Roblox’s Steal Problem: Is a Buyout the Only Way Out?

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All right, let's go into our next topic. Uh we're going to do a little Roblox. There's a new report from Newzoo and Geek. I pulled out just one chart on this and then I wanted to hit two topics that lead into what Kress wants to cover with Convoy. So, Roblox is now the most played game on PC console by total hours. So, when you think about actual play time, this is where they just kick ass. Despite a largely mobile audience, Roblox top PC console play time in half one of 26 driven by engagement rather than reach. Roblox is 1.4x more than Fortnite. And when you look at all of these other games, they are basically double play time for all the other Minecraft are double League Counter-Strike Call of Duty FC and so just they're just crushing it on play time. Here's what I thought leads Kress and this makes him so happy. Roblox players have distinct gaming preferences. They gravitate

towards arcade co-op and survival horror. Remember, I always talk about this being a huge organic genre and they're underrepresented among players of realistic premium AAA titles. It is the tale of two towers. It's really the tale of two cities and two polar opposite spectrums. There's a group of players who love what we know Roblox for and then there's a very very small couple of people who are playing what's it called Rivals the shooter called Rivals or triple A experiences.
one.
This data from Newzoo and Geek is telling us that they're underrepresented in that market. So, I'm just stunned by the play time number. It's it's massive, but Kress take us through how you're seeing it and how does this go into the the Convoy article that talks about they should go back private is basically the gist, right?
Jason Chapman of Convoy wrote an amazing piece on Roblox. It just hit I think yesterday. He's the founder of Benchmark Ventures. His brother's name is Josh and they both

started Benchmark Ventures. They really were big and early into gaming, but I think their thesis has kind of changed and they're more focused to tech. And Jason himself is like an engineer type. The guy's brilliant. So, they're more looking at picks and shovels these days and other technology companies and I think part of the reason why he has some expertise on that. Jason's thesis on Roblox is that they should go private. And this is kind of kind of a similar idea as that I have is that this new strategy for Mr. David doesn't make sense for a publicly traded company. It's basically kind of what he's saying. And so, I'm not going to use his words, right? So, he said "Roblox's growth is stalled. Cash generation is strong. They had like 1.3, 1.4 billion of free cash flow in 2025 and they hold 6 billion in cash. Stock is down to 65% from its 25% high, so the price is now workable for a buyout." All right, so he went into the whole structure of how this works and I don't think that's all that interesting in terms of the premium they need to pay and how that would work and you know, the fact that David owns a

lot of the stock stocks and that helps him. The challenge is that it's up to David, right? So, David does have the you know, a majority of the voting shares I think are a good portion of it to make this vote. So, he has to have it. So, the real interesting thing is why. Is that again, he says the strategy to go HD, the strategy to do more retention style games does not fit a publicly traded company. Basically, he's what he's saying is exactly what I've said, right? They're spending insane amounts of money on R&D, creator payouts, safety, technology, tools, all this stuff to try to attract and build games that attract this audience for the long term and the market continues to punish them with their spending every quarter and missing revenue guidance. If you remove the quarterly like referendum on their performance, then it would let management actually do a five-year plan that makes sense. And this is where I agree with David. I think that it does make sense for the long-term viability of this business,

because I think the way the business is situated now is it doesn't make any goddamn sense that, you know, the pinnacle of all things Roblox are games where you steal toys from children. That is not sustainable. Like that is not a sustainable model, period, end of sentence. So, anyway, my take is that like, again, this strategy doesn't make sense for the public markets. Going private would actually give them the cover fire to actually change their model and change their business and change their whole organization around this. And this could be a really good way for Roblox to survive. Because if not, I think what will ultimately happen is that they're going to trip all over themselves, and David's going to continue to push this HD crap, and they're going to continue to deteriorate on revenue and continue to miss numbers, and continue to lose profitability, and the stock is going to get annihilated, right? Or the other option is to screw this HD thing and continue to go after these terrible games that are, you know, torturing children, that sort of thing, and and just keep going and and

releasing all this slop. And I don't think that's a viable way out either. So, maybe Jason's onto something they should go private.
I don't get the circle. Are you just laundering your criticisms of Dave, which you've been very persistent about, through this piece? Like what does Roblox get out of this? They need access to large amounts of capital. That's what the public markets are for. And the Convoy piece is literally just explaining how a bunch of investors get to cash out at a premium. The markets need to understand that Roblox's cost curve is always going to be tied to its marginal revenue curve, exactly like it is in Spotify, right? Every dollar they pay out, a certain share of that is going to go to the creators themselves. That's just what you're signing up for with a platform-based company that like took forever for people to understand that's how Spotify works, and it's the way it's going to work here. Their investment in AI infrastructure is not that far up. It's been remarkably consistent. It's large, but it's remarkably consistent. So, these things aren't getting worse. So, I guess I'm still just confused what they're going to they're going to get out of criticism cuz you don't like Dave's strategy.

Well, then the answer here is just replace Dave.
We can't though.
Well, I'm saying he would step down. He would step down there be public pressure if the results were not there.
But again, this is what puts public pressure on him. So, Josh is not an activist, but you could get active activist shareholders responding to this and saying, "Hey Dave, you got to either step down or go private."
don't understand why this strategy is the right one for Roblox. Is it just because it gets rid of Dave?
No, this doesn't get rid of Dave. Dave would have to participate in this structure. He has to approve it.
strategy of the AAA. Totally makes sense to me, but that seems to be your issue, not that they're on a public market.
They can't be valued what they're valued if they continue down this road. That's what I've been trying to say.
Well, I mean the market's probably going to punish them though.
Well, it's going to get worse because I think there's still people that believe he can pull this off, but he cannot. And this is why I think this piece confirms kind of what I've been saying is that they're in a position in which they need to go private, otherwise they're going to fail, right? Because they can't execute against what they're trying to

execute against without completely destroying their P&L and continually to underperform, continually to bring down revenue guidance and profitability guidance. And that's far worse for the shareholders and Dave and the employees than going private at a premium and then relaunching when this strategy is paid out in 5 years and in his mind, you know, go out at a bit a bigger premium than they are today.
still taking a shitty strategy private, which is that they shouldn't be making AAA experiences. That's not the right thing for them to be doing as a company.
They can get off the heroin of the steal a brain rot games and by not having the public pressure, they can start to orient more towards games that are potentially successful.
then?
I I do agree with Thieves.
Okay. Okay, that was new to me. I didn't know you agree with Thieves strategy. I think that's that's garbage. What are you talking about? That's garbage.
of building these shut No. Okay. I guess it is relatively nuanced. I hate Steel a Brain Run and those type of games. I think they are

horrific, right? I like the idea of building a strategy around HD games that retain and you know, even a premium potential model for Roblox moving forward, right? That makes sense to me, right? And I think that's good, right? Generally speaking. But it's not nearly as easy as seems to be to make this stupid trash, right?
You just sound like Apple where it's like all these free-to-play games are making money. I don't like them. I think they're gross. I don't think you should do that. You should do editor- editorial focused What is it? Momentum? What's the What's the What Monument value? You should make money Monument value three. Like where is the Eric who's like this is how the market works. This is what's working. Go make more of it. Why are you suddenly stating some sort of moral stand on what the consumer should demand when it comes to Roblox?
Have you seen a child cry because they're
Everyday.
their toys are taken away in any of these Steal an Egg, any of these any of these games?
for any Pokémon game. You can say that for That's from the That's from the dawn the dawn of children.

You know?
You were actually pointing out a huge inconsistency in my reasoning around these things because as a publicly traded company, like they have to do what they have to do, right? And so this was necessary for them to execute. And they fleeced the entire investment community that this was a sustainable model.
Well, you're talking about shitty games like Adopt Me, Brookhaven. We were talking uh about those games.
Those are the games that don't make money, dude. This is the point. These games do not make money for the platform. What makes money is these insanely demonizing games that create torture videos for children. That's what's making money on the platform.
They had their moment in the sun, but we can go to the top grossing games. I mean Rivals has been around for a really long time, Adopt Me has been around for a really long time. All these games have Bloxburg, I mean you can debate if that's scammy or not, but you're really focusing on this one title.
Dude, it's not one title, dude. It is like that's eight, 10, 12 titles that do the exact same thing, Phillip, and you know that.
The number one argument
The number one and number three top five games keep rotating with this play

pattern. And what exploded them into the revenue growth and the DAU growth were these play pattern kinds of games. Yes, you're right, Adopt Me and all those other games have existed, but what really led to, you know, in a sense they become heroin addicts to these kinds of play dark play patterns that propelled them to the success as a public company. Now they have to figure out how to match that.
I got this such such a loaded such a loaded series of frames to describe these games. Like you're you're you're focusing on one segment of the platform. The platform has a number of long-term successes that you guys I think would endorse. I think it's been one area of growth this last summer, which by the way went away, right? Roblox's DAU is down for the first time historically this summer. A lot of these games have been underperforming recently, and again you're you're pointing out one trashy game that has mechanics that you guys don't support. I just think you're outdated on this. You're taking your your boomer attitudes towards monetization and what an experience should be and applying it to these kids.

I think that's appropriate.
They changed the algorithm to point away from those games, which have led to exactly what you just said, which is the numbers are down. Showing that what is working on the platform was that, and they're moving more towards exactly the HD games, the retentive games. The numbers are down.
This quarter the numbers are going to be up because they're pushing people to steal an egg, which is the exact same game, but they are not pushing anybody. Like the algorithm is working, and the algorithm is is very much towards D1, D7, D28 are big part social gameplay. Like the algorithm is very much towards a long-term gameplay.
No, it's not, Mishko.
I mean they literally updated the algorithm to take out longer time frames to be the ones they prioritize.
Exactly. And that Dude, are we talking in circles here? That Dude, the stock was down like 40%, right? Because they torpedoed guidance and torpedoed earnings, you know? Now, this quarter is what I'm saying is they changed the algorithm

back. So these other these other steal games are coming back now and they're going to crush the quarter, right? And the stock's going to be up.
Stealing Egg is the number one game.
So when we analyze mobile all the time, we come across these hyper-casual games. I mean when you go into Sensor Tower, you basically have to spend, you know, your first 30 minutes filtering all the things that drive downloads but don't actually drive long-run retention. And now we wouldn't describe mobile as just that's all of mobile is hyper-casual games that are stuffed with ads in the first 30 seconds. There are great experiences we all know on mobile that sometimes have lower D1 retention but have longer run retention. Mid-core, 4X, all of these things. And so it may be the case that Roblox is deprioritizing some of the hyper-casual high-download things and pointing people more towards those mid-core experiences that have higher LTVs. I'm sure they're trying to figure that out, but I just wouldn't paint the platform in one broad stroke and just look at let's say what is popular right now and say like okay, well that that that dominates the whole platform and we can paint it. We

certainly wouldn't do that in mobile. I mean if we were to look at mobile top downloads right now, it would be all this trash and we'd be like what the is this? Like the 10th Arrows clone. Uh I just don't think that's a good way to illustrate the platform.
What generates revenue is what defines the platform, right? Not what downloads or what people play, right? From a from a financial perspective.
I think we should come back when we have our next Roblox discussion and talk more about like breaking down Roblox earnings, but let's also consider like what are the games that have the highest LTV on the And I don't think it would be the games that you describe.
It absolutely is.
When I say LTV, I mean what the games themselves have accumulated in terms of cash. I I don't I think it would be I think we should I think we should do the analysis.
10 of the top 20 are going to be Steel Toys from children.
You think that's accumulated more in its lifetime over a bunch of these other titles?
Well, they're newer, so
1,000%.
Well, I mean that's kind of the argument here is that from an LTV perspective, are these games going to be able to continue to generate revenue? My point is they don't because they don't have great retention. They're flashes in the pan.
That may be, but you just they get

swapped out from a new one, you know, a few months later, right?
Yep.
20 of these games out there, you know?
Yep. I have no doubt about it. Every time there's a success, there'll be Aeroscorpies.
Do you want to talk about the number of games coming on?
There's similar charts. I just found one of these ones. So, this is first-timers pouring on the platform. So, we previously know that at least the public number that there has been about 16,000 experiences coming in every day. And with the onset of AI tooling, so this is not necessarily the AI tooling that Roblox is giving to its developers, but this is existing AI tooling, especially Claude has been very good. Also, you know, ChatGPT and other ones, but Claude has seemed to be the primary tool for game development. We can see that the onslaught of new games has been rising. So, this weekly basis. So, what we're seeing is after September, the rise of new games is increasing rapidly. It's pretty much doubled since September. And what specifically is

driving the growth of new games being made for the platform is the amount of games made by new time game builders. So, first-time game makers have grown 10x since the launch of these powerful AI tools in September. It has also increased the amount of the games that are being made by existing studios. So, naturally they have been much more effective and faster and and you know, hopefully better with the ability to create games and hopefully better to create those type of AAA experiences. But what we're seeing is really an onslaught from people who haven't done games before are launching them. And there are success cases. I forgot the name, but there are success cases definitely with the games done by first-time creators. But naturally, the head percentage is abysmal. And this one is also creating the the challenges on the platform because the algorithm is so significantly skewed towards longer-term retention. There's this onslaught of games that are maybe not as great because they're done by people who haven't done games before. And as a

result, it's very hard to kind of get the initial traffic to see if your game has legs. So advertising is used to drive traffic to Roblox games. And advertising costs, the CPIs for advertising on Roblox have also been booming. So this is kind of like the microcosmos of what happens when everybody becomes a creator. And we're going to see this in in like accelerated time of what happens in Roblox. And this is kind of like what might happen with with the other platforms that are being launched, whether it's the Metas or the or the Google's ones or I don't I even forgot whoever was launching these platforms.
Now, if you're watching the YouTube version, Mishka posted a graph of the growth in games submitted to Roblox, particularly by first-time makers. And it's tracked with Opus 4. Or excuse me, 5.5. I mean, like dramatic increase, right? And they've also been boning up their MCP and AI tools. I think the question is is well, does this does this replicate on other platforms? And if you

remember, Steam actually has an AI disclosure form. And so that gives us some insight into whether or not games are increasing on the Steam platform or those with the AI disclosure. And it is true that they're increasing. If you look at July 2025, we're around, let's say, 7,000 games, and now we're around 14,000, but that growth rate is pitiful. It's not nearly what it was [clears throat] in the Roblox case. And I think we all know the reason for this, and I we don't have to spend too much time on it today, but it's just interesting to me how this particular genre and community is punishing AI in a way that younger generations are not.
But I do have to say Roblox generation is not happy about AI, either. Like, yes, the platform is supporting it, the developers are using it, but if you get caught of blatant AI, they are very unhappy about that.
They can't possibly support this many games as a platform, right? This is going to create cost overruns that are going to be insane. Like, they

need to curate
What What do you mean cost overruns? Where do you think the cost would come from more submissions? No, cuz you would no one would no one would play.
That is true. Like, they're they're not going to play.
Yeah.
But they need to start curating, though, just generally speaking. I think curation is the only way of eliminating a lot of this stuff, right?
Okay. All right.
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