Published - September 12, 2022 @ 12:52 PM (EET)
At its annual developer conference Friday, online gaming firm Roblox Corp. (NYSE:RBLX) announced it plans to debut 3D ads next year as it strives to diversify its revenue stream beyond in-game purchases.
Following management's comments, shares of Roblox climbed nearly 8%.
For 15 years, adding immersive ads has been a "dream" for Roblox, said Chief Executive Officer Dave Baszucki. Baszucki also said the plan is to let players interact with advertisements inside games, including ones functioning as portals, taking gamers to branded zones.
Before the rollout, Roblox will test ads with developers and brands by the end of 2022, with the company having already tested some online ads with companies like Warner Bros. and Vans.
WHY IT MATTERS
As investors poured into high-growth tech stocks, Roblox saw its market cap climb past $80 billion in November, shortly after debuting on the New York Stock Exchange in March 2021.
Since then, however, Roblox has lost 60% of its value in 2022 as the reopening of schools after the lockdown and sky-high inflation crimped user spending and punished those businesses.
Thus, figuring out new ways to monetize its 58 million users has been a top priority for management, but introducing advertising on Roblox has been controversial since most of its users are under 18.
Advertising watchdog Truth in Advertising sent a complaint to the US Federal Trade Commission in April, arguing that "Roblox has failed to establish any meaningful guardrails to ensure compliant with truth in advertising laws."
Elsewhere, Roblox has been doubling down on the "metaverse" to combat cooling demand.
The company said it is debuting other new features, including a tool that will help users discover virtual worlds and experiences easier, as well as chatting features, avatars that include facial animations, and shopping and attending concerts.
Currently, it generates "substantially all of our revenue" from the sale of Robux, the company said in its latest quarterly filing.
