How Roblox's public debut will impact the gaming industry

Yahoo Finance's Dan Howley breaks down how Roblox's public debut will impact the gaming industry.

Video Transcript

AKIKO FUJITA: Well, turning our attention to the big debut in the market, shares of gaming platform Roblox begins trading on the New York Stock Exchange today through a direct listing under the ticker RBLX. Our gaming expert Dan Howley watching all of the action for us today. And Dan, when you look at the filing, some pretty incredible growth that this company has seen over the last year, especially nearly doubling its daily active users during the pandemic.

DAN HOWLEY: Yeah, this is kind of another example of how gaming has really exploded as a result of the pandemic, people being stuck at home. But Roblox in particular has done incredibly well during this period. And 31.1 million daily active users on the platform, that's a huge jump from the prior year, which was around 19 million daily active users, I believe.

One of the other important things to point out, though, is that there's seven million different developers on the platform. Now Roblox isn't like a Nintendo or a Sony or a Microsoft, one of those big developers or EA Activision. They don't have a singular narrative story. They don't have individual characters. Everything is created by other players.

So the fact that there's seven million of them on there really speaks to the growth potential for this company and I think, really, for the gaming industry as a whole. These people are going to be the next generation of game developers. And if they have access to a platform like this, it really makes it easier for them to get into the business.

I think one of the other things to point out is that Roblox specifically says they need to capture the larger-- sorry, older audiences, the folks who are over 13. They said they've had a problem with that so far, but they want to expand in that area, and they do intend to do so. So I think if they can capture those older teens, then I think that they will have a long trajectory to go as far as continuing the gaming dominance that it's shown so far.

ZACK GUZMAN: Yeah. Whenever we talk about a company having a-- you know, a large chunk, half of their customers, below the age of 13, always a little unique in that regard. But we had heard, you know, anecdotal stories of dads playing with their younger children, as well, in Roblox.

But when you look at it, Dan, I mean, what are the growth drivers going to be? Because we are talking about a gaming company coming out after the pandemic showing a lot of growth because of that, some people might say. But ahead, when you look specifically at revenues, they've stressed the opportunities to add ads to the platform, as well. But beyond that, what else are you going to be watching to show what a lot of investors want to see after a company becomes public, that necessary top-line growth?

DAN HOWLEY: Yeah, I think one of the things to really look at is the experiences they can bring to the game. So they had a concert with Lil Nas X, basically showing that it can be this kind of weird metaverse similar to what Fortnite has done. But with this, they have the opportunity to spread it out into different areas of the game, where with Fortnite you're stuck in Fortnite and the little concert area in that game.

With Roblox, there are other areas that you can build out different experiences for different concerts, different events. You can have classrooms join and build out for kids there. So that's something they're actually working on. They have an accelerator program, as well as an incubation program. So I think those are really where they're going to see growth.

And don't forget, they make a lot of money selling these Robux, which kids then use to purchase in-game items. Those Robux that are then purchased from the people that develop those individual games, those-- a cut of those go to those developers. So there's really this kind of cycle where you have these developers building the players buying.

That goes back into the developers' pockets. They want to stick around to keep making that money. I think, basically, Roblox just has to make sure to incentivize those developers to stick around and keep producing higher-quality content. That'll really have the gamers coming back from more.

ZACK GUZMAN: Yeah, we'll see what happens in terms of where it opens, as we were just looking at. Well above that $45 reference point, but we will keep our viewers updated on where that is. Dan Howley, appreciate you joining us.