Is Facebook’s Focus on the Meta Universe Good or Bad News for Roblox?

Facebook (NASDAQ: FB) develops plans to enter the metaworld. If you are unfamiliar, the metauniverse is a virtual environment where people can interact with each other and their environment.

One company that will feel the direct impact of Facebook’s decision Roblox (NYSE: RBLX). He already manages the meta universe platform with millions of daily active users, but it is at risk of loss for Facebook. However, the consequences of the emergence of Facebook should not be unfavorable for Roblox, as it can benefit from increased attention to the metaverse.

Four people sitting together looking at their smartphones.

Image source: Getty Images.

Facebook is taking a step

During a conference in the second quarter of Facebook, CEO Mark Zuckerberg discussed how he thinks about the metaverse: β€œIn addition to being the next generation of the Internet, the metaverse will also be the next chapter for us as a company. In the years to come, I expect people to move from seeing us primarily as a company on social media to seeing us as a company from the metaverse. ”

Roblox is pale in size compared to Facebook. Zuckerberg-led company has the resources to aggressively invest in building its meta-universe platform and withstand latency until the service is profitable. When Facebook CFO David Venus was asked about the financial commitments she made, without giving a specific figure, he replied, assuming it would be billions.

In addition to financial investment, Facebook has 3.5 billion active users each month in its family of applications (Facebook, Instagram, Whatsapp, Messenger). These are users whom he can encourage by e-mail or notification in the program to join the newly developed platform of the company’s metaverse (when it is ready). Facebook has announced plans to hire 10,000 people in Europe to create a metaverse, so it could happen sooner or later. Facebook also plans to change the name to reflect its renewed focus on the metaverse.

Not all is bad for Roblox

Roblox is not necessarily doomed. The company has attracted 48.2 million daily active users, which is 32% more than in the same period last year, and has created a platform with items and experiences used by its users. Moreover, the demographic group of the company’s users tends to be younger: more than 50% of its users are under 13 years old. This can be a competitive ditch that will not allow Facebook to capture its customers. Many parents may be hesitant to allow their children to join the Facebook meta-universe created.

In addition, Roblox is an experience without advertising. The platform is free, and the company makes money by selling an in-game currency called Robux, which players use to purchase unique items and exclusive experiences. Facebook has said that advertising will become an important part of its metaverse. Therefore, for users who like to avoid advertising, or parents who want to keep their children away from advertising, Roblox can become a metacosm of choice.

Benefits

Facebook’s entry into the meta-universe business can shed light on the product. Billions of people around the world who have never heard of the metaverse are learning about the platform. This may be good news for Roblox, even if Facebook undoubtedly takes a larger share of the young industry market. In fact, the release of Facebook is likely to increase the growth rate of the meta-universe industry – probably turbocharged it. And if the industry grows, Roblox will win. As mentioned earlier, Roblox has only 48.3 million daily active users, a small amount compared to the total number of people in the world with a connected device who can be potential customers.

Overall, the benefits to Roblox in a world where hundreds of millions (assuming 10% of people in the Facebook app family choose to join) of people have a meta-universe account far outweigh the downsides of the potential daily losses of active Facebook users. In my opinion, Facebook’s decision to develop a metaworld is good news for Roblox and its shares.

This article reflects the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Advisory Service. We are colorful! Questioning the thesis of investing β€” even our own β€” helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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