Roblox’s ambitions in China risk falling flat

In July, online game company Roblox hired cosplay dancers to perform at its opening ceremony in Shanghai, marking the start of its much-vaunted attempt to break into the Chinese market. At the time, the company proclaimed that it would offer a “hypernumeric world” and “without limits” to its new users.

Four months later, Roblox is struggling to break through in China, facing regulatory barriers and fierce competition.

“Roblox has been very discreet about its opportunity in China,” said Neil Campling, head of technology research at Mirabaud Securities. He believes Beijing’s decision in August, which restricted young people to playing between 8 p.m. and 9 p.m. on Fridays, weekends and holidays, affected the company’s growth plans.

Roblox’s partnership with Tencent Holdings, allowing it to enter China, was a key part of its prospectus for its successful IPO in March. But the Chinese version of the platform, known to its users as “Luobulesi”, is not among the top 100 games played on Chinese games portal TapTap at the time of publication.

David Baszucki, co-founder and chief executive of Roblox, told investors last week that the company is taking a “very long-term view” in China, “continue[ing] head down ”in the face of regulatory challenges. The company declined to comment for this article.

Roblox’s entry was further complicated by its decision to market itself as an educational platform to attract Chinese parents, placing the company at the intersection of the gaming and online education industries, both of which submitted. to regulatory attacks.

“Roblox in China does not function as a social platform, but is designed as an educational tool that complements schooling,” said Chenyu Cui, game analyst at research firm Omdia. “Education has caught the attention of the authorities, so its future there is uncertain.”

Despite explosive growth during the pandemic on a global scale as children spend more time at home, Luobulesi is fighting to gain ground against established competitors in the Chinese market. Roblox is not disclosing how many of its 47.3 million daily active users worldwide are from China, but an investor presentation on Tuesday showed sparse use on the mainland.

“Roblox has yet to erupt in the same way Minecraft did with its China launch,” said Daniel Ahmad, senior analyst at video game research firm Niko Partners. “Tencent will have to refine the way the game works and intensify marketing efforts to increase the number of players. ”

Minecraft, whose sandbox game – a free-form style of games with fewer rules that encourage players to use their imaginations – reached 60 million registered users three months after its launch in 2017. It now has more than 400 million of registered users in China, where it is operated by NetEase, according to research by Niko Partners.

Roblox presentation shows in Asia that usage is concentrated in South Korea, Japan, Singapore, Philippines and Vietnam

Roblox presentation shows in Asia that usage is concentrated in South Korea, Japan, Singapore, Philippines and Vietnam

Meanwhile, Roblox faces growing competition from Reworld, a Chinese platform that also hosts games created by its users on its platform. Reworld has courted the investment from TikTok owner ByteDance as he dashes into the game to challenge Tencent’s dominance in the industry. The move sparked a bidding war between the two internet giants for independent game developers in China, which has cooled since the government tightened restrictions on games.

Roblox helps developers localize their games for new markets, offering translation services to be “more attractive and compelling to local audiences,” Craig Donato, chief commercial officer, told investors on Tuesday.

But in China, developers face the added complication of avoiding a long list of banned material, including “no extremely scary skeletons or zombies”, “no encouragement for minors who hate and drop out of school” and no reference to the fact that Taiwan is a separate country. Chinese versions of Roblox games include security features like warning signs telling players not to imitate avatars jumping from high platforms.

Oscar, who did not want to share his last name, creator of the game “Midnight Racing: Tokyo” which has been played over 33 million times, decided not to make a version for mainland China due to the costs. high localization and “strong censorship which greatly limits the creativity of developers.”

Ahmad also noted that Roblox’s user-generated content model puts him at greater risk of being penalized by regulators.

“Although many [the] The censored features are common sense and are already part of the Roblox terms, much of it is problematic. In addition, there is the risk that the game will be withdrawn at any time, ”Oscar said.

But James Onnen, developer of the Ragdoll Simulator game, said his team had “no problem locating in China.” “We didn’t have to make a lot of changes. Our primary audience is children, so censorship of corpses and alcohol consumption doesn’t matter, ”he said.

Roblox didn’t turn its back on China, a market of 720 million players, but instead started talking about growth opportunities in Japan and Indonesia. “We are just getting started in Asia Pacific,” Donato said.

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