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The Hugely Popular Tween Gaming Platform Roblox Applies For IPO

The Hugely Popular Tween Gaming Platform Roblox Applies For IPO
United States based the popular tween gaming platform Roblox us all set to go public and has filed papers for that purpose.
In the nine months ending in September, revenue of $589 million and an operating cash flow of $345 million were reported by the company.
According to the IPO filing, in the nine months ending in September, a net loss of $203.2 million was reported by the company which is yet to turn out an annual profit.
For people who are not aware of the name Roblox, it is probably because they are a tween or a parent of one. User-generated games make up the entire platform and a large proportion of them are created by children and teens for which they have generated millions of dollars. According to the company, Roblox is played regularly with friends by about 75 per cent of American children aged between 9 and 12 years.
The lockdown during the height of the pandemic saw children rushing on to the gaming platform to organize virtual birthday parties and other in-game events which they could no longer arrange in person for friends.
3 billion hours were spent in playing on Roblox by gamers in July which was double the time spent by them in February.
Each day, 36.2 million users on an average log onto the platform to play virtual games with friends. And according to the company’s filing documents, 29 per cent of those users are typically in the age group of 9 and 12 years while 25 per cent of those users are under the age 9 years.
Roblox is also big business. According to Sensor Tower, which tracks mobile apps, the company clocked $2 billion in lifetime revenue just from mobile players in the month of October.
However the challenge for the company is to find out way to make a profit as the company had reported a string of losses throughout its history in its stock market filing which included a loss of $97.2 million and $86 million in in 2018 and 2019 respectively.
In the nine months ending in September, $209.2 million was earned by game developers on the platform many of them were young adults. That was 190 per cent higher compared to the same period a year ago. That amount was reported by Roblox as an expense.
But a handful of the company’s customers regularly spend money on games, the company revealed in the filing, and added that it does not strike exclusive contracts with the game developers using the company’s platform for developing their games.
A warning that it may not become profitable in the future was also issued by the company in its filing. It however mentioned that to make a profit, more users can be charged by it for its subscription service, Roblox Premium.
The business of the company depends on being able to "provide a safe online environment for children to experience", Roblox also said.
Roblox has come up in headlines when kids spend too much money without parental permission and when predators target children using the platform.
A team of 1,600 moderators for monitoring the platform to identify inappropriate content as well as for conducting safety reviews of all images, audio and video files with the help of humans and machine scanning exists with the company, Roblox said in an August blog post.

Christopher J. Mitchell

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