What is Roblox? Everything you need to know about the latest craze

Posted:
in iPhone edited December 2021
Released in 2006, Roblox grew from obscurity into a gaming juggernaut, culminating in a multi-billion-dollar public stock offering -- and controversy about its monetization model that relies on children. Here's what you need to know about the game.

Roblox has seen fast growth during the pandemic
Roblox has seen fast growth during the pandemic


Roblox is a video game and creation platform available on most mobile devices, consoles, and PCs. Players choose from experiences built by developers and can use in-app purchases for in-game content and other perks.

Due to the platform's cutesy design and the freedoms it provides to players, Roblox has become a standout hit among children. The pandemic only spurred its growth as adults sought alternate incomes in development and children were stuck at home playing games. These forces combined to create the giant that Roblox is today.

What makes Roblox unique is its proprietary development platform. Rather than letting players build levels within the game, creators must use a discrete development tool on Mac or PC. Once content is submitted to Roblox it can be monetized in various ways.

A different game company called Media Molecule is known for pioneering "player creation" with its Little Big Planet series, but creators couldn't monetize content. Roblox has a similar approach, but experiences can only be built in development software, not in the game itself. Roblox also lacks a central storyline for players and focuses on the experiences constructed by developers.

Roblox: the video game

Roblox isn't a traditional video game -- it's a platform that hosts experiences built by developers using a dedicated game engine. When players open Roblox, they are greeted with a page of "experiences" or minigames that you can select to play.

Developers for the Roblox platform can design experiences and charge money for content
Developers for the Roblox platform can design experiences and charge money for content


The game has attracted young children due to its popularity on YouTube. Influencers who target younger audiences discovered that many of the minigames' colorful and cutesy nature in Roblox would attract viewers. This then leads to influencers hiring development teams to create minigames and content that can be monetized.

After a viewer sees the game on YouTube, they are usually invited to download the game via a pop-up ad. The excitement of playing something they saw someone else playing and the game's cute nature will win many kids over quickly.

This simple cycle of using social media to promote specific minigames and content has been very lucrative for the platform. So lucrative that the Roblox company has begun publicly trading stock.

What are Robux?

Roblox earns its money and pays developers using an in-app purchase system for currency. The currency used in Roblox is called "Robux." Many games and apps use this form of in-app purchase to give users currency they can spend in bulk without authenticating real payments every time.

The problem with in-app purchases in Roblox is it has multiple levels. You need the Robux currency to purchase items and accessories within the game, but you'll also exchange Robux for other in-game currencies.

That means when playing a minigame, you could earn "dollars" by performing tasks like in any other video game. If a user wants to buy special content or more "dollars" within a minigame like "Adopt Me," then they'll have to spend Robux to do so.

The exchange rate for Robux is simple -- divide by 100 to get the equivalent dollar amount. While this math is easy for adults, it obfuscates the value of items from children.

There is a monthly subscription that adds 450 Robux every month for $4.99. There are more economical ways to get Robux, like buying them directly from the website or getting gift cards from Amazon.

What is the Roblox Catalog

This is the default screen in the avatar builder, pushing obscenely priced content
This is the default screen in the avatar builder, pushing obscenely priced content


The catalog is where any user-facing item, accessory, or customization option is sold. In the avatar menu, the catalog consists of things like hair, clothing, or faces. There can be in-game sale systems built by the developer or an isolated catalog of items built just for certain minigames.

Developers using the proprietary development software on Mac or Windows can customize and upload items that can be sold for Robux. Roblox players cannot create levels or content in the game but can buy and resell items from the catalog as long as they are listed as limited items.

There are systems in place for users to check on an item's price history if sold by a player. This will allow users to avoid price gouging, which is rampant on the catalog.

Players and children may not recognize this distinction or understand the value of an item. Parents need to be aware of the in-app purchase system and ensure that purchases cannot be made without a passcode. Children left unattended with Roblox can quickly spend hundreds of dollars that may not be refundable.

How to exchange Robux for real money

Premium Roblox subscribers can convert Robux into real money when certain conditions are met.
  • Be a member of Roblox Premium
  • Have a minimum of 100,000 Robux earned by the account
  • Be 13 or older
Once a member meets the requirements, they can apply for the Developer Exchange Program. Upon approval, the account holder can request a Robux cash out once a month at the current market rate of exchange.

This means a developer or player must make at least $1,000 selling items in the catalog or via minigames before gaining the ability to cash out. Players seeking a quick cash grab will upload a simple smiley face and charge hundreds of dollars for its use. It is unknown how effective this method is, but parents should warn their children of the scams.

Possible Roblox App Store violations

Roblox frequently recommends objects worth well over what can be bought with in-app purchase
Roblox frequently recommends objects worth well over what can be bought with in-app purchase


The screenshot above is from one of the most popular Roblox mini-games -- Adopt Me. The highest purchase is so high that the in-app purchase system doesn't offer enough Robux to cover it. The pop-up pushes users to visit the official website to purchase more Robux, a clear violation of Apple's in-app purchase policy.

Developers are not allowed to mention external purchase options or direct users to websites. This has caused issues with apps like Fortnite and Hey in the past.

Robux are similar to the V-Bucks used in Fortnite. As long as you purchase in-game currency from external retailers like Amazon, the game doesn't have to pay Apple.

Roblox isn't immune from price gouging and scams and little seems to be done about it. The recommended tab shows multiple products with prices well over hundreds of dollars. Apple has run into similar issues on the App Store, like one developer charging $999 for an app called "I'm Rich" that did nothing.

Moderation and oversight

Since Roblox is heavily used by children, it has several systems to keep things safe. For example, the avatar creation tool prevents lewd objects from being submitted or inappropriate attire from being worn.

Systems like these are fully automated and aren't perfect -- so players will have to report anything that slips through. For example, reports of "fascist playgrounds" and "virtual strip clubs" suggest that Roblox doesn't always catch, or understand, what should or shouldn't be allowed.

Live chat and IAP combine to make any parent worry
Live chat and in-app purchases combined can make any parent worry


When examining another player's profile, there will be a "report concern" button. This lets parents or players report any weird behavior, inappropriate messages, or other problems.

The game features live chats when in a minigame and private chats between players. There are filters to prevent sensitive content from being shared, like phone numbers, and cussing is not allowed. However, there is nothing to prevent players from sharing user names to other chat apps or meeting up on Discord.

There have been reports of child predators taking advantage of this, for example, by getting young players interested in a new world they are developing. Once the child moves the conversation to a third-party chat client, all protections disappear.

Reportedly, Roblox does little to protect users beyond banning an offending account, but the offender can make a new account and continue abuse without issue. Being banned doesn't prevent monetization either, since the abuser can transfer their developed games to other players before an imminent ban. Therefore, there is no consequence for abusive behavior.

Parents can restrict access to certain parts of the game using the security settings. In-game chat can be disabled, and parents can hide other profile information from here.

Beyond the game there lies an entirely different world populated by the developers themselves. These developers can be anyone over the age of 13 and tend to occupy spaces beyond Roblox for communication and coordination, often in Discord.

If your child decides to develop for Roblox to try and earn money, they may be recruited by a small team. These teams are often run by other children or young adults, and Roblox takes no responsibility for what transpires between these individuals. It is up to the parents to provide oversight and ensure their child is being treated fairly and being paid properly -- if money is involved.

Roblox: the content platform

While building minigames and content is limited to developers, there's very little overhead to becoming a developer. All you need is a Mac or PC to install the free developer tool called Roblox Studio.

Roblox requires you to be over 13 years old to monetize content for the platform. Some level of competency is required to design and upload avatar items, and fundamental programming skills are needed to make minigames. The programming language used for Roblox Studio is called Lua 5.1.

Once you've uploaded something to the platform, even a simple shirt, you can monetize it, but you must have a premium subscription to do so. Once the object is sold from the catalog, the developer will take a cut of the revenue in Robux.

This game has its own in-game currency purchased with Robux.
This game has its own in-game currency purchased with Robux.


Social media influencers can take advantage of the Roblox platform since there are no restrictions against self-promotion. The minigame menus and launch screen can feature links to a creator's YouTube or other accounts. That means influencers can monetize via in-app purchases and sponsored ad viewership on YouTube.

As the platform has grown, so has the size of development studios making Roblox experiences. These large studios can have dozens of people working on one mini-game as a full-time job, and earn enough to live on. However, Roblox doesn't take any responsibility for how these studios operate or pay their developers.

Since the game is meant to attract children to code experiences, this often leads to teams of children working together to try and compete with the large studio. Some reports suggest that some development teams are taking advantage of the child developers by not paying them well, if at all. And since none of this is regulated by Roblox, your child may find themselves being bullied into performing demanding development work for little to no compensation.

Roblox: the company

Roblox was established in 2004 and has seen many iterations since. After a few bursts in popularity, it now boasts 9.5 million developers, 24 million experiences, and $761 million paid to the community devs.

The platform is available in 180 countries in 11 different languages. Roblox claims to have 32 million average daily active users.

The vertical integration of development, monetization, and social media influence has made Roblox a multi-billion dollar company. It went public on March 10, 2021, with a net worth of $45 billion.

Investors hope that Roblox can continue to grow after the pandemic ends
Investors hope that Roblox can continue to grow after the pandemic ends


Roblox will continue to grow as investors throw money at it and stock prices surge. As social media influencers saturate the experiences with YouTube links and in-app items, the game's revenue streams will grow.

That being said, children are fickle and can move on to the next popular thing without notice. Investors also need to consider that a lot of recent growth was brought on by the pandemic, which will soon be over. Roblox will need to prove it can grow in a post-pandemic world if it wants continued investment in the game.

As long as kids are interested, however, parents need to pay attention to the game. Set up parental controls within iOS to block in-app purchases, turn off in-game chat, and ensure the games your child is interested in aren't off-color or filled with rude players.

If your child is interested in developing Roblox experiences, discuss the issues with child labor, how income is earned, and what their goals are before they begin. Be sure to check in with them, and keep track of who they work with and if real money becomes involved.

Reports suggest that players and developers tend to keep quiet about issues due to internal politics. If a user is outed as a "snitch" or their reputation is tarnished, they may never be able to join a team or create one themselves in the future.

Payment controversy

In August 2021, Roblox came under fire for how it handled developers who made experiences for the game. A lengthy investigation posted to YouTube on August 19 by People Make games accused Roblox of being exploitative of developers in the system.

While Roblox offers developers the potential to earn revenue, in a similar way to Apple's App Store, the situation is much tougher for those creating Roblox experiences and expecting to get paid.

Part of the problem is how Roblox focuses payouts based on Robux, the in-game currency, rather than cash. This leads to the situation of developers being able to immediately spend their earnings within Roblox itself, so the earned funds never leave the platform.

Users earn very little when they cash out Robux
Users earn very little when they cash out Robux


The concept is likened to the company scrip used by mining firms in the 19th century, which would see mine operators provide a scrip to employees that could be paid at the company store, instead of currency. Workers would be warned off from any potential scrip-to-currency exchanges due to exchange fees taking some of the value away, leaving them with buying items from the company itself.

Along with in-game items, the currency is also usable to pay for advertising within the game. This service, again, is operated by Roblox itself.

In terms of how much Roblox pays out, developers earn just 35% of the value of Robux from a transaction, with it keeping 65%. By contrast, Apple takes its 30% fee at most, as does Steam, Microsoft's Xbox platform, and Sony, while Epic and Microsoft Windows game sales involve a 12% fee.

Roblox's own developer pages cites the high number of individual fees that are taken out as a cost of the transaction and operating the platform. This includes a 24% cut to app stores like Apple's own.

Unusually, one chart from June 2021 had Roblox saying it took a 26% share for itself, separate from the 9% it takes for "platform investment" and 14% for "platform hosting and support." In total, Roblox takes up to 49% of the value of a Robux transaction for itself.

The black market exists to avoid paying Roblox its fees
The black market exists to avoid paying Roblox its fees


Of course, the small amount of money earned from performing transactions and Robux exchanges on Roblox itself led to black markets being formed. Players, again often children, are guided to illegal websites that exist outside of the Roblox company's sight. Here they can put expensive items up for sale for much cheaper, thanks to lack of fees.

Users can also use the black markets to exchange Robux for cash or other items, again avoiding the requirements set by the company. It has been reported that these black markets have operated without interference for years. Allegedly, this is due to the fact that the Roblox economy relies heavily on these back-alley dealings.

Even though Roblox has been made aware of such illegal transactions, the only action the company allegedly takes is banning offending users. People Make Games reached out for comment from the company and didn't receive a direct answer to their inquiries.

Roblox is a publicly-traded company worth roughly $55 billion on the stock market, which is the same valuation given to Nintendo.

Updated on December 15, 2021 with information from People Make Games follow-up video.

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Comments

  • Reply 1 of 11
    geekmeegeekmee Posts: 629member
    This is right on the mark!...
    My 8yr old plays Roblox ALL THE TIME over the past year, and believe me I had questions!??
    Mostly I wanted to know if I was being a bad parent letting her pursue her fascination...
    After all, I had Etch-A-Sketch (at the risk of revealing my age.)
  • Reply 2 of 11
    wonkothesanewonkothesane Posts: 1,717member
    An entire industry evolved around the core idea to deceive and trick minors into giving away their best parts - life time and money. 
    lollivermariowincowatto_cobra
  • Reply 3 of 11
    cgWerkscgWerks Posts: 2,952member
    Well, the latest craze seems to be on Wall Street. Roblox has been a craze among the kids for years now.
    I think an article I saw earlier today said something about valuation being about 26x or something like that. I don't really get that, as I don't see why their revenue would shoot up suddenly because of the public-trading.... and it's already pretty widely known among the kids as far as I can see. Where is the growth?
    watto_cobra
  • Reply 4 of 11
    MarvinMarvin Posts: 15,309moderator
    cgWerks said:
    Well, the latest craze seems to be on Wall Street. Roblox has been a craze among the kids for years now.
    I think an article I saw earlier today said something about valuation being about 26x or something like that. I don't really get that, as I don't see why their revenue would shoot up suddenly because of the public-trading.... and it's already pretty widely known among the kids as far as I can see. Where is the growth?
    Probably the usual financial games. The early investors want to see a return so they inflate the values of the stock basing it on revenue and active users and that's how they make money by selling inflated shares to new investors and the company selling shares then uses that income to fund their operation for years. Look at Snapchat, they have never made a profit in 9 years and valued at $88b.

    They all hope it eventually turns into something profitable like Twitter and Amazon. It took Twitter 13 years to make a profit ( https://edition.cnn.com/2019/02/07/tech/twitter-earnings-q4/index.html ). It took Amazon around 20 years to turn into the success it is today. Snapchat has a business model that looks like it can never be profitable but the founder is a billionaire.

    Roblox currently makes substantial losses:

    https://www.gamespot.com/articles/roblox-doesnt-make-a-profit-right-now-but-ceo-is-optimistic-about-the-future/1100-6488683/

    "Roblox brings in a lot of revenue, as the company made $923.9 million in 2020 (+82%), with active daily users climbing to an astonishing 32.6 million. However, Roblox Corp. does not make any money. The company posted a loss of $253.3 million in 2020, which was significantly worse than its loss of $71 million the year before."

    Investors will be hoping that eventually they will grow/maintain their users the same way Minecraft has and lower their costs. Their biggest costs are paying developers to build for the platform and infrastructure:

    https://www.nbcnews.com/tech/video-games/roblox-embraced-indie-game-makers-become-30-billion-company-rcna385

    "Roblox said in the latest update to its prospectus that it paid developers $328.7 million last year, up almost 200 percent from 2019. That far outpaced the company’s sales growth of 82 percent last year, when it booked $923.9 million in total revenue.
    Roblox’s second-biggest expense, behind developer fees, is infrastructure, privacy and safety. Those costs jumped 69 percent last year to $264.2 million."

    Because they have in-game chat and it involves kids, they have around 1,000 admins to check everything is ok for the millions of users. Some developers are making a lot of money building games on the platform, the couple mentioned in that article made $49k in a month. They were kids who started playing on the platform when they were younger and turned into developers, like these:

    https://venturebeat.com/2017/07/21/the-deanbeat-robloxs-kid-developers-make-enough-robucks-to-pay-for-college/
    https://www.dailymail.co.uk/femail/article-8953063/Identical-twins-20-make-100-000-year-video-games.html

    This is the kind of thing Apple Arcade could use but ideally much better quality than this:







    These videos look crazy and they have millions of views. Kids are playing these games for hours and watching videos of other people playing on Youtube. It looks like a terrible game to play but I guess the creativity and social aspect of it is appealing to kids like the World of Warcraft MMO style gaming and Minecraft building.

    It might never make a profit but early investors and founders will as well as the game developers and Youtubers and their stock price will be as meaningful as most of the other zero-profit companies that crop up these days.
    cgWerksurahara
  • Reply 5 of 11
    BeatsBeats Posts: 3,073member
    A craze in 2021?

    back in 2017 I emailed the company because I thought it was pathetic that the game wasn’t available on Apple TV.

    To this day Apple TV is pathetic for gaming.
    williamlondon
  • Reply 6 of 11
    cgWerkscgWerks Posts: 2,952member
    Marvin said:
    Probably the usual financial games. ...
    It might never make a profit but early investors and founders will as well as the game developers and Youtubers and their stock price will be as meaningful as most of the other zero-profit companies that crop up these days.
    Yeah, thanks for all the info! I suppose they'll find some way (if they haven't already) of turning the kids into a product like social media. I just don't see Robux sales, or their audience, growing that much. Maybe I'll be wrong.

    My son loves it, and spends a lot more time in there these days than in Minecraft. I like Minecraft (and play it when I can find time), but I don't really like Roblox... though I've never tried to play it for more than a few minutes at the request of my son. The quality is horrible, but I suppose once you get into it, it gets immersive in the mix of gameplay types, as you noted.
  • Reply 7 of 11
    avon b7avon b7 Posts: 7,622member
    geekmee said:
    This is right on the mark!...
    My 8yr old plays Roblox ALL THE TIME over the past year, and believe me I had questions!??
    Mostly I wanted to know if I was being a bad parent letting her pursue her fascination...
    After all, I had Etch-A-Sketch (at the risk of revealing my age.)
    Ha! Was that your 8 year old child, or 8 year old grandchild!  ;)

    We might run into each other in Jurassic Park one day and I'll get you an acaí (or whatever the latest buzz drink is at the time!) and chat about Etch-A-Sketch how it made our generation so happy! 
    edited March 2021
  • Reply 8 of 11
    auxioauxio Posts: 2,717member
    It's definitely not the "latest" craze.  I remember my son talking about it and first trying it about 5 years ago.  He's played it on and off again since then, but it never really captured him like Minecraft.  He hasn't really delved into all the games on it, but the ones he has feel pretty shallow.  He played this one where you customize a house, your clothes, car, etc for a little while.  Kinda like a virtual, multiplayer version of a Barbi dreamhouse & car.  But he got bored of it quickly.

    Minecraft is definitely more his thing as you can delve as deep as you want to go.  I'm currently helping him out with a custom game mod & he's practicing speed running the game (finishing it as fast as possible by using all sorts of clever shortcuts).
    cgWerks
  • Reply 9 of 11
    uraharaurahara Posts: 733member
     a clear violation of Apple's in-app purchase policy”
    No wonder. I had emailed once about the app which violated this. And I spoke with 3 representatives until they got what the issue was. Apple’s own support staff has no clue about this policy. 
  • Reply 10 of 11
    mcdavemcdave Posts: 1,927member
    How ‘enriching’ technology has become. I guess at least the 49% cut would make it too steep for money laundering. 
  • Reply 11 of 11
    Funny, this has popped up now. My son is the one that cares about this. None of their software the client or the development environment have ASi version. Where is that AI article saying we should abandon software because the developers have had plenty of time to develop native versions.
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