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Business of Esports Minute 025: Roblox IPO, NRG Wastes $10M, Nerd Street Subscription

A week of news covering the intersection of business and gaming / esports, all in about one minute – everything you need to know from the “profit of esports” himself.

025 – November 29, 2020

From the keyboard to the boardroom, this is the Business of Esports Minute! Every single week, I, Paul Dawalibi, the prophet of esports, will be bringing you my hottest takes from the week, basically everything you need to know about the business of esports all in about one minute. Let’s go.

This week, Roblox filed their IPO prospectus after announcing that their third quarter revenue jumped 91% to $242M. The company’s net loss also doubled to $48M. Roblox’s filing comes just 2 months after the Unity IPO, but Roblox is bigger and growing faster. The Roblox platform now boasts over 36M daily active users and over 8.7B hours engaged. According to the prospectus, 72% of users are on mobile devices with Apple devices holding a significant lead. If we use Unity as a comparable, Roblox would be worth over $37B. That’s a big step up from the $4B valuation they got earlier this year in a round led by Andreesen Horowitz. Altos Ventures is Roblox’s largest shareholder, and they stand to make an incredible return on this investment.

On the other hand, esports team NRG is unlikely to ever generate a positive return for their investors. They are in the news this week with another questionable investment – this time in the form of $10M to build “The Castle” – a series of sets and gaming spaces designed to attract content creators. The biggest head-scratcher is their replica set of the White House oval office. It’s unclear why the world needs any of this, but it’s yet another example of inexperienced management combined with free-flowing investor dollars over-spending on fixed physical assets that are unlikely to generate any long-term value for the company.

Finally, esports venue and lan center operator Nerd Street Gamers announced a new subscription service this week called Nerd Street+. The subscription service will cost $20 per month and give users access to live and digital weekly competitions, discounts on entry to larger tournaments and camps, and a monthly allotment of playing time at the company’s esports venues across the country. The investor in me loves the recurring revenue streams created by the ever-increasing number of subscription services. However, I worry in the case of Nerd Street, if their subscription service is only providing a discount to their most hardcore customers, or if it truly increases usage and broadens the customer base. For far more detailed insight and discussion into the business of esports, as well as the most exceptional line-up of guests, please tune in every week to the Business of Esports podcast and every Wednesday evening into the Business of Esports after-show livestream. Also make sure to follow us on Twitter @bizesports and on YouTube at The Business of Esports.

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