Is There a Better Path to Growth?

Have you ever come across something so appalling that your immediate reaction is to share it with someone else, hoping they'll find it equally disturbing? If so, that makes me feel slightly better about sharing this with you: a snippet from Roblox's latest quarterly earnings report. The presentation is noteworthy for its unusual design choice, with white text on a light blue background, which seems to prioritize obscurity over readability. This isn't the only aspect of Roblox's report that raised eyebrows. For instance, the company expressed confidence in its potential to support one billion daily active users over time, given the diversity of its user base and investments in its product. However, with less than 66 million DAUs in the most recent quarter, achieving this goal would require substantial growth. Notably, Roblox has never had a profitable quarter, as it allocates a significant portion of its revenue towards fueling further growth. The company's strategy for growth focuses on expanding its user base rather than maximizing spend per user. In contrast, companies like Take-Two, the parent company of Zynga, have been accused of aggressive monetization tactics. Take-Two's CEO, Strauss Zelnick, emphasized the importance of reaching a broad audience without making consumers feel exploited. However, the reality is that companies may eventually shift their focus from user growth to extracting more revenue from existing users. This transition can be problematic, as it may lead to a decline in the quality of the user experience. The business models surrounding live service games can lend themselves to unethical practices, particularly at the scale of publicly traded companies with aggressive growth targets. While some companies have managed to maintain sustainable and ethical practices, the industry's tendency towards exploitation is a concern. The Italian games industry, for example, is experiencing growth, with a 50% year-over-year increase in employment. Developers in the region are eager to put their cultural stamp on the industry, while maintaining an international approach to game design. Other news includes the launch of Baldur's Gate 3, which drew 800,000 concurrent players on Steam, and the acquisition of Flavourworks by Telltale. Sony's PS5 hardware sales have been weaker than expected, but the company remains confident in meeting its goal of 25 million units sold for the year. The Evo fighting game tournament attracted over 9,000 registered players, and GOG's introduction of menstrual leave had a positive impact on employees. The global games market is projected to experience a 2.6% growth in consumer spending in 2023, a welcome return to positive territory after a decline in 2022.