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Roblox faces potential competition from Epic Games claims Morgan Stanley

Published 2023/03/23, 16:02
© Reuters

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.

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