😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

Roblox faces potential competition from Epic Games claims Morgan Stanley

Published 2023/03/23, 16:02
© Reuters
RBLX
-

By Sam Boughedda

Morgan Stanley analysts told investors on Thursday that Roblox Corp (NYSE:RBLX) is facing competition after Epic Games announced it would roll out a new way of paying content creators inside Fortnite.

The analysts, who have an Underweight rating and $26 price target on Roblox, explained that Epic Games announced Creator Economy 2.0, a new program to allow developers to earn money through Fortnite Creative Mode, and starting this month, some content creators will become eligible for payouts based on player engagement. They added that the total pool of money available will be 40% of Fortnite's net revenue (or 29% of gross).

As a result of the announcement, Morgan Stanley sees three reasons "why this speaks to potential competition for RBLX, which paid 22% of bookings to developers in '22."

Firstly, they stated competing products are beginning to fully launch, and this "marks the first time a scaled platform with a significant gaming audience has actually launched a metaverse/creator economy product.

In addition, the analysts believe existing gaming audiences and economies can be leveraged into the metaverse, while the take rate "could be a competitive lever."

"We note that Epic's payout pool is funded by the current Fortnite player base, meaning that there is an existing opportunity on the platform that could serve as a substitute for RBLX's audience and commercial ecosystem. In our view, this illustrates how existing platforms can leverage their platform/reach into competing offerings," they wrote.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.