Boundless Opportunity In A Boundless World
This week I am bringing to you my first truly in-depth stock analysis where I look at a company’s catalysts, operations, financials, outlook and present my take on everything. The vast majority will be available only for my paid subscribers, however, I’m leaving some of it available to everyone. I invite you all to check out all of it and let me know what you think!
The Metaverse
Imagine how much money was made by those who were able to invest in global exploration centuries ago. Investing in a completely new world that was unknown to many but had endless opportunity. What if we have the opportunity to invest in another “new world” - one that is still unknown and foreign to most but has its own economy, is developing and growing and is no where near its full potential.
When many hear the word “metaverse” they probably snicker or roll their eyes. It’s just a made up word from 2021 that no one can properly define, right? When I think of how to define the metaverse I think that it can be said that it is the combination of the internet with gaming. A truly seamless digital world where everything’s connected. Allow me to show you what I mean by that in this article.
The Gaming Component
The global video game sector is the largest entertainment market in the world with 3.2 billion players spending $180 billion per year. Traditionally, the “studio model” of a company hiring hundreds of employees specializing in graphic design, software engineering, marketing, etc. is what has dominated in terms of developing new games. This is a very costly model. But now, a new concept has sprouted up. One that lets consumers become the creators. User-generated content (UGC) has become the model for many forms of entertainment now - YouTube, Twitter/X, Spotify, Substack, and now gaming.
The Internet Component
As the internet continues its evolution into a fully immersed world, the lines become blurred between the physical and the digital. Because of this, how we represent ourselves online becomes increasingly important, just as how we represent ourselves in real life.
Think about it for a minute. NFTs seemed crazy when they first came out and were hyped up. People spending millions on an ugly picture of a monkey. But the “why” is more important than the “what”. Why? Because your digital profile matters - it’s an asset. Having a Bored Ape Yacht Club NFT was the digital equivalent of owning, say, a Rolex watch or Lamborghini.
Still sounds crazy? How about this…What would you rather have? One million engaged followers on social media or a Ferrari? That one might make a lot of people think for a minute. It’s because, to many of us, we live online (whether we want to admit it or not) and our digital reputation matters.
Roblox
Roblox is a multiplayer gaming platform that allows users to create, play games and share experiences created by other users. It gives users the option between creator or player.
Roblox basically provides the platform while creators develop different games on that platform. I can’t help but think of it as being similar to the App Store. The App Store is the platform where creators can create apps for users to download and interact with.
The Roblox Economy
Studying the Roblox ecosystem is extremely interesting because it is its own microeconomy. An economy of teenagers, essentially.
Robux is the virtual currency used to make purchases within the Roblox platform. Users can buy Robux with fiat money. They can also earn Robux through affiliate programs and other avenues. Robux are used to purchase items related to one’s avatar, promoting a self-made game through advertising, etc.
Next time you go to store that has a gift card kiosk, look for Roblox gift cards. I guarantee there’s a section for them.
Creators can use Robux to monetize their games by adding items or features that users are required to purchase. The success of Roblox is truly tied to the success of its developers. Developers make real money from creating on Roblox. They keep about 75% of their earnings while Roblox takes the rest of the portion. They can take their earnings to the Developer Exchange and change their Robux out for fiat money. This creates a incentive system for creators which creates a flywheel effect for the entire ecosystem.
The more creators are developing quality games, the more users are engaging with those games, the more users are engaging, the more they are spending Robux on platform which goes to the creators.