Roblox Is Redrawing Its Map of the Metaverse

READ MORE: Craig Donato interview: How Roblox navigates brands, UGC, and the metaverse (VentureBeat)

“The internet isn’t very human,” contends Craig Donato, chief business officer at Roblox, in an interview at the Gamesbeat summit.

“You can have all sorts of rules, but that’s not dictating my behavior. There are social norms that dictate my behavior. There’s reputational impact. All this social signaling. That all impacts my behavior,” he continues.

“Humans are social animals. When we’re talking to someone, looking them in the eye, and they’re nodding their head — we need to figure out how to bring those social signals to the metaverse. Otherwise, it’s going to be a bad, toxic place.”

Donato explained that Roblox is working on ways to advance this. For instance, possibly using a webcam to map the facial expressions of a person on their avatar.

“Humans spend most of their time looking at people’s faces, the expressions in their eyes. I’m a lot less likely to be toxic to you if, when I say something, I can see that I hurt your feelings. It’s just human instinct. I don’t hear a lot about that, but I’d say that’s the area where we think — VR and AR are hot now, but those aren’t gating factors.”

“A lot of people called us a game company, for years. We kind of bristled at that. We accepted it, but it’s not really what we were ever about.”

CRAIG DONATO

Watch This: The World of Roblox

Another solution is to monitor interactions using AI. “We need to make sure that we’re scanning not just what the assets are, but what the code can do,” Donato explained. “The ability to do moderation of user-generated content is incredibly complex.”

Then there is giving the community better tools to self-moderate, such as being able to mute or block someone “so I never have to be part of a game server with you. Or I can report you.”

In a wide-ranging interview on the Gamesbeat stage, Donato talked principally about his company’s vision for the metaverse. The business was founded in 2004 and since its inception has been about creating a shared digital space. A space for people to do things together, or in the words of its founders David Baszucki and Erik Cassel, “human co-experience: people doing things together in synchronous 3D spaces.”

“I think people call that the metaverse now, but it’s always been what we focus on,” Donato said. “A lot of people called us a game company, for years. We kind of bristled at that. We accepted it, but it’s not really what we were ever about.”

The metaverse is inevitable, he says, and Roblox is all in. “A larger and larger percentage of people’s time is going to be spent doing things with other people in the digital space. It’s just inevitable. It’s just going to accelerate.”

Watch This: Making (or Remaking) the Metaverse With Roblox’s Bjorn Book-Larsson

About 50 million people a day visit the Roblox platform, spending an average of two to two-and-a-half hours a day for a total of roughly 100 million hours daily, and earning the Roblox creator community about $500 million in 2021. The creators on Roblox range from big studios making multiple millions of dollars a month down to individuals who are doing it as a hobby.

None of the content on its platform is produced by Roblox. All the experiences, all the gear and avatars — anything that you can buy in the experience — is produced by creators.

“We grew entirely through organic network effects. One network effect is the UGC network effect. The more creators we have producing content, the more audience that attracts. The more audience is here, the more they build content. It’s this virtual loop. That’s paired with the social network effect. The number one way people come to Roblox is they’re invited to play because it’s more fun to play with your friends. Those things work in unison,” Donato said.

“We’re only successful if our community is successful,” he added. “We need to figure out how to incentivize them and make them successful with the tools we provide.”

Elaborating on this, Roblox is already using a lot of what might be called Web3 elements. For example, its business model is based entirely on microtransactions.

“We have our own currency. People buy that and can spend it on gear and any new experiences on our platform. Once they buy that gear they take it with them from experience to experience. The creators on our platform not only create an experience, but they can mint items. Those can be sold and traded. We simply float that economy,” explained Donato. “We sell the currency and take a cut of transactions on our platform. That’s worked quite well for us. Years ago, we had advertising, and we eventually pulled the advertising down from our platform because the microtransaction model is so effective.”

However, Roblox is not Web3 in several crucial aspects. It is not on the blockchain, it does not permit tokens, and its virtual world is not interoperable with any other virtual world.

“Philosophically, we believe in decentralized creator communities. Ultimately, we believe the metaverse as a phenomenon will be a community-driven, a bottom-up phenomenon,” Donato said.

NFTs, he said, are not a priority, but we can expect Roblox to incorporate them in future. “It would be kind of buzzy if we did it. But in terms of product functionality for our users, we’ll see. But we’re not philosophically opposed to it at all, to the extent that it creates more value, that it lets creators come together in more interesting ways to provide value to users.”

Perhaps this is because Roblox wants to retain revenue from the trade of its digital items on the platform. The trade is a pretty healthy revenue earner — why open it out until there’s a compelling reason to do so?

“For example, some of the bags Gucci sold, virtual representations of their physical bags, they sold for more than the actual bag. Weird things happen. Trading, buying, holding inventory, collectibles, all that stuff is very powerful. We see a lot of demand on our platform. Some of the items on our platforms cost $50-60-70,000. It’s kind of crazy.”

Nearly a third of Roblox users update their avatar daily. People change their avatars multiple times per week.

• “Philosophically, we believe in decentralized creator communities. Ultimately, we believe the metaverse as a phenomenon will be a community-driven, a bottom-up phenomenon.” — Craig Donato

Donato was more evasive about the possibility of opening the platform up to say, Fortnite, which would be a chief building block if the metaverse is to be anything more than a series of walled gardens.

“Right now, we’re building all the scaffolding and infrastructure that needs to go around [the metaverse]. We’re absolutely game for interoperability. It’s not really the issue right now. It’s figuring out how to get everything to work together. At least in the immediate future, there will probably be multiple metaverse platforms that will then interoperate. Those boundaries will get increasingly blurry over time.”

Donato shared some interesting insight into the users of its platform and how they view the metaverse.

“Kids that grew up with interactive online gaming, based on our research, view reality differently than we do,” he said. “I think of myself as a colonist of the metaverse, one of the old people. We see digital and physical reality as distinct from each other, and we see digital as less than physical. But this younger generation sees them as not only equal but as not separate. They live their lives both at the same time. They view it differently. They naturally socialize. They understand how to get around, and understand the social norms. They just see it differently.”

Donato agrees that, as it stands, a lot of the metaverse is simply marketing.

“But I can imagine that in the not-so-distant future, retail will be revolutionized by the metaverse. Sometimes I don’t want to buy something on Amazon. I go to a store because I want to pick it up and I want to see it. I want to find out if it fits me. A lot of that will be things we can do in the metaverse.

“We can create avatars that have the same proportions as your body,” he continued. “We can allow you to look inside a product, take it apart, put it back together again, and understand it in ways you can’t on a flat website. As those things happen we’ll see the more direct response. We’re just in the very early phases of what the medium can do. But it needs to be conceptualized by each vertical.”

READ MORE: Craig Donato interview: How Roblox navigates brands, UGC, and the metaverse (VentureBeat)

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