Examining Roblox creators’ economic impact, 12/09/2024
Building value 'blox by 'blox
This week’s Video Games Industry Memo is sponsored by Sumo Digital
Promoting DEATHSPRINT 66, which is out on Steam today.
New report examines the impact of Roblox on the US economy
Department of Justice claims Russian agent targeted online gamers for misinformation campaign
Funko Fusion brings its third person IP driven fun to players this week
Hello VGIM-ers,
I want to begin the newsletter with a lovely little announcement.
As of last Friday, I’m pleased to say you are now one of more than 2000 people who read Video Games Industry Memo - double my target for year one of the newsletter.
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The Video Games Industry Memo 1st Birthday Party takes place on Thursday 14th November from 7pm at The Craft Beer Pub in Farringdon.
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Tickets are free, but space is at a premium. So if you do want to sign up, make sure you hit the button below and get your place at my little party.
And with that done, it’s now time for us to dive into the big read.
The big read - Examining Roblox creators’ economic impact
A new report has shown for the first time the economic impact that Roblox creators have on the American economy.
The catchily titled Roblox Economic Impact and Social Benefits Study, produced by Nordicity, discovered that the creators who build the myriad experiences that make the platform tick added $1.2bn of GDP, supported 17,840 full time equivalents (also known as FTEs, a proxy measure for jobs) and contributed $324m in tax to the country between 2017-2023.
In the context of the enormous American video games industry, Roblox creators represent a very thin part of a much thicker economic wedge.
But if we take a look beneath the slight sophistry of the billion dollar headline, we can see something more interesting at play.
In a little over half a decade, the economic contribution of Roblox creators has gone from negligible to noticeable - opening up questions about what can be done to further grow their contribution to economies around the world.
Methods, man
To understand the conclusions of the report, it’s worth taking a quick step back to look at how it arrived at its answers.
From a methodological perspective, Nordicity quantified the effect of creators on the US economy by using a similar approach to its research into the economic impact of the wider video games sector in places like Canada and the UK.
The company received survey responses from hundreds of developers to understand how they worked and analysed over 70,000 transactions made via Roblox’s Developer Exchange Program - the place where creators can swap the Robux they earn by running their experience for real cash - to build its data set.
It then used that information to measure the effect creators have in terms of GDP, jobs and taxes in three ways.
Nordicity assessed the direct impact that these creators had on those metrics through paying themselves, or staff, to create the experiences that they or their businesses generate income from.
It then measured their indirect impact on the economy by understanding how those creators and companies supported adjacent or upstream suppliers, like software providers, by paying for their services.
Finally, the company also sought to understand the induced impact of earnings by measuring how creators personally spent the money they’ve accrued within the wider economy (e.g. buying a coffee with friends at the weekend).
By assessing creators across these three vectors, and totting up their cumulative contribution to each headline metric over seven years, the report was able to spit out its headline grabbing figure of over a billion dollars of economic impact.
However, rolling up the data to reach a glamorous number does more to obscure our understanding of the impact of creators on the economy than increase it.
Generally, the economic impact of sectors is measured on an annual basis to allow for like-for-like comparison across market segments.
And when we break Roblox’s seven year long hero figure down into its year-to-year totals, it’s clear that creators are generating considerably less for the economy than the topline total suggests.
In 2023, for example, grassroots creators generated $344.5m in GDP, supported a little under 5,000 FTEs and contributed approximately $46m in tax.
By comparison, research from The Entertainment Software Association indicates that the wider games industry supported 350,000 jobs and $101bn of economic value in 2023.
Against other dramatic headline totals, Roblox creator’s economic contribution doesn’t appear to be that significant.
However, looking too closely at hefty hero metrics means that you run the risk of missing what’s truly interesting in this report.
Underneath the big figure is a much more detailed report into the precise ways creators have impacted the US economy so far and how that’s changed over time.
And when we look more closely at its findings, it becomes much easier to see the ways that Roblox creators really are generating interesting value within the wider US economy.
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Growing up fast
There are three points within the report that I think illustrate this point nicely.
First, and perhaps most obviously, the growth of Roblox creator’s economic impact between 2017 and 2023 is nothing short of astounding.
Between 2017 and 2023, the GDP contribution of creators grew by 2212.1% from under $15m to the aforementioned $334m mark. Similarly, the number of FTEs supported by creators increased from 310 in 2017 to 4960 six years later - a jump of over 1500%.
And while we must note that such massive growth comes from a small base, and plateaued slightly post-pandemic, that pace of change remains remarkable. This demonstrates just how quickly Roblox creators have become a functioning part of the digital economy and suggests their role could grow further as the platform’s worldwide user base of 79.5m continues to get bigger.
Next, the value that creators are generating appears to be spreading to people, businesses and parts of the American economy that would otherwise not benefit from the presence of tech or games businesses.
Of the creators surveyed for the report, 56% of those who responded said that Roblox was the only platform they develop for.
This suggests that the ease with which people can create and monetise experiences via the platform is flattening opportunities to reach a mass audience via game development. This both widens the sector and the people who can begin to, or make, a living off it.
As for where they’re located, the report finds that an average of 50% of cash remittances between 2017-2023 went to developers in emerging tech economies in the US - such as Arizona, Utah and Nevada - that were based outside of the major technology coastal hubs.
This suggests that the economic growth delivered by Roblox builds even further on the games industry’s ability to create businesses within communities across both the country and the world - strengthening its story as a force of economic ‘levelling up’ in the modern age.
Finally, and perhaps most interesting of all, the report suggests that Roblox’s economic impact is likely to grow easily for two key reasons.
First, there’s still plenty of room for the wider economic ecosystem around the platform’s current creators to grow through further professionalisation.
According to the report, 16,000 of the 17,840 FTEs accounted for within Nordicity’s research - roughly 90% of the jobs total - are directly involved in the creation of experiences.
In comparison, the BFI’s Screen Business Report exploring the effect of the UK games industry on the economy found that just under a third of the industry’s 73,000 FTEs worked on making games.
Given that only 21% of Roblox creators in the US currently run a business to manage their experiences, it suggests there could be a ‘professionalisation gap’ between them and the wider games industry.
This raises the prospect of creators generating more jobs - especially within indirect support roles such as operations - as their businesses evolve.
Second, limits to the current research methodology also ignores big pockets of value in the ecosystem that already exists.
By solely analysing income earned through the Developer Exchange Program, Nordicity acknowledges that it misses potentially significant ancillary sources of income within the ecosystem such as the creation of branded experiences or the sale of merchandise.
This suggests that the current figures undercook the economic impact of creators on the economy - providing plenty of room for the GDP, jobs and tax contribution figures to jump up quickly in the years ahead.
User generated economic value
Overall then, the economic impact of Roblox creators is currently fairly small but could grow considerably in the years to come.
The question is what this all means for the platform, industry and policy makers at large. And personally, I think the report has three major implications that are worth considering.
First, there’s a strong argument to more effectively identify the value of user generated content across industry economic research generally. As well as capturing the ancillary incomes that this report, understandably, missed, there is almost certainly a need for the sector to find further pockets of value - such as in Fortnite’s creator community - to tell its economic story in the round.
Second, it again demonstrates the ability for games and entertainment to put money into the pockets of communities around the world. With policy makers across the world desperate for growth, especially within ‘left behind’ areas affected by trends like deindustrialisation, this report strengthens the argument that backing interactive entertainment is a good route to achieving equitable economic uplift.
Third, and finally, it suggests that there is room to explicitly court user generated content makers through video game policy initiatives.
Most tax credits and reliefs across the world were designed to appeal to video game developers prior to the explosive growth in ‘games as a platform’ services.
While a close reading of, say, the technical document behind Video Games Expenditure Credit suggests Roblox game developers can claim tax credits, clarifying their eligibility, promoting reliefs to them and preparing them to claim (e.g. making sure they set up a company) could generate growth with relatively little effort.
For now though, it is really welcome to see the publication of such detailed research at a relatively early point in the life-cycle of Roblox’s creator economy.
By publishing such findings, it has made it much easier to understand the potential value of a developing, and often poorly understood, part of the games market - helping us smooth its pathway to growth in the years to come.
News in brief
Putin’s puppets: Unsealed documents from the US Justice Department have shown that US gamers have become a key target demographic for Russian disinformation campaigns. Ilya Gambashidze, a Russian national named by the DOJ as a central figure in Russia’s disruptive efforts, wrote in a plan for a campaign called the Good Old USA Project that online gamers and chatroom users were the "backbone of the right-wing trends in the US segment of the Internet.”
Grim abuse: Mickey Carroll at Sky News ran a piece last weekend exploring the toxic abuse that women who play games online continue to receive from certain disgusting parts of the ‘gamer’ fandom. Stuffed with shocking abuse, data and case studies, it’s a depressing reminder that we really haven’t made major progress since Gamergate in 2014.
Respect the Pro-cessor: Sony has unveiled the PS5 Pro, its mid console generation update for the PlayStation 5. It boasts an upgraded GPU, advanced ray-tracing, AI upscaling and a “yikes” inducing £699 price tag. Pre-orders commence 26th September, with the console arriving in the hands of the fabulously wealthy on 7th November.
Lords AI-Mighty: The House of Lords Communications and Digital Committee has launched a call for evidence for its inquiry into the use of artificial intelligence within *shudders* “creative tech”. Their aim is to investigate how AI and related spinoff tech from the creative industries could be used to support scale up businesses in the rest of the economy. Submissions are open until Wednesday 16th October. Email me at george@half-space.consulting if you’d like a hand with yours.
Jamtastic: This year’s Green Game Jam activations have gone live, with nearly 50 leading video games featuring in-game campaigns aimed at encouraging a million players across the world to take a single action for the benefit of the planet. Come for the in-game activations; stay for me, Shay Thompson and Bertie Purchese once again judging The Media’s Choice Award at the Green Game Jam Awards when the campaign concludes later this year.
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Moving on
Jayson Hilchie is stepping down as CEO of The Entertainment Software Association of Canada…Code Wizards Group has made a number of new hires, bringing on board Fred Jefferiss as COO in the UK and signing up Jason Dreger and Tessa Nordgren as Senior Game Operations Engineers for its new Vancouver studio…And Sara Machado has popped up at Unity as its new Senior Technical Recruiter…
Jobs ahoy
Hasbro is hiring for a YouTube Channel Manager…Alibi Games is recruiting for a Product Marketing Manager…Sony Interactive Entertainment is looking for a Brand Manager, Live Service, which is interesting given recent news…Jagex has an opening for a Producer to work on an unannounced game…And if you fancy a new role as a Head of Communications then Double Eleven is the place for you…
Events and conferences
Nexus, Dublin - 25th-26th September (Use code HALFSPACE for 15% off)
Tokyo Game Show, Tokyo - 26th-29th September
Pocket Gamer Connects, Helsinki - 1st-2nd October
Game Connect Asia Pacific, Melbourne -7th-9th October
AI and Games Conference, London - 8th November (Discount available for VGIM Insiders)
Games of the week
Funko Fusion - Third person action game based on terrible plastic dolls but featuring great IP (Hot Fuzz!) launches across platforms.
Marvel vs Capcom: Fighting Collection - Punch your favourite superheroes IN THE FACE with the digital release of Capcom’s fighting game collection.
The Elder Scrolls: Castles - The Fallout Shelter formula gets an Elder Scrolls twist on iOS and Android this week.
Before you go…
What do you use your Steam Deck for? If the answer isn’t “operating a gun turret”, then it turns out you’re not as creative as the Ukrainian Army is.
Business Insider has reported that the country’s military has been using Valve’s portable PC to power its military hardware in a way that probably wasn’t intended when the device was first invented.
If only someone was writing a book about how this kind of thing happens, eh?
A very hard to measure benefit of the spread of game dev is the increase in digital literacy (such as boolean programming concepts). If Roblox is teaching skills that are applicable in the wider economy then it's adding value through education.