2nd week of march, Roblox launched its initial public offering (IPO). The timing of the twice-postponed IPO coincides with the world opening up and the return of out-of-home competition. Roblox's stock price is being raised in part by a temporary, artificial COVID boost, as opposed to fundamentals which will drive the company's growth in the 'new normal.
Roblox will not be exempt from feeling increased competitive pressures in the short term as a result of the COVID bounce effect. The company, however, stands to gain an edge over the others because of its positioning. Because it addresses emerging consumer needs, whose development has been catalyzed by the recent Coronavirus pandemic, but which can be attributed to decades of development.
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MIDiA dubbed this phenomenon the COVID bounce effect at the start of the pandemic. It is the result of time and money artificially halted through the halting of out-of-home and 'in real life (IRL) entertainment. In addition to the additional time and attention gained through efficiencies and efficiencies, digital propositions, including those that were targeted to COVID-19, have seen a significant boost in engagement.
However, as vaccines are distributed, the lockdown eases in the coming months, and the summer approaches and government schemes support out-of-home and High Street shopping, consumers will begin to use their time and money for other activities, rather than digital.
But we are headed toward a 'new normal' as opposed to going back to the 'old days. As a result of the pandemic, commuting probably will take up less of our time on a weekly basis; we are likely to meet new people (both professionally and personally) and form bonds in the digital environment more frequently than ever before. In the digital environment, we are more likely than ever to make new friends (both professionally and personally) and form bonds with new people. Despite the desire to return to theaters, concerts, and restaurants post-pandemic, we will experience more and more of our lives via digital interactions.
COVID bounce effects will be most noticeable in entertainment propositions that serve solely as entertainment (i.e. deliver fun) as opposed to propositions that cater to basic consumer needs (a more digitally skewed one). In the digital environment, two of the most pressing needs are the ability to express oneself and the ability to lean in. Roblox offers both.
Consumers are spending an increasing amount of their time in digital environments, driving an increased need for them to express themselves and define themselves. As feeds and algorithms become increasingly crowded (along with user-generated content and professional content), it becomes ever more difficult to stand out and communicate expression efforts to others (which is a key element of expression's value).
Creating micro-communities to make it easier for consumers to cut through the digital clutter and to be more effective at finding, associating with, and expressing themselves in their digital camps. The typical single-purpose game company has just one or a small handful of fan communities, whereas Roblox has created a metaverse that can serve as a destination for any tribe.
As noted in MIDiA's previous blog posts, we are entering a lean-in consumption period, where creation itself becomes an integral part of the consumption process. New technology has made it possible to co-create content to unprecedented depths. Smartphone cameras and filters transformed us into photographers; DIY creator tools transformed us into songwriters and cinematographers, and now Roblox enables co-creation for games.
Despite the proliferation of tools for creating audio, video, and text, consumers are still unable to easily make games seamlessly, which gives Roblox an edge over the competition.
A key feature of Roblox is that it is not so much a games company as it is a platform for digital expression and co-creation around games.
Moreover, as every games company ventures forward to directly compete with out-of-home entertainment propositions as part of the COVID bounce, self-expression and co-creation in the digital environment will become more mainstream as Gen Alpha and Z get older.
Roblox will likely experience some short-term stumbling blocks in terms of engagement as consumers establish a new equilibrium between out-of-home entertainment and digital entertainment, but these effects will likely be less pronounced than with more traditional single-purpose games. It seems likely that Roblox will become a cultural and social leader rather than just a games company as the dust settles on its co-creation and digital expression strategy.