Four publishers, four playbooks
Game makers face a maturing games-as-a-service market. Earnings show how.
The SuperJoost Playlist is a weekly take on gaming, tech, and entertainment by business professor and author Joost van Dreunen.
If the data don’t agree with you, it must be the data’s fault.
No one likes bad news. I get it. Bringing evidence into an organization is sobering—especially when it cuts against the internal narrative. Worse still, it can rattle the fragile politics of the place, suddenly arming the unpopular view with third-party validation.
The games industry is no different. In the fat years, everyone looks like a genius. It’s the lean years that test mettle. And when the numbers don’t cooperate, people don’t change their story—they shoot the messenger. Just ask Erika McEntarfer, the labor stats chief Trump fired hours after reporting weak job growth.
So, to keep in shape this summer, we’re sticking close to the numbers. This week (and next), we’re digging into earnings season to sharpen up before everyone’s back from vacation.
On to this week’s update.
BIG READ: Four publishers, four playbooks
The short: Earnings season lays bare how game makers are adapting to a maturing market, each betting on a different path forward.
The big winner (so far) is Roblox, which reported a new all-time high of 112 million daily active users.
The success of Grow a Garden has emerged as a key driver of the platform's current momentum, validating its growth model to investors and attracting mainstream attention from non-endemic brands and celebrities. It blew away Wall Street analysts. Bookings totaled $1.4 billion, representing a 51 percent year-over-year increase, surpassing consensus expectations of 23 percent growth. Additionally, the average daily hours of engagement per daily active user reached a new high of 2.69. It puts Roblox squarely at the center of the attention economy.
I previously wrote about the success of Grow a Garden, specifically how it demonstrates that Roblox can evolve into the next central entertainment platform. The firm’s strategy to become a creator platform and shed its label as just a game is starting to materialize, silencing skeptics. The logic breaks down as follows.
First, rather than cannibalizing other experiences on the platform, Grow a Garden is actually elevating the entire ecosystem. The success did not come at the expense of different experiences, indicating a net positive of new users. It demonstrates positive network effects that will enable Roblox to continue scaling, thereby disproving any concerns about market saturation.
Second, the platform is proving capable of generating homegrown hits. Instead of purely relying on outside content or third-party development, Roblox is becoming a creative hub. This "hit factory" model proves the firm is capable of consistently generating new viral experiences that drive user engagement and platform growth. That makes Roblox different from, say, Fortnite, which relies more heavily on licensing outside IP to organize in-game events and experiences.
Third, the speed at which brands, advertisers, and celebrities are responding signals a shift in their thinking about Roblox. Last week's AMA featuring Taylor Swift's football-playing boyfriend (complete with free virtual vegetables as attendance incentives) tells you that these interactive environments are becoming essential venues for audience engagement. Roblox offers its own blend of Reddit-style Q&A sessions and Fortnite-style live events as a meaningful alternative to conventional social media.
In response, Wall Street analysts have dramatically increased their price targets. Across the major banks, there was an average increase of 40%, led by Barclays (+142%) and Morgan Stanley (+124%), taking the consensus target from $107 to $150.
