By Zaheer Kachwala
May 9 (Reuters) – Roblox cut its annual bookings forecast on Thursday, in a sign that people were returning to spending within its video game platform amid an uncertain economic outlook and high levels of inflation.
The downgraded forecast marks the latest gloomy report from the gaming industry, which has laid off hundreds of workers and closed studios this year to cope with declining demand.
Electronic Arts also gave a weak revenue forecast earlier this week.
Roblox now expects full-year bookings to be between $4 billion and $4.10 billion, down from its previous forecast of $4.14 billion to $4.28 billion. The forecast for second-quarter bookings of $870 million to $900 million was also below estimates.
The company said it was conservative with its second-quarter forecast as the Easter holidays, a period of high engagement on its platform, occurred during the first quarter of this year, compared to the second quarter a year earlier.
The gaming industry is struggling with lower engagement, meaning growth in the PC and console market is expected to remain below pre-pandemic levels until 2026, according to research firm Newzoo.
The number of hours gamers aged 13 or older spent on the Roblox platform grew 19% in the first quarter, the slowest growth rate for the company in about two years.
“That’s not unusual,” said Roblox Chief Financial Officer Michael Guthrie, adding that the company is adding many older gamers who take a while to settle down and spend more time on the platform.
Roblox has also turned to digital advertising to diversify its revenue. Earlier this month, it started showing virtual billboards with content from brands like Walmart and Warner Bros Discovery to users on its platform.
Roblox will build the infrastructure for the ad platform in 2024 and begin providing ad revenue forecasts in 2025, Guthrie added. (Reporting by Zaheer Kachwala and Harshita Mary Varghese in Bengaluru; Editing by Shounak Dasgupta)
