loud, as evidenced by the demo Razer gave us ahead of today’s event. Those are tuned with Dolby Atmos. 

At 5.7 inches, the screen is the same size as the first generation. I’m a bit surprised the company didn’t go a bit larger this generation — gaming is one of the stronger arguments for large screens on mobile devices. That said, Razer’s increased the brightness by half and improved color accuracy.

While, as expected, the front looks pretty much exactly like the first gen’s, the back’s been souped up a bit. The familiar tri-headed snake logo lights up now, with 16.8 million color options. There are different settings for the light, including the ability to have it light up with notifications based on different apps — so, light blue for Twitter, red for Gmail. You get the picture.

Of course, having a light-up logo on the back would be silly, so the company’s created a case with a cutout, specifically to showcase the new lighting rig.

Razer’s managed to maintain a decent price point here. At $799, it’s not cheap, but it’s a couple hundred bucks below the latest from Apple and Samsung. Preorders start tomorrow.

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