The global gaming platform Roblox (RBLX 3.83%) has been wildly successful for players and developers alike. In this video clip from "The Gaming Show" on Motley Fool Live, recorded on Feb. 7, Fool contributor Jon Quast and analyst Sanmeet Deo outline what the company does well but also what it needs to be wary of going forward.
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Jon Quast: We were going to talk a little bit about the creator economy and how maybe blockchain gaming is one potential avenue for incentivizing that and, I don't know, making earnings a little bit more accessible to more people, but Roblox is very interesting in that regard as well, because I was just reading a report that it looks like the developers or creators who create games on Roblox looking to make $500 million this year in 2021, looks like they made $500 million, and we'll get the exact numbers, I guess, with Roblox, but that's incredible.
Sanmeet Deo: Yeah, that's one thing that fascinates me about the platform is that it's completely user-generated content. All their games and experiences are not created by Roblox the company, they're created by developers and their mission is to share the wealth with developers and create a place where developers can create content.
They are incentivized to create content that are engaging and exciting and fun to use for people. I hate to say, but I like to liken it as if it's the YouTube of gaming so to speak. Because YouTube is driven a lot by user-generated content. There's viable options for developers to create whether it be a side hobby or even a full business or some developers have come on as single developers, created some games done very well, and now they have their own gaming studios, so it creates a platform or an opportunity for people.
One thing I didn't mention with the preview is some of the risks that are there with Roblox we should definitely keep an eye out and watch out for especially what they talk about in the earnings calls with, I've seen some reports about well Roblox exploits developers and doesn't pay them enough for the young kids or there's the safety issues on Roblox which they've outlined consistently in their reports and that's something to be mindful of and there's actually a short report that came out. I haven't looked at it but talking about some concerns with that. They've been on top of that since day 1 and I know there are from what I've heard, they are aware of it, and they're always fighting it and that is going to be a risk and a concern throughout, especially with any platform where kids younger than 18 have access to.
Jon Quast: Yeah. It's the nature of having user-driven content. You can have a entire code of conduct. But people violate that, and they are very aware. Roblox, on Friday publishing in their blog, the various measures that they're taking for protecting children on the platform.
But at the same time, like you said, yeah it's something that they're going to have to grapple with because things do sometimes get through and people are exposed to things before they are aware of it and can remove it, so is it is an ongoing issue for the company. It's like the best thing about the company is that it's user-generated content. It's also the worst thing about the company because it does remove a little bit of control from the process, so it'll be interesting to see how they deal with that.
