Tomorrow, March 10, is another big buzz day just like when Airbnb or Bumble went public. Roblox has a near $30 billion private valuation, and the indication is a direct listing opening price of $45. A few VCs and the founders will make a gigantic profit.
I gave my concerns in public forums about the risks of companies who target a younger audience, but my opinions were overshadowed by the diehards. The true believers, like the people who loved Gamesto(nk)p, say that Roblox is going to be the gateway answer to digital commerce and gaining young customers early.
That might be true now, but that will eventually end (in a very unspectacular fashion).
I was the penultimate video game player at my school, and I spent more time playing video games than I did going to school or sleeping. I can tell you that video games individually and as whole platforms have a shelf life. The games got boring after a while, and they got replaced by newer, more exciting games and platforms.
Also, the older you are, the longer the life that the game that can hold its client base (if they get caught). What games really gain consistent traction from older people for a longer period? Bridge, crossword puzzles, bingo, slots, dominoes, chess, checkers, poker, 21, mahjong, rummy, go-stop (Asian games have very similar demographics.)
What games gain consistent traction from younger people for a longer period? NONE.
The key element in successful gaming is psychology and suppression. Those are metrics I use to evaluate gaming opportunities. Roblox has not done enough of that.
People are getting bored and started leaving the platform (especially the classical gamers). The online chat bullying is annoying at best, and there is a big perception that Roblox is greedy for money, and that the company is not doing enough to make the games and development more interesting. I do not like the valuation level here — Roblox needs more improvement in what they do.
Good luck to everyone in the IPO: I’m not having any of it.
Full disclosure: the author does not have any positions in any of the companies above.
Edward Kim is co-founder and General Partner at 3LA Ventures. You can contact him at ed@3lavc.com
March 9, 2021 (original print date)
