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What is Roblox? Everything you need to know

Roblox has seen fast growth during the pandemic

Released in 2006, Roblox grew from obscurity into a gaming juggernaut, culminating in a multi-billion-dollar public stock offering in 2021 — and controversy about its monetization model that relies on children. Here's what you need to know about the game.

Roblox is a video game and creation platform available on most mobile devices, consoles, and PCs. Players choose from experiences built by developers and can use in-app purchases for in-game content and other perks.

Due to the platform's cutesy design and the freedoms it provides to players, Roblox has become a standout hit among children. The pandemic only spurred its growth as adults sought alternate incomes in development and children were stuck at home playing games. These forces combined to create the giant that Roblox is today.

What makes Roblox unique is its proprietary development platform. Rather than letting players build levels within the game, creators must use a discrete development tool on Mac or PC. Once content is submitted to Roblox it can be monetized in various ways.

A different game company called Media Molecule is known for pioneering "player creation" with its Little Big Planet series, but creators couldn't monetize content. Roblox has a similar approach, but experiences can only be built in development software, not in the game itself. Roblox also lacks a central storyline for players and focuses on the experiences constructed by developers.

Roblox: the video game

Roblox isn't a traditional video game — it's a platform that hosts experiences built by developers using a dedicated game engine. When players open Roblox, they are greeted with a page of "experiences" or minigames that you can select to play.

Developers for the Roblox platform can design experiences and charge money for content
Developers for the Roblox platform can design experiences and charge money for content

The game has attracted young children due to its popularity on YouTube. Influencers who target younger audiences discovered that many of the minigames' colorful and cutesy nature in Roblox would attract viewers. This then leads to influencers hiring development teams to create minigames and content that can be monetized.

After a viewer sees the game on YouTube, they are usually invited to download the game via a pop-up ad. The excitement of playing something they saw someone else playing and the game's cute nature will win many kids over quickly.

This simple cycle of using social media to promote specific minigames and content has been very lucrative for the platform. So lucrative that Epic Games has begun offering in-game experiences sponsored by companies like Disney in Fortnite.

What are Robux?

Roblox earns its money and pays developers using an in-app purchase system for currency. The currency used in Roblox is called "Robux." Many games and apps use this form of in-app purchase to give users currency they can spend in bulk without authenticating real payments every time.

The problem with in-app purchases in Roblox is it has multiple levels. You need the Robux currency to purchase items and accessories within the game, but you'll also exchange Robux for other in-game currencies.

That means when playing a minigame, you could earn "dollars" by performing tasks like in any other video game. If a user wants to buy special content or more "dollars" within a minigame like "Adopt Me," then they'll have to spend Robux to do so.

The exchange rate for Robux is simple — divide by 100 to get the equivalent dollar amount. While this math is easy for adults, it obfuscates the value of items from children.

There is a monthly subscription that adds 450 Robux every month for $4.99. There are more economical ways to get Robux, like buying them directly from the website or getting gift cards from Amazon.

What is the Roblox Marketplace

The Roblox Marketplace, formerly called catalog, is where any user-facing item, accessory, or customization option is sold. In the avatar menu, the catalog consists of things like hair, clothing, or faces. There can be in-game sale systems built by the developer or an isolated catalog of items built just for certain minigames.

This is the default screen in the avatar builder, pushing obscenely priced content
This is the default screen in the avatar builder, pushing obscenely priced content

Developers using the proprietary development software on Mac or Windows can customize and upload items that can be sold for Robux. Roblox players cannot create levels or content in the game but can buy and resell items from the Marketplace as long as they are listed as limited items.

Players and children may not recognize this distinction or understand the value of an item. Parents need to be aware of the in-app purchase system and ensure that purchases cannot be made without a passcode. Children left unattended with Roblox can quickly spend thousands of dollars that may not be refundable.

How to exchange Robux for real money

Premium Roblox subscribers can convert Robux into real money when certain conditions are met.

  • Have a valid DevEx portal account
  • Have a minimum of 30,000 Robux earned by the account
  • Have a verified email address
  • Be 13 or older

Once a member meets the requirements, they can apply for the Developer Exchange Program. Upon approval, the account holder can request a Robux cash out once a month at the current market rate of exchange.

This means a developer or player must make at least $105 selling items in the catalog or via minigames before gaining the ability to cash out. Players seeking a quick cash grab will upload a simple smiley face and charge hundreds of dollars for its use. It is unknown how effective this method is, but parents should warn their children of the scams.

Moderation and oversight

Since Roblox is heavily used by children, it has several systems to keep things safe. For example, the avatar creation tool prevents lewd objects from being submitted or inappropriate attire from being worn.

Systems like these are fully automated and aren't perfect — so players will have to report anything that slips through. For example, reports of "fascist playgrounds" and "virtual strip clubs" suggest that Roblox doesn't always catch, or understand, what should or shouldn't be allowed.

Live chat and IAP combine to make any parent worry
Live chat and in-app purchases combined can make any parent worry

When examining another player's profile, there will be a "report concern" button. This lets parents or players report any weird behavior, inappropriate messages, or other problems.

The game features live chats when in a minigame and private chats between players. There are filters to prevent sensitive content from being shared, like phone numbers, and cussing is not allowed. However, there is nothing to prevent players from sharing user names to other chat apps or meeting up on Discord.

There have been reports of child predators taking advantage of this, for example, by getting young players interested in a new world they are developing. Once the child moves the conversation to a third-party chat client, all protections disappear.

Reportedly, Roblox does little to protect users beyond banning an offending account, but the offender can make a new account and continue abuse without issue. Being banned doesn't prevent monetization either, since the abuser can transfer their developed games to other players before an imminent ban. Therefore, there is no consequence for abusive behavior.

Parents can restrict access to certain parts of the game using the security settings. In-game chat can be disabled, and parents can hide other profile information from here.

Beyond the game there lies an entirely different world populated by the developers themselves. These developers can be anyone over the age of 13 and tend to occupy spaces beyond Roblox for communication and coordination, often in Discord.

If your child decides to develop for Roblox to try and earn money, they may be recruited by a small team. These teams are often run by other children or young adults, and Roblox takes no responsibility for what transpires between these individuals. It is up to the parents to provide oversight and ensure their child is being treated fairly and being paid properly — if money is involved.

Roblox: the content platform

While building minigames and content is limited to developers, there's very little overhead to becoming a developer. All you need is a Mac or PC to install the free developer tool called Roblox Studio.

Roblox requires you to be over 13 years old to monetize content for the platform. Some level of competency is required to design and upload avatar items, and fundamental programming skills are needed to make minigames. The programming language used for Roblox Studio is called Lua 5.1.

Once you've uploaded something to the platform, even a simple shirt, you can monetize it, but you must have a premium subscription to do so. Once the object is sold from the catalog, the developer will take a cut of the revenue in Robux.

This game has its own in-game currency purchased with Robux.
This game has its own in-game currency purchased with Robux.

Social media influencers can take advantage of the Roblox platform since there are no restrictions against self-promotion. The minigame menus and launch screen can feature links to a creator's YouTube or other accounts. That means influencers can monetize via in-app purchases and sponsored ad viewership on YouTube.

As the platform has grown, so has the size of development studios making Roblox experiences. These large studios can have dozens of people working on one mini-game as a full-time job, and earn enough to live on. However, Roblox doesn't take any responsibility for how these studios operate or pay their developers.

Since the game is meant to attract children to code experiences, this often leads to teams of children working together to try and compete with the large studio. Some reports suggest that some development teams are taking advantage of the child developers by not paying them well, if at all. And since none of this is regulated by Roblox, your child may find themselves being bullied into performing demanding development work for little to no compensation.

Roblox: the company

Roblox was established in 2004 and has seen many iterations since. The app sees popularity surges from time to time, but it consistently remains near the top of the App Store gaming charts.

According to the Roblox corporation website on April 1, 2024, it has 2.4 million developers, 4.4 million active experiences, and the metric for payouts has disappeared. In December 2021, it had 9.5 million developers, 24 million experiences, and $761 million paid to the community devs on the same page.

The platform is available in 180 countries in 11 different languages. Roblox claims to have 32 million average daily active users.

The vertical integration of development, monetization, and social media influence has made Roblox a multi-billion dollar company. It went public on March 10, 2021, with a net worth of $45 billion.

Investors hope that Roblox can continue to grow
Investors hope that Roblox can continue to grow

The exciting IPO and spike in stock price was short lived as it dive bombed in early 2022. Today, the RBLX stock sits at $37.84 per share and a $23.9 billion market cap — nearly half the IPO.

Children are fickle and can move on to the next popular thing without notice. Also, the pandemic bubble popped, leaving many companies like Roblox much smaller than they were.

As long as kids are interested, however, parents need to pay attention to the game. Set up parental controls within iOS to block in-app purchases, turn off in-game chat, and ensure the games your child is interested in aren't off-color or filled with rude players.

If your child is interested in developing Roblox experiences, discuss the issues with child labor, how income is earned, and what their goals are before they begin. Be sure to check in with them, and keep track of who they work with and if real money becomes involved.

Reports suggest that players and developers tend to keep quiet about issues due to internal politics. If a user is outed as a "snitch" or their reputation is tarnished, they may never be able to join a team or create one themselves in the future.

Payment controversy

In August 2021, Roblox came under fire for how it handled developers who made experiences for the game. A lengthy investigation posted to YouTube on August 19 by People Make games accused Roblox of being exploitative of developers in the system.

While Roblox offers developers the potential to earn revenue, in a similar way to Apple's App Store, the situation is much tougher for those creating Roblox experiences and expecting to get paid.

Part of the problem is how Roblox focuses payouts based on Robux, the in-game currency, rather than cash. This leads to the situation of developers being able to immediately spend their earnings within Roblox itself, so the earned funds never leave the platform.

A chart showing how Roblox distributes money when users cash out with about 25% going to developers
Users earn very little when they cash out Robux

The concept is likened to the company scrip used by mining firms in the 19th century, which would see mine operators provide a scrip to employees that could be paid at the company store, instead of currency. Workers would be warned off from any potential scrip-to-currency exchanges due to exchange fees taking some of the value away, leaving them with buying items from the company itself.

Along with in-game items, the currency is also usable to pay for advertising within the game. This service, again, is operated by Roblox itself.

In terms of how much Roblox pays out, developers earn just 28.9% of the value of Robux from a transaction, with the company keeping 48.9% and app stores taking 22.3% in commissions. By contrast, Apple takes its 30% fee at most from developers, as does Steam, Microsoft's Xbox platform, and Sony PlayStation, while Epic and Microsoft Windows game sales involve a 12% fee.

Roblox's own developer pages cites the high number of individual fees that are taken out as a cost of the transaction and operating the platform. This includes a 22.3% cut to app stores like Apple's own.

The black market exists to avoid paying Roblox its fees
The black market exists to avoid paying Roblox its fees

Of course, the small amount of money earned from performing transactions and Robux exchanges on Roblox itself led to black markets being formed. Players, again often children, are guided to illegal websites that exist outside of the Roblox company's sight. Here they can put expensive items up for sale for much cheaper, thanks to lack of fees.

Users can also use the black markets to exchange Robux for cash or other items, again avoiding the requirements set by the company. It has been reported that these black markets have operated without interference for years. Allegedly, this is due to the fact that the Roblox economy relies heavily on these back-alley dealings.

Even though Roblox has been made aware of such illegal transactions, the only action the company allegedly takes is banning offending users. People Make Games reached out for comment from the company and didn't receive a direct answer to their inquiries.

It isn't clear how long Roblox will remain popular with companies like Epic copying its business model. Regardless, it's not an ideal environment for the children it is aimed at.

Updated on December 15, 2021 with information from People Make Games follow-up video.

Updated on April 1, 2024 with updated information about stock valuation, Roblox commission percentages, and other small changes.