Can You Build a Real Business on Roblox?

Roblox is one of the biggest paradoxes in gaming. It has over 150 million daily active users, games with largest concurrent user bases in the industry, and entire studios built inside of a platform that on paper looks like the future of games. And yet, most games pop and drop, never becoming real businesses, ads barely move the needle, revenue shares are favoring the platform, and brand deals sound exciting in pitch decks, and maybe a little bit more disappointing when it comes to P&L. And most importantly, the growth, which is the only thing that game companies obsess over happens in a world with no user acquisition. So, the question is not whether Roblox is big, obviously it is. The real question is, is Roblox a place to build heads or a place to build companies? So, to discuss this and many more questions, uh we have fantastic guests. First, Nick Turno, senior vice president of engine and creator engineering at Roblox. Nick, welcome to the podcast. Thank you.

And Zach Letter, CEO of Wonder Works, a Roblox studio, and before that, a decade spent as a YouTube creator. Zach, welcome to the podcast. And thanks for having me. All right. Well, gentlemen, let's just jump right into it. When you look at Roblox in 2025, what's the single biggest misconception outsiders still have about the platform? Zach, you want to go first? Yeah, I mean, I think a misconception I get all the time is that it's a platform for a younger player base in general. Um in my experience developing a game called SpongeBob Tower Defense in in partnership with Paramount, we actually have an audience that's nearly 70% 18 plus. And when you think about it, SpongeBob's a 26-year-old IP. I'm 35. I was 9 years old when it came out. Uh so, it touched a lot of generations, and it really shows for the right experiences users are willing to come over in droves. Like, look at Dress to Impress, how it kind of grabbed mainstream audience and actually led to a lot of people creating a Roblox account and coming over to the

platform. So, Roblox is really just a great platform for game creation, uh platform for gamers made by gamers, and as you kind of see the developers kind of age up more and more, like me being 35, you see more complex games aimed at a more mature and older audience being created. So, I think that's a big misconception. And this is the first game company and the first game studio you've been working at, is the your own, right? Yes. Yes. Was there anything that you underestimated before you started? Oh, gosh. Uh many things. I think when I first started, I'm like, "Well, you know, I I always complain about people making games, and why are they doing this and not that? Like, it it seems so simple." Um so, I definitely came in, you know, thinking I knew everything about game design and how to make a good game cuz I played so many. Um and I've definitely had my share of humbling experiences in the last 6 years. Um and learning that design isn't as simple as just making something that is pretty or or feels a little bit satisfying. There's so much

more that goes into it, and uh definitely had to learn a few hard lessons. Mhm. Nick, so talking about hard lessons, what do you think the studios consistently misunderstand about Roblox and how the platform wants to evolve? Yeah, one thing I'd say it's maybe not so much a misconception, um but just an opportunity for developers. Um Roblox is pretty unique, and we're sort of constantly layering in new APIs and new capabilities, capabilities that don't exist in traditional gaming environments. And so, I think we see creators who kind of keep an open mind and look at these new capabilities and think about, "Man, what could I do if I could combine these new capabilities with the APIs and ideas I already have um to create sort of whole new genres, whole new types of gameplay on the platform, um they have a real opportunity on the platform because we're constantly adding these new things, and it's all live, right? Um and the ability for creators

to kind of like read, incorporate these new ideas into their thought process, and ship across all these platforms, uh it can really happen in days. It's sort of unprecedented, I think, in the history of of gaming. And Nick, you you have I mean, you have a storied career. Like, you've spent 10 years at Zynga, your last position being CTO. Then you were senior vice president of a platform at Twitter, and now essentially running platform or engineering and and creator engineering at Roblox. When you think about the last 5 years, I know you've been at Roblox for 3 and 1/2 years, but when you think about kind of like the last, you know, 3 and 1/2 to 5 years at Roblox, what's the most important evolution uh that has happened on the platform side? Is it the creator tools that you're responsible of? Of course, you're going to say that. Or discovery or monetization? Like, where do you Where do you kind of pinpoint the uh the biggest evolutions? Well, at Roblox, we tend to think of our growth and the opportunity that emerges

as more of the culmination of hundreds or even thousands of things we're doing across the platform. It goes all the way from the tools you described to the performance at runtime, improvements to the discovery algorithm, like matching the content with the users, and monetization opportunities. All of these things. But if uh forced to choose, I'd say uh we've made an a lot of really um large improvements to monetization across the platform in the last 5 years. We rolled out creator rewards just this last year that helps align incentives between Roblox and creators to bring new users to the platform, engage them. Um and new modes of commerce, so real-world commerce on the platform. We increased DevEx at just this last RDC, which is the percentage of um money that comes in that uh gets back to creators. Uh and of of course, rewarded video um is rolling out and and getting increased adoption across the platform.

So, I'd probably put monetization number number one. I think we've made a bunch of improvements to discovery as well, such that when these new

[snorts]
piece of and then outside of that, like, there's been so many improvements to like the data we get, like, the analytics and how deep we can dive just on platform without having to go to a third party um and get deeper analytics. So, I think like, we are now best equipped to make the stickiest experiences possible. Um and that's all thanks to like what Nick and his team are doing with all the tools. And then, because we know how to monetize, I put that a little bit lower, but that discovery, that's everything. Like, that's why I did YouTube uh over like Twitch. Uh back

in the day, I had to make a big decision. Am I going to be a live streamer or am I going to be a video creator? And it's like, well, YouTube had the algorithm. And like, they had discoverability, and like, anyone could get their video in front of somebody. Um and if you knew how to make good videos, and if you learned lessons from one video to the next, you would become bigger and bigger and bigger. And that's exactly how Roblox operates, and that's why the platform's so exciting. Stay ahead of the competition with Sensor Tower, the trusted source for mobile marketing intelligence. Whether you're tracking trends, benchmarking performance, or scouting the next big hit, Sensor Tower delivers the data that drives strategy. Dominate the charts with Sensor Tower. What has changed in discoverability? Like, how how is the algorithm changed? Or what is the algorithm now? Like, I to my understanding, it promotes games that have better retention and more social gameplay, more maybe purchase actions early on. Um but Zach, you probably know the

algorithm better. We I know what I focus on. I No one knows the algorithm probably better than Nick probably does.
[laughter]
Um but I we focus on the the six benchmarks most that Roblox provides in their analytics. So, you know, average play time per user per day, um day one retention, day seven retention, our payer conversion rate, um and our average revenue per paying user. Like, those are the big things we focus on. And as long as we're at like, in the 90th percentile with all of those, we we know we're going to have it. Because we know we're going to get more and more home page impressions each and every day um because we have a sticky experience that's monetizing well. So, Nick, essentially, you've built an algorithm that the better the game retains, uh and the better it monetizes, you bring it forward to more users, right? Yeah, I'll I'll I'll say this. I I it's possible that Zach knows as much about the discovery algorithm as me. And that's because this year, we really have focused a lot on transparency. Yeah.

About what our discovery algorithm is doing. And this has been a significant change. You know, it's a complicated algorithm. There's a lot of data. We have a lot of things we can consider. But we made a decision that we wanted to be very transparent with our creators and with the world about what it is we are prioritizing and what it is we're rewarding and what it is we're not rewarding. And I can't enumerate probably all the things that are in the algorithm right now. We have a devforum post that enumerates the seven signals we look at. I think in addition to what Zach mentioned, there's intentional co-play, which we do want to reward people playing with their friends. Um but we've also made some decisions not to prioritize certain things like playtime beyond a certain time threshold because we don't actually want our creators to be creating sort of like, you know, deeply addictive and deeply time-consuming experiences for the for the players. Um and so by being

transparent about all of this, by really sharing um what what we're looking for with our creators, it allows them to more easily craft their experiences to succeed on the platform. Um and we also try to be very deliberate about anytime we change the algorithm. You know, it is a dynamic thing. We're always looking to improve it. Um but as a matter of discipline we're very communicative about each of those changes. And and so going forward and looking at these algorithm changes because these are the biggest effect on the platform naturally for the creators. Um it seems like based Nick on what you said there's less emphasis on viral games like Brain Rot and Grow Garden that essentially requires you to be online nonstop and pay to win and more towards higher quality experiences if you will and maybe higher production values like Creatures of Sonaria or Frontlines being something that you want to see more on the

platform. Would that be correct assumption? Well, first of all, I'd say all the games you mentioned are fantastic and we don't really put our foot on the scale as relates to more of this game or less of that game at that level. The discovery algorithm is based upon the metrics that you know, that we've been transparent about. And so any game, you know, we try to craft our algorithm such that it cannot be gamed to use the other framing of gamed, right? Like um the more we put into that algorithm and the more transparent we are, it's sort of like a self you know, regulating system. And so all the games you mentioned are wonderful. We're very proud to have them on the platform and the success that they've been able to reach. Um but yes, to be very clear, there's a number of games on the platform which are deeper, richer, exploring new

genres, uh new types of collaborative play um that we do hope to see more and more of on the platform over time. One of the things we're working on internally is sort of broadening our API set, broadening our genres, broadening our appeal to people of all sorts around the world, uh different ages, different countries, uh different things that they like to do on the platform even beyond gaming. Um and so the metrics we you see in the discovery algorithm um are meant to capture that sort of breadth and support that breadth uh rather than picking and choosing within those specific areas. Hm. And Zach, talking about like the you've been creating games for Roblox for over 6 years. So, what are the type of game maybe I would put it this way. What worked before and doesn't work now and what type of a games you're making now versus before?

I do feel like especially over the last 6 years with like TikTok and Instagram Reels and and like just short-form content as a whole, you really need to focus on getting the player into your loop as fast as possible and I feel like, you know, when when I started 6 years ago, you could be heavily supported by certain influencers and them making video content services like a tutorial or MPE and people were more willing to invest a little bit more time to fully understand an experience. But right now, it's really like when we have somebody just like a TikTok, you only have them for a few seconds. You need to keep them entertained second by second to get them in that loop. So, making sure that that process is smooth and as quick as possible has become like our biggest focus as a studio because yes, it's really easy to get people into your experience, but because of that, there's also a billion experiences on Roblox. So, if you want to keep them, you need to like show them what's special about your experience as fast as possible and try to really get them in that loop within

those first couple of minutes. So, I think that's what we've really began to prioritize. Not so much making the biggest deepest world off the rip. It's really servicing them something bite-size and more MVP state upon release and then live opping it with the the player week in and week out over like the course of a year to build out a fuller experience. So now, what we might have worked on three or four months to get to a release, we work on five to six weeks, get something more bite-size out, make sure that the player base is enjoying the direction we're going and then we're building the game with the community. In the game of growth, everyone is looking for that power up. Vibez [music] is exactly that. It's built by industry people, so they actually get the challenges you're dealing with. As a result, they've become the fastest growing gamified [music] rewards platform out there. And the results are kind of nuts. With their AI-powered targeting, you're not [music] just buying stalls, you're bringing in the right players. And now, they've got this new ROAS optimization engine, so your

campaigns basically [music] level up automatically. Vibez is built different. It's designed for growth. And I guess you could say it's powered by good vibes. Check out their DOF exclusive [music] case studies by following the link in the description and go to v y b s.co. That's v y b s.co. Share your email and join the waitlist. That's super interesting. Hm. And and even when the game comes out as an MVP and you're building it with a community, you're still getting enough push from algorithm or are you spending a little bit to get enough users to be able to build it with the community? Yeah, we're getting enough push from algorithm because we're hyper-focused on that bite-size piece of the loop, making sure it's, you know, bulletproof. And then if we have something, then we continue to expand it with the community week in and week out. Like SpongeBob Tower Defense, we built that experience

in 6 weeks. We're now going on to live op 52 this Friday. Um so every single week, 52 weeks, new content. Um so and the game has evolved a ton. There's probably like six or seven new full game modes that weren't there day one and there's an additional 200 plus towers that weren't there day one. So and it's all been live with our actual community, so they feel a part of it and we're literally making our updates live. Like we kick off a sprint on a Monday and we drop the update on Friday. So like we're doing it live with the community and I think that's what makes Roblox so special because it feels like it's community-backed and driven every single experience. And just last question on that, like what is the size of a team that does this? Like in I'm talking about full-time employees as well as contractors. Yeah, I mean, our whole studio is only 13 people. Um we made Survive Bikini Bottom, which is our new survival horror game in 5 weeks with two people. Um and then we made SpongeBob Tower Defense in 6 weeks with four people.

Um we got lucky with Survive Bikini Bottom because we already had great assets from Tower Defense. So it's like it saved us a little bit of manpower and we were able to spin up another game a little bit quicker. But yeah, the teams are small. Like we're never really over four people per project and as a studio, we're doing about three projects at once at any given time. So. Nick, how typical is is is this type of a setup of Wonder Works type of a studio? It's quite typical. I mean, I think we see teams I mean it's it's actually it's it's a good size team. You know, Zach's Zach's a professional. Wonder Works is a is um a fully scaled out team. We see teams of one, two, three people, 10 to a dozen as Zach is describing. I think the largest uh teams we see building experiences like the very largest experiences on the platform are in the 20 range. So, it's really amazing, right? Like the largest game

largest games ever by concurrent users, which we saw just this past summer, built by teams of less than 2,000 people. Um and um yeah, so that's pretty typical. I also loved what Zach said sorry, beyond the team size, just the iteration is really the recipe for success we see most commonly is it's a beautiful thing about the platform and um uh Mishka, you know this from from our time at Zynga where we would try to go relatively quickly to iterate and but usually just on one or two platforms. Um and one of the things that I think is really powerful about the platform and Zach's really leaning into it as he described is this notion to iterate daily um or even multiple times within the day, um, across all these platforms, iOS, Android, Mac, PC, console, VR, um, with

the community, because you can get that rapid feedback through the analytic system that Zach was describing. And the people who do that, who really lean into the speed and the data and the iteration, I think they're just able to find the right product, the right product market fit more quickly. Yeah, I mean, it's it all sounds and is like a product manager's wet dream. It's like you don't even have to make the product at the end, just throw the MVP, the community will give you feedback, the iteration times are incredibly fast, the overhead cost is super low. Um, you don't really need even a central tech team essentially because of the uh the benefits of the platform. You don't need UA because of well, the limitations of the platform, but also the algorithm of platform that is um, transparent, and you just play by the rules that the uh the algorithm has. So, in that sense,
said, we don't have to submit builds, you know, to an app store or something like that. Like we ship 10 builds in 3 days for Survive Bikini Bottom. Um, so

like we can do it fast, we can iterate as many times as we want in a day. And Roblox users are really resilient and super used to, you know, raw product and and developing it with the developers. So. Web stores. You've seen what good looks like, but have you seen great? App charge is the direct-to-consumer platform backed by the likes of Supercell
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tradi- not traditional, but studios from other platforms, let's say mobile, uh which vast of our listeners is. One thing that I've noticed is looking at Roblox is that the uh the more senior teams or teams coming in from a different platform have a lot of challenges in creating experience, not necessarily managing them or product managing them or growing them, but they have challenges in creating for Roblox players. Um, is that still the case? I can talk touch on it. Um, I mean, I've seen similar challenges with people like being a full-time YouTube creator and wanting to become a live streamer or wanting to go short form, especially during the boom of TikTok and everyone seeing that opportunity. Um, it's it's just like a different type of gamer that is born on Roblox. Like they're social focused, like they have different priorities. Like I said, they're more resilient too and willing to work hand in hand with the developer to develop

the experience they want to see on platform. Um, so like they demand to be listened to. Um, they want to play with their friends. Um, they want it available on all devices. Like we've done releases where we forego like console support at release and like regretted it because everyone wants to be able to be connected at all times. So it's like there is a lot of unique things that you need to consider when developing an experience on Roblox. Plus, the players like their interests do change and the platform's ever evolving. Um, so staying on trend and and really trying to create something that can potentially be the next trend too. Um, kind of like leaves you on your toes always. And I feel like if you come from a traditional studio like mobile or even AAA, you're thinking of much longer dev times and and that could kind of, you know, lead you away from what we're doing where it's like ship an MVP and iterate with a bunch of people, but you have to be very scrappy and move fast and make quick decisions. And it's not like that some- like something everyone's had to do in the past. So.

Maybe riffing on that a a bit. I It is true that Roblox is unique and people sometimes think of it as similar to other game engines or gaming platforms, but it's really quite distinct in a variety of ways. Um, we already spoke about the rapid iteration across all these platforms, but it's also the case that Roblox is really centered on the notion of express your creative intent. And, um, at at its at its core, what Roblox really does is take that intent and take care of so many things from LODs to um cloud compute to streaming such that that experience that you crafted that that as as you saw it works across all these different platforms sort of automatically and and scales to millions of concurrent users automatically. And so, I do think it's an adjustment for traditional game developers because it's just a different shape. It's just a

different thing than um, you know, a traditional gaming engine, but I do think increasingly we see interest in the broader gaming industry. Um, you know, I can't [clears throat] speak to that in great detail, but there's um increasing interest uh increasing traction we're seeing across traditional game developers. And those who are able to kind of like grok Roblox for what it is as distinct and really embrace those those areas which maybe traditionally have been constraints like, gosh, I got to think about which platform I want to launch on and I better not make these, you know, meshes have too many triangles or whatever because it won't work well on those devices and that sort of thing. Um, you know, you can kind of like and and you got to think about all the infrastructure, how am I going to you know, you kind of shed some of that burden and then just really focus on your creative intent and the unique capabilities of the platform, which we have been touching on like social and

beyond. Um, that there's kind of a refreshing ability even for traditional game developers to uh wildly succeed on the platform even with much smaller teams than what they've been used to historically. I I get the appeal. And I know of course because these games are can be huge, biggest in the world, and it takes so little to build it. Like Zach was saying, 5 to 6 weeks and they have a product out and they're iterating based on it. Team size is tiny, cost to build something is very small. But at the same time, like Zach um actually Nick, have you seen any of the the people from other platforms succeed in creating these games? Um, I have seen some. You know, I don't I don't want to speak to specific uh names, but I think um across our top studios, there's significant uh fractions of those which are traditional game developers. Um, coming me mean

coming from other gaming platforms. Um, I do think it's fair, you know, Roblox has been a platform that's been evolving for, you know, going on 20 years now. And it is the case that a lot of people who grew up on the platform know the ins and outs. They know the ins and outs of the technology, the audience, the tools, even the people. And, um, in a way they do have a head start, you know, and and if you look at our top games, there are a lot of uh um endemic creators, which is beautiful, it's wonderful. Um, we love it. Um, but yes, they're not alone. At this point, they're not alone. And, um, as the [clears throat] platform gets wider, broader, um, I think there's room for everyone. Yeah, because it's interesting. I mentioned Frontlines as one of the games and when I first saw Frontlines, I was like, we're cooked. Like this is it. This is the next platform. It looks amazing. And then that game, you know, despite being the one that I would play, didn't get the type of attraction that

almost, you know, any other hit on Roblox would have made. And that kind of sets the perspective of what works. It's it's the same almost as the AAA developers who went to mobile where they thought like, yeah, we'll just make a a high-quality shooter or a MOBA or something similar and that will take over that platform as it did our platform. And yeah, the experiences on mobile are very are and not are still very different like the puzzle games or the 4X games. So that's what I was kind of asking is like, how to become Roblox native as fast as possible in order to be able to create these experiences. Yeah, I mean, one thing I'd say is that I I think it's a recurring trap in the gaming industry to get really fixated on there's only one type of game that really succeeds, uh which is high graphical fidelity. And you know, as someone who's been in the gaming industry for quite a while, I feel like it's a lesson learned over and over that sometimes the breakthrough game is not that visually compelling. It just has an amazing core loop, amazing

gameplay, amazing social. Whatever it is that gets people hooked. I mean, again, we saw that way back at Zynga with with some of the games at the time. Um, and um you know, so so again, I think there's room for everyone. Frontlines is an amazing game. Maximilian Studios, the creators of Frontlines, um, are up to some even more amazing stuff. Those are some people who do have some experience uh building games, uh you know, even even on other platforms. Um, and um really excited about what's coming next is going to be even more photorealistic and amazing than Frontlines. But again, I don't think it I don't think anyone's cooked, you know? And I think that's the beauty of the platform and the beauty of um the gaming industry is it's such such mass appeal and everyone has a different set of things that maybe they find entertaining and fun and they want to do with their friends and um so and that's really the way we we

think about Roblox too is we're not just um looking for that that photorealistic um Frontlines type experience. We we love SpongeBob Tower Defense as well. Game devs, here at Heroic Labs we know that great game play is what players love, but integrating meta game features [music] like challenges, progression, and rewards is crucial for retention and monetization. But coding them is a tedious and time-consuming process. That's why top studios [music] have turned to Hero from Heroic Labs. Hero provides a complete suite of battle-tested meta game features that are quick to implement letting you spend more time on the core game play experience. Ready to ship fully featured engaging games? Check out Hero today at heroiclabs.com. [music] Um so let's switch up and and talk about growth on the platform. So coming myself

from mobile, growth is same as buying users and talking about Roblox like buying is not the way. So what are the growth levers that Roblox studios use and and master? Is it community Discord essentially? Is it storefront optimization with thumbnails or is it influencers? Like Zach, maybe you can talk about how you've grown your games over the uh the past 6 years. Yeah, I mean we're very platform SEO focused making sure that we're going to you know have the best discoverability on platform and have that be organic um because everything comes with that. So when your game starts to build traction you start to get influencers talking about your experience whether it be on TikTok or YouTube or whatever platform it is um and then we build a community like on Discord that we can support those influencers by making them stars of our influencer program hooking them up with update access early so they can make videos and have them out the second the update drops giving them resources from

our experiences for game passes things that are going to enable them to make the best content possible and continue to support our experience. Um and then everything else comes with that. So like if you really do well for the algorithm on platform, you're going to have more discoverability. You'll have great discoverability the influencers will find you start making more content for you which will make you feel even more organic and you'll cast a wider net and then your Discord will grow from that because you're supporting the community and influencers with like codes and little perks like that and then we use all of that to drive even more attention to our live ops which we do weekly and because of the frequency of those live ops we're always on the top of people's minds. We're always coming up with something new to keep keep ourselves in that algorithm keep influencers making videos and it's just this vicious flywheel that we just keep feeding and feeding and feeding. So Hm. And it sounds like they have this sort of almost like an old school MMO type of a community building approach. Uh is that intended on Roblox perspective? Like you specifically want to limit the

user acquisition play that has essentially taken over mobile gaming? Well, let's see. So um you know we we do um have a community's product within Roblox and we do think um part of building [clears throat] a game building a studio is cultivating that community engaging with that community sharing news updates even getting feedback from them uh to make the next version better. That's really a core part of success um for any game I think and um Roblox is investing in the abilities to do that on platform. We we want that to be very uh low friction very easy for creators and also safe. Um you know on platform we can make sure um the conversation is civil we can make sure it's constructive and uh the right feedback's getting both ways. Um we do also as we were just discussing

about the discovery algorithm um try to tune it such that um again everyone wins, right? Everyone wins when the users find the content that they like. The creators win cuz they find their audience the users win cuz they find their experience. And so the beauty of that is that's what Roblox wants that's what users want and it's what creators want and it's like that that's really where Roblox tries to operate in which there's just this automatic shared win. And in that world you don't even have to spend much money. I think that's one of the tragedies of the more traditional momi mobile gaming ecosystem is there really isn't an effective way for users to find their experiences or for um experiences to find their users through the more traditional app stores. That

would be perhaps my opinion personally. Um I mean it's led to this a massive industry around user acquisition spend um analytics um you know I've been very involved in that but it's really a significant tax in some cases on the on the creator um because every step of trying to find your audience can be very expensive and any misstep can be even more expensive on a on a pure ROI basis. Um and so so we do have um that said we do have capabilities on platform to help creators um help the algorithm to particularly get that flywheel started. I call it a uh uh uh in instead of a a vicious uh cycle um maybe maybe something more positive but the notion that a virtuous cycle in which you can kind of spend to explore the space find your audience get that data into the algorithm such that it can

take it from there. Um and of course advertising is a wonderful way if you make significant changes in your experience and you want to just kind of re- juice the system like get everything to pick it up. That's that's kind of we we do see a lot of opportunity there um but again we want it all to be done on platform and really seamless such that users just come in and they're like oh cool there's this great new update on this content that I love or uh here's this new game that um seems related to my interests and let me let me take a look. Vicious the rate it spins. Yes. [laughter] A- and I totally understand being in control of your own store because you know Google and Apple have essentially lost the control of the store. I don't know if they wanted it but I mean Apple for sure wanted it and then in the end you have hyper casual games or hyper casuals and then again when you induce the the user acquisition element into gaming and make it mandatory then the LTV element becomes even more important.

So now you have to be extreme at your monetization in order to afford buying users and and that's that's an interesting cycle that leads to a totally different type of uh experiences focusing on whales more than more than anything else. Yeah, I guess the other part I I should have mentioned because it's a key part of the user acquisition story on Roblox is social. Um and it's like as soon as you you know you come into the platform and you see your friend playing a game that you've never played before and and you join. We see a lot of activity there. So that's one of the main ways that we get signal that something is um you know worth picking up. Um again I mentioned it earlier but just the intentional co-play. And talking about this virtual cycle or vicious cycle however you want to put it. Um when Nick when you evaluate games internally at Roblox, what are the KPIs that matter the most

that that kind of show that this game has this virtual cycle of growth? Yeah, so let's see. So um we've got qualified play through. This is when you see that experience that thumbnail um and you and you tap it. You go to the what we call the experience details page you see more about the experience maybe there's some videos or images maybe there you can see the you know the thumbs up thumbs down rating you can read the details about it bunch of data on the experience details. They actually kind of play, you know? And um it's really easy to play in Roblox. I think probably everyone knows this but load times for that experience like from the moment you click play to when you're in it interactive are measured in seconds. Um and but we look for what we call qualified play through which is not only do you do you start playing but kind of stick around for a bit. Um and then 7-day play time. That's like um over the course of 7 days you you know

what's your aggregate amount of play time. How many days of that week did you play? How many days of that week did you spend uh the amount that was spent spent and then intentional co-play. Those are the signals that again we've communicated on our dev forum we post about our discovery algorithm. Those are the ones we show in our creator analytics to help people like Zach understand how they're doing uh relative to benchmarks. And um if you optimize those things which is much easier said than done um then you'll get um really nice treatment by the algorithm. Zach, how do you optimize against these? Gosh, um Um
[laughter]
I mean, it's definitely comes right like from the very beginning on paper when you're designing an experience having like that social co-play in mind and making sure you're designing mechanics that encourage that. We want people to invite their friends to our experience. We've done things in the past as much as like incentivizing

playing with your friends. So, if you're playing with your friends, maybe you're earning bonus currency or rewards. Um if you invite a certain amount of friends to the experience in the first week, you can hit certain milestone rewards. Um really about trying to engage their friend group in the experience because if your friends are down to play something, they're most likely bothering you every single night to play it and that's going to help our experience. Um I think we all know the meme of you finding a new Steam game and telling everyone to download in your friend group only to play it once. Um we want to be something different than that. So, we really focus on that from our very core concept of design with all of our experiences. Make sure that they're social experiences and you benefit more while playing in a group versus playing solo without punishing the solo player. Um it's really hard and it changes the answer changes for every game we make because if you're in a different genre or like caring towards a different demo, the ways we approach it are just so different.

Hm. Talking about like all the games that that you guys have shipped over the time, what's the longest sustainable game? Like are we talking about months? Are we talking about years? Are we talking about weeks? We're definitely in the years category now. SpongeBob Tower Defense turns a year old on the 21st of this month and we had 140,000 CCU on our last update. So, the game is still around and and kicking really well. We actually had Ice Spice collab with us in our last update cuz she's in the SpongeBob movie. So, that was really fun. Um so, I do think you can make multi-year franchises on Roblox. Like we're proving that with an IP license, we can make multiple games that have success on Roblox with the same IP. Um so, we had SpongeBob Tower Defense. It's done half a billion visits already. We did a hyper-casual game that we made in two days with SpongeBob that did a nearly 100 million visits and we only updated that game like once or twice just to kind of prove we could make something quick and just have it run on

its own without the weekly live ops. Um and now we have this third experience Survive Bikini Bottom which, you know, it's just under two weeks old right now, but we're seeing really positive signs with our benchmarks and and our our homepage impressions are increasing day by day. Um and we really think in the coming weeks that one's going to take off. Everything's pointing to another hit. So, I think on Roblox you can build a franchise. You can have multiple games with the same IP and really build a strong community, but it's just as hard to do as it is anywhere else. So, building the next Call of Duty or the next Halo or the next Gears of War, like that's really hard and not a lot of people have done it. So, it's like you're going to have creators that are able to do it and build like blockbuster franchises, but then you'll have great creators that make one-off like super inspiring hits that are very successful for their studio because of the large margins we have and how cheap it is to build experiences on Roblox and how quickly you can iterate. Like I talked to every top developer and the most

common thing you're going to hear is for every one success I have, I have a couple dozen failures I don't want to talk about.
[snorts]
And it's like that's what it is. It's fast iteration. It's releasing a bunch of product learning a lot of lessons until you can get there to to a state where you're perfecting it. Hm. And and Nick, from platform perspective, like does Roblox want more of these franchises kind of like these evergreen games that every single platform has? What I was talking about Candy Crushes of and and Clash of Clans or Call of Duty's and FIFA's or League of Legends and so forth. Or is the goal to keep the platform more as um as designed as hit rotation essentially of different experiences? I think there's probably a healthy balance. Um again, we don't have a a fixed formula for that. We we focus on building amazing APIs and tools and algorithms and transparency and are generally just continually amazed

uh by the creativity of our creators and sort of surprised by what they they do with our APIs. You know, we we often have notions of what's going to happen and then they're dashed immediately because um you know, our creators are more creative than we are, which is which is a wonderful thing. Um you know, I think yeah, we love um you know, evergreen games as you said that just sort of like grow and sustain over time. Um and you know, congrats Zach on on doing that and and your recent success. Um at the same time, a platform that's full of kind of the same things week after week, month after month, year after year um might not be that delightful for uh you know, people who are looking for something else. So, um I think there's a healthy mix of disruption, stability. Of course, we want our game creators and you know,

Zach maybe alluded to this earlier is the cost of building a a game on Roblox, if you do it right as Zach is describing, it's a small team. There's really no infrastructure expense. And your user acquisition costs as we just described are extremely low and potentially zero, right?
Yeah. Um so, if you you know, and and contrast this with more traditional game development, right? Where you may be working on a larger team for a longer period of time spinning up all this infrastructure uh thinking about user acquisition using all sorts of third parties and complexity and um then you see if you succeeded or or you failed, you know, um uh but anyway, on on Roblox because the because you can go fast and it's low cost, you can you can try more things. Whether that be iterating on a specific cool idea you have that you you just know is going to work or trying several different things and getting that feedback.

You know, um that's sort of what we want to see and I think um the way you keep that real is that there is this ability to break out. There is this continual ability to break out and have new experiences. So, so, we love the evergreen games that keep engaging um and improving and we love the ability for there to be sort of disruptive new content uh sort of crashing onto the scene. This podcast is brought to you by AppsFlyer.
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where your users come from and how they'll interact with your app. AppsFlyer, where your app's potential meets performance. Yeah. Understood. But probably over the time like with every single platform from Facebook to mobile to console to PC, uh it will end up with 70% at least of revenue going to specific top publishers. That's that tends to be. But it seems like the platform is still despite, you know, over a decade of of growth is in the early stages where there's a lot of hit rotation especially with the audience growing. I think that's that's really the reason with audience base growing so rapidly and maturing at the same time, that kind of changes the taste uh taste of of the players that then again changes what's on top. Would that be a correct assumption? Yeah, I mean, I I guess the thing I'd layer on top of that that we have is just the the platform itself is evolving quite rapidly and um

so, I I think that's kind of different than what you see with like a traditional um mobile or hardware um based innovation cycle. Um you know, we have a lot of our compute on the cloud and so, we're able to roll out new capabilities um new APIs um crazy new stuff uh pretty much weekly. And so, I think you're right to say we're in kind of a young phase of the cycle, but I also think the cycle might be different than some of those cycles you've seen before just because we're not actually dealing with a multi-year hardware upgrade cycle. We're dealing with a much faster engine iteration where every every day of the week there's like new capabilities rolling out. And so, and each one brings out new opportunity of what's possible.
[snorts]
We sent to some of the the Roblox developers and asked like what would you

like to ask and what would would you like us to talk about? And one of the things that came out was ads on Roblox. And the developers mentioned that large game large games games with a big audiences are generating only about five-figure ad revenue despite having almost 100 million monthly active users. So, maybe I'll point this to to Zach. From your perspective, why is Roblox ads such a weak pillar today in terms of monetization? Well, I actually have like a really good example from my YouTube days, but I'd say it's very new. The product's new itself. So, when I go back to YouTube, when I started doing it as a full-time gaming creator in 2007, 2008, uh gaming content didn't monetize. It was being struck down uh by IP owners from the gaming community, and it really took a network like Machinima to come around and offer partnerships to specific gaming creators. And back then, you would be lucky to get a dollar CPM

um on your content as a gaming creator. Um if you were a a truly elite creator where you were pulling some of the largest numbers on YouTube back then, you could get a Machinima deal that would pay $2 CPM flat rate. And like nowadays, everyone scoffs at that. Like, a five or six dollar CPM is horrible uh on YouTube in gaming. So, it's like it the product was new and it was early, and it was still more than we were getting before, which was nothing. Uh so, like, if you have these free-to-play users and you're using rewarded video ads, this is still more than you were making from those users in the past, and it's still a new product. And as it continues to evolve, one day we'll scoff at five or six dollar CPMs or 10 or 15 dollar CPMs as this product continues to mature, and like the interest in it becomes more broad. Nick, from from your perspective, like, is brands meant to be over the time to become an important source of revenue, or is it an ecosystem sort of a signal towards brands uh other brands advertising

inside Roblox? I want to just um build a little bit on what Zach shared cuz it I think it's exactly correct. Um it's an example of a new capability, a new set of APIs we've layered on top of this Roblox ecosystem that's been growing again for 20 years. Um and the way we look about it at at this whole thing is we're building a foundation for a long-term and sustainable ad ecosystem. So, it's got to work well for the brands, uh for the creators, and for the users. And so, we're taking kind of a crawl, walk, run approach to it. Um you know, it's two-sided. There's supply and demand. There's game design components to this, which um Zach can probably speak to. It's not just that you have ads in your game. It's what is your game, and where are the natural places to have, for instance, a rewarded ad. Um and so, I think across all these

dimensions in terms of like brands uh supply and demand um game integration and the sophistication of that, and the CPMs and so forth that Zach mentioned, um we're we're seeing growth. We're see I can't speak to it um quantitatively, but we're very optimistic about this. We're just taking a long-term view on it because we want every step of the way for each of those three constituencies and Roblox itself to be proud and happy of the progress and steps that we're taking. Totally understand. So, first steps.
[snorts]
Um all right, I wanted to take take us out with a couple of different questions that are prediction related. Uh and I'll limit the prediction to about three years cuz I mean, that that's already hugely long time in gaming. So, first one is like, if you think about three years ahead, uh what is success what does a successful Roblox studio look like in

terms of a team size, the revenue mix, and the background of the developers in that studio? Um I guess I can touch on this first. Um I mean, I like don't believe you need to have a really large studio to have success on this platform. And even if we were to be a studio that had a top five game and a couple top 50s, uh I don't see us being someone that would scale to 100, 200 people and try to replicate that 25 times over um because I do think it takes a very special set of skills and people and like a passion for the platform to have success. Like, you need to always be playing Roblox and understanding what drives the players to I feel like truly design for the platform. Um so, for us, like, even in success, I don't think we'd really scale beyond 20, and that's just like my personal preference, but I think in success, I I used to say like, to be really, really successful in where we want to be, we want a top 10 experience. But

just because how much the platform's grown, like, that number shifted to like as long as we're in the top 75, you know, we're doing pretty good. Um so, for us really as a studio, I think if you want to be a successful one in the future, having a couple top 100 experiences and a small studio that can move very quickly and be agile and be able to be receptive to community feedback and develop the products in partnership with your community is is where we want to be, and and that's how I think we'll have the most success we can as a studio by being as nimble and agile as possible. I I'd I'd land in about the same place. I'd say studios from 10 to 20 um you know, per per per um significant bet they're making um per experience. You know, there might be some consolidation where an individual company might have several studios within it or several um bets that they're making. Um but I think team sizes would be in that 10 to 20 range. Um that's sort of a sweet spot for collaboration and for just doing amazing stuff. We're even seeing, I think, the

traditional gaming industry move in that direction, at least it seems to me. Um revenue mix I think would be somewhere between zero and maybe 50 um meaning ads would be somewhere between zero and 50. Um and I think that would vary based upon the game. Um and um yeah, I think we're actually pretty close to this. Like, we're we're sort of in that sweet spot. We really like where we are. We don't want it to become um harder. We're certainly making a ton of investment in tools to make it easier. At the same time, the bar for content, the ambition of our creators continues to increase. I think we'll stay within that range. Mhm. Well, last thing, what would be your advice to a founder who wants to build their next company in Roblox? Like, what Um I think be super open to failing. Um like quick background of our studio, we were

once 90 people in office um and have experienced our fair share of failures uh over the last six years, and for the last two years, we've been 13 people and have experienced more success in these two years than we did in the previous six. Um so, be really open to failing and iteration. That's a big part of any UGC platform. Like, every video I put out on YouTube wasn't my new number one video. Um so, even if you have a success like I did with my first ever experience in 2020, uh doesn't mean your next game is going to be a smashing success either. And you just need to be able to take something away from each project that you make and and apply that to the next one. So, don't be afraid to fail and and keep innovating. I think it's beautiful advice. I don't know if I have much to add other than I'd say just keeping an open open mind about what gaming can be. Um what is possible. You know, that it's easy to fall into the paradigm of well, this is how games work historically, and this is what's been

possible historically. Roblox is fundamentally a different engine uh and technologies unfolding in a variety of really fascinating ways. And so, I think we'll see big surprises in terms of the types of content that can be created and the types of content that appeal to people over the world over the next five years. And so, being open to that uh and keeping your ear to the ground on that, I think, is a recipe for success. So, to summarize it, it's a new platform, and you're a white belt no matter what you've done before. And so, approach it in that way, or you're going to get choked out. Yeah, just because you've had one success doesn't mean everything's going to be successful. So. All right, gentlemen, thank you so much for for answering the questions and and coming on the podcast. I truly think Roblox is is the platform that that everybody keeps asking there, you know, in the gaming, it's like not doing so well, and people are talking about PC, and people

are overlooking Roblox in many ways. Uh and and this is the new platform that that we've been asking for, and the multiples are very nice and and kind of like reckoning to the old times of of mobile. So, it it offers all kinds of opportunities not only for the founders, but also for the investors. And in that sense, I think the uh the platform will only be growing in terms of not only the player base, but also the uh the type of studios that will be spawning. So, um again, thanks so much for clarifying of what works today, and um we'll talk again in a year and then discuss what works then. So, [snorts] and thank you everybody for listening. Links in the description to our guests if you want to ask them any any additional questions, and um thank you for joining us for this one. Thanks for having me. Thank you. You did it. You made it to the end of the episode. As a fan of the show, it would help us out if you'd subscribe and leave us a review on the podcast [music]

service of your choice. Those stars and likes, while a small action on your part, mean a lot to us and help to grow the show. More importantly, are you a member of the Deconstructor of Fun Slack group? If you have five years or more of games industry experience, go to deconstructoroffun.com/slack and apply [music] to join. Join the games industry's best professional community filled with peers always willing to lend a hand, or subscribe to our newsletter to get all the latest insights from the Deconstructor of Fun content [music] creators. Thanks for listening.