Gaming platform Roblox was all set to go public in late 2020, before putting off its IPO until this year to give more time to decide how to price it. Now the company has sprung a surprise with a new funding round of $520m – its Series H round – valuing Roblox at $29.5bn.
The round was led by VC firms Altimeter Capital and Dragoneer Investment Group, but a new investor is closer to our home: Warner Music Group. Billboard reported that WMG has chipped in an “eight-figures” sum to the funding round, although that could be anywhere between $10m and $99m.
WMG was one of the first labels to work with Roblox on a music marketing initiative: an album launch party for artist Ava Max last September that attracted nearly 1.2 million fans. WMG’s chief innovation officer for recorded music, Scott Cohen, was an early evangelist for Roblox’s music potential, telling the NY:LON Connect conference last January that “there’s over 100 million monthly active users on this platform, and almost nobody in this room has ever heard of it? This is where the target audience is… This is where the kids are.”
Alongside the funding news this week, Roblox announced that instead of a traditional IPO, it is now planning a Spotify-style ‘direct listing’. Pricing details are still under wraps. Before the delay and change of plan, Roblox’s IPO prospectus revealed that it had 17.6 million daily active users, and that in the first nine months of 2020 its revenues were $588.7m, although it made a net loss of $203.2m.
The Ava Max event was an early marker for how Roblox would like to work with labels and artists, as was its in-world Lil Nas X concert in November, which attracted 33 million fans. Roblox is also working with independent labels including Monstercat to build a catalogue of music for its community of game creators to use, albeit under a promotional model that – when tried by Twitch with its new ‘Soundtrack’ feature – has aroused the ire of some rightsholders.
As with any user-generated platform, there is potential for tensions with those music companies. That IPO prospectus revealed that Roblox is already using audio-monitoring tech to spot and remove copyrighted music uploaded by creators, adding that some labels and publishers “maintain that we are subject to liability for infringing content that was previously uploaded to our platform and have stated that they may seek damages for such infringement”. By investing in Roblox, WMG appears to be taking a different view.
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