Thread by @pierskicks

1/25 Today I touched upon the recent Roblox S-1 filing as it relates to the nascent blockchain-based virtual worlds or Crypto Sandboxes as I like to call them.

The @Roblox IPO is a landmark event and represents the first pure, public Metaverse play.

delphidigital.io/reports/the-ro…

2/25 For those of you that don’t know, Roblox is a multiplayer sandbox game with over 30 million daily active users. Sandbox games derive their name from the nature of a sandbox that lets children create nearly anything they want within it.

3/25 These worlds have no apparent objective, and allow creators to architect their own worlds, narratives, and meaning.

Roblox has exploded in the back half of this decade and now boasts over 150 MAU.

4/25 The game is on track to pay out well in excess of $250M to its mostly young-adult creators in 2020, having booked $1.24 billion in sales for the first 9 months of the year.

5/25 The payouts from UGC built on the platform is rewarded proportionally to the amount of time people spend in a given world.

6/25 Whilst it’s awesome to see the company paying out almost 17% of their total bookings from the last 12 months to creators on the platform, note how top-heavy this distribution is. The leading ~0.03% of creators captured almost 40% of total payouts.

7/25 If only there were more granular and direct monetization mechanisms available to creators out there… perhaps it would expand the creator population?

It certainly seems that rewarding players with a portion of the value they create is a winning strategy.

8/25 As demonstrated in the figures above, there are over 8.5 million user-generated experiences across the platform—substantially more than any developer could hope to build alone.

9/25 Game-to-player value flows sound eerily similar to those blockchain games I keep banging on about… I touched upon the suitability of blockchain for Crypto Sandboxes in an NFT report earlier this year.

10/25 Crucially, these crypto sandboxes exhibit significantly more elegant monetization mechanisms whereby players can directly trade in-world goods and creations on global exchanges.

11/25 There are many options available for being rewarded for your time and effort such as developing virtual real estate, designing voxel models, or trading limited-edition goods across worlds.

12/25 Whilst there are certainly many unique value propositions of crypto sandboxes, we still have a long way to go. Various UX frictions and scaling restraints will continue to hold these worlds back until solved.

13/25 Just for fun, below I’ve shown the aggregate all-time sales (both primary and secondary) for the leading 4 crypto sandboxes vs just 9 months of Roblox sales this year.

14/25 At first it might look daunting, but there are two sides to every coin and we could equally view this disparity as highlighting the staggering scale of the opportunity before us.

15/25 These crypto-infused creator-driven games are unlocking fundamentally new tools alongside native economic rails to support them.

As we can see, appetite for blockchain-based virtual worlds appears to be strongly correlated across major peers.

s/o @nonfungibles

16/25 The year-to-date sales for 3 of the top 4 (excluding @decentraland) all hover near $2.5 million.

What might serve as a meaningful differentiator that could drive a divergence?

17/25 Interestingly, many of them either are (@SomniumSpace) or have (@cryptovoxels, @decentraland) rolled out browser-based gameplay which inches them closer to hardware agnosticism.

18/25 One potential differentiator I’m interested in tracking is whoever properly cracks mobile support first as it’s clear that it dominates platform share for Roblox (72%) and other large sandbox games.

Both CV and SS now support VR, deepening immersion...

19/25 ...If compelling experiences that really take advantage of this component are created, we could see this emerge as a meaningful differentiator between them and other crypto sandboxes.

For now however, it’s not clear this is the case.

20/25 Looking a bit closer to home with the toolsets uniquely available to crypto sandboxes, who will be the first to truly take advantage of novel token mechanics?

21/25 @decentraland's MANA is effectively just an MoE, whereas @TheSandboxGame's SAND has tried to weave additional functionality into their token such as staking and governance.

22/25 Time will tell how effective their implementations are at bootstrapping adoption, spurring investor interest, and increasing user retention.

23/25 I’m bullish on crypto sandboxes due to their strong compatibility with deep blockchain integrations—almost any aspect of the world can be tokenized, built upon, and traded.

24/25 What’s more, multiple breakout successes in the traditional video game industry have demonstrated that sandboxes are a winning formula.

/fin

I believe that accentuating natural creative desires with strong incentive systems throughout virtual worlds will result in some colossal wins in the years ahead.

Stay tuned. 👀