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A recent announcement by Roblox, predicting lower annual bookings than expected, has stirred apprehension within the video game sector. The company’s projection for 2025 anticipates bookings ranging between $5.20 billion and $5.30 billion, falling short of market estimates averaging $5.27 billion. This news has prompted a significant drop of 26% in Roblox’s shares during premarket trading.
The subdued forecast from Roblox adds to existing anxieties about the health of the video game industry, following a lackluster outlook from Electronic Arts. The latter attributed its weak bookings, a critical metric reflecting in-game spending, to challenges faced by its soccer franchise. Despite these concerns, Roblox’s foresight indicates a third consecutive year of approximately 20% growth in bookings, outperforming competitors who are grappling with a downturn in consumer spending due to persistent inflationary pressures.
Outgoing CFO Michael Guthrie emphasized Roblox’s growth trajectory, highlighting that the company is expanding significantly faster than the broader gaming market, which is currently experiencing minimal growth as a sector. Conversely, research firm Newzoo suggests that the overall video game industry likely grew by a mere 2.1% in 2024.
Roblox’s rapid expansion over the last couple of years can be attributed to its foray into new game genres catering to diverse age groups, thereby unlocking fresh revenue streams through advertisements and e-commerce. Furthermore, the platform’s success can be linked to its innovative approach to user-generated content and the free-to-play model, enabling Roblox to defy the industry-wide deceleration in video game expenditure.
Nevertheless, a slight decline in daily active users, a pivotal metric for gauging engagement, was observed in the final quarter of the year, dropping from 88.9 million to 85.3 million between October and December. Additionally, fourth-quarter bookings amounting to $1.36 billion fell short of the anticipated $1.37 billion.
Guthrie attributed this subdued growth to challenging comparisons with the previous year, particularly when Roblox launched on Sony’s PlayStation consoles, driving a surge in new registrations and heightened spending. He also acknowledged the impact of Roblox’s suspension in Turkey, where regulatory concerns related to safety and child protection led to a ban on the platform. This issue has been a persistent challenge for Roblox, attracting legal disputes and public scrutiny.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Krishna Chandra Eluri)
