Roblox: A virtual world of Lego-like blocks

A friend in the toy industry tells me that he makes toys for little kids because you can't survive marketing to older kids. After kids hit 12 (and often before that), they vanish into computer games and online worlds.

One place many of them are going, boys especially: Roblox, an online world where you can build stuff and share it with other people. Parents might like its strong Lego vibe over, say, World of WarCraft. To me it looks like Second Life with MineCraft bricks.

That combo doesn't do much for me, but I'm decades from its target demographic. And among the 8- to -14-year-old set, Roblox is doing big business. CEO David Baszuck told me he's recording 19 million play hours a month from 5.7 million unique users. It's the No. 3 property in terms of engagement time for kids, he says, citing ComScore.

Revenue in the four-year-old business is growing 75 percent a year, Baszuck says. The site makes money primarily by selling virtual currency (Robux), which can be used to purchase in-game items. Items can then be re-sold for more virtual currency. Users can also earn Robux through in-game activities like running their own events and creating their own virtual goods and arenas. There's no way to cash out of Roblox, though, so the in-game economics are somewhat unhinged from reality.

Surveying the carnage in a Roblox world.

(Credit: Screenshot by Rafe Needleman/CNET)

But Roblox is primarily a building game, not a market simulation. The game is physics-based and encourages both building things out of virtual blocks, and using scripting to code how items behave. I spent a few minutes manning a cannon on a blocky galleon, lobbing shots at a another ship (which my team eventually sank). It was pretty impressive, watching the planks fly off the bad guys' ship as we landed hits, even if the planks were toy-like, not realistic.

Roblox's construction and coding focus gives parents the "warm fuzzies," Baszuck says. It develops critical thinking and modern technology skills, not to mention entrepreneurship and some social chops (you have to build what people want).

But let's be clear: If you give a world to a bunch of pre-teen boys, they're not going to be chasing virtual butterflies. There are hang-out worlds, but also plenty of fighting games, traps, and haunted houses. Most of the popular games appear to be typical kids' battle games. But the service is also growing so fast that it appears to have outstripped the moderators' capabilities to always protect the kids who use it. Several reviews describe the service as not especially kid-appropriate, and in the virtual goods market, spam overwhelms online discussions about items.

Clint Schmidt, vice president of marketing at Roblox, responded to this by writing, "There is no doubt that there are immense challenges associated with user-generated content and a community-driven site... We have a raft of security measures and new filtering techniques that we will deploy within 2 weeks that we expect to dramatically reduce the possibility that inappropriate content is ever posted."

At least for younger kids there are parental controls, including a special account type for younger kids where the only responses you can send or receive are canned texts.

Roblox is clearly an active community. There were dozens of user-created worlds in use at the times I checked in. But it's not what a grown-up would call attractive. The graphics leave a lot for the imagination to fill in. That is, however, a hallmark of a good kid's product.

The company is announcing today that it has raised $4 million in a second round of funding. It's also leaving its "hush-hush" marketing mode and, Baszuki says, is going to finally start making some waves.

Roblox has challenges to address and a marketing expansion may be a little premature, but it does look like the company has a formula that works.