Roblox players to start seeing video ads in its virtual realms

(Reuters) - Roblox is rolling out virtual billboards with video advertisements, the gaming platform said on Wednesday, in its latest move to draw revenue from its games that are mostly free to play.

Users will now see billboards featuring content from brands such as e.l.f beauty, Walmart and Warner Bros Discovery, just as they would in real life.

That would give advertisers access to Roblox's nearly 72 million daily active users — half of whom are Gen-Z customers, a population group prized by marketers and businesses.

The company in November began testing the video ads — that will be served to users who are 13 years and older — as part of its efforts to reduce reliance on revenue generated from its in-game currency "Robux", which players can use to buy outfits, vehicles and other features inside the company's digital worlds.

It charges a fee on all purchases done on its platform, which hosts millions of videogames that are built by its users — who get a share of any related revenue.

That practice will extend to the ads, with creators of the virtual worlds who opt to show the billboards getting a portion of the revenue Roblox makes from them.

Roblox is hoping its large Gen-Z user base will give it an edge in the competitive ad market, where it would have to wrestle for marketing dollars with tech giants such as Google and Meta Platforms and smaller players such as Snap.

"By advertising on Roblox, brands can create deeper connections and engage tens of millions of Gen-Z users," said Stephanie Latham, vice president of global brand partnerships.

"We are also in beta with some partners on what a cost per completed view product would look like on Roblox and so expect to have more specifics later this year," she told Reuters.

The company had last month hired advertising tech firm PubMatic to ramp up sales of the new video ads.

(Reporting by Harshita Mary Varghese; Editing by Shilpi Majumdar)