Children Prefer 'Robux' Over Cash as Gift of Choice

Greg and Selena Robleto, like many other parents, attempted to incentivize their children to do household chores by offering them money. Unfortunately, they soon discovered that this was not an effective method.

The girls requested to be compensated with Robux, the virtual currency used in video games from Roblox Corporation, and RBLX -0.04%.

The couple was met with disdain when they presented the wrinkled, paper money.

Mr. Robleto, a 46-year-old web designer from Rockville, Maryland, recounted how people were asking him to convert their money into Robux. He noted that he didn't even need to have cash on hand, as he could just go online and put $5 into their accounts.

Kaylee Robleto, aged 12, recently purchased a digital Louis Vuitton handbag, while her 10-year-old sister, Ginelle, acquired a virtual Gucci jacket. Both items cost less than five dollars in Robux.

Kaylee mentioned that she has to ask her parents to take her to stores if she wants to spend money in the real world, but she has the freedom to choose what she buys on Roblox.

The Robleto family is part of a large group of tech-minded young people who are gaining financial autonomy through Roblox, a popular online destination for children. Approximately half of the 60 million daily users of Roblox are under the age of 13. Companies are increasingly using Roblox as a platform to reach out to these young people.

The conversations that families have about money are being altered by Roblox and other virtual economies, and this is helping to address the age-old issue of parents controlling how their kids spend online. Most virtual items are priced at less than $10, and due to the parental controls that have been put in place in recent years, there is less of a worry about children spending too much. By adding a small amount of money to virtual wallets, parents can save both money and time compared to going to a store like Target, and they don't have to take out their wallets for every purchase.

Joost van Dreunen, a professor of the business of videogames at New York University's Stern School of Business, noted that developers soon understood that in order to make money from a young audience, they had to take into account the desires of parents.

Roblox is one of many games that offer virtual currency as a monthly subscription, similar to an allowance, according to an expert.

Young people are devoting more of their time and money to Roblox, a free-to-play, 3-D virtual universe. This metaverse allows users to create and participate in a variety of activities through their avatars. Over the past three years, Roblox's revenue has skyrocketed, reaching $1.9 billion in 2020. The majority of this income is generated from the sale of Robux.

Adults are still trying to figure out how to use the metaverse, while children are already taking advantage of it. They are earning and spending virtual currency while playing games and interacting with others on Roblox.

In April, Chipotle Mexican Grill Inc. introduced "Chipotle Burrito Builder," a game on Roblox that allows players to create virtual entrees in exchange for the restaurant chain's own virtual currency, Burrito Bucks. Those who accumulate enough of the currency can redeem it for an actual entree at a Chipotle location. The company repeated the promotion in September, this time having players grill virtual steaks to promote its new beef filling.

Chipotle's marketing chief, Chris Brandt, explained that the goal of the game was to provide an enjoyable, engaging experience rather than simply displaying ads.

Roblox stands out from other videogame companies in that it does not depend on large budgets and well-known talent to create popular games. Instead, it allows anyone with the drive and dedication to develop games, including hobbyists, professional developers, and an increasing number of advertisers.

Despite the high cost of creating a game on Roblox, more and more businesses are investing in this platform as it is a form of marketing disguised as entertainment, according to Emma Hazan, CEO and founder of Sidekick Comms Ltd., a communications and brand consulting firm.

She noted that, in the past, advertisements were the primary way to reach children, but now companies are utilizing online gaming platforms such as Roblox.

Ms. Hazan noted that the distinction between the old and the new is that games that double as ads are interactive and created to be enjoyable. This is not usually the case with traditional online ads. She added that with Roblox, "brands are getting involved in the action."

In September, Walmart Co. joined the ranks of Kellogg Co., Chobani Inc. and other companies by introducing two new games on the Roblox platform. Every week, new games from advertisers are released.

At Walmart Land, children can accumulate virtual coins to purchase virtual items such as headphones and apparel from Walmart's own labels for their avatars. William White, Walmart's Chief Marketing Officer, appeared as a blocky "Robloxian" wearing a Walmart letterman jacket to promote the experience, noting that it was "bringing the best of Walmart's aisles into the virtual world."

Nike Inc. created Nikeland, a virtual experience based on their Beaverton, Oregon headquarters. Users can earn coins by playing basketball and other games, which can then be used to purchase virtual sneakers and other items. This was one of the first branded experiences on the platform.

John J. Donahoe, the CEO of Nike, expressed on an earnings call last year that the sneaker company was connecting with young athletes through the launch of Nikeland.

Advertisers will soon have more options available to them. Beginning in the new year, they will be able to purchase "portals" in other creators' games that will take users directly to their own. Additionally, they will be able to purchase virtual billboards in games created by other developers. Both of these features will provide developers with a portion of the revenue.

At Roblox's investor day in September, Chief Product Officer Manuel Bronstein commented that they had only just begun to explore the potential of a monetizing economy in 3-D immersive experiences.

Roblox is not the only virtual world where kids are spending virtual money. Microsoft Corp.'s building game "Minecraft" has its own currency, Minecoins. Epic Games Inc.'s multiplayer shooter game "Fortnite" has V-bucks, and Niantic Inc.'s augmented-reality game "Pokémon Go" has PokéCoins.

This year, Moonbug Entertainment Ltd. launched a new social-media platform for children called Zigazoo, where they can purchase nonfungible tokens (NFTs) of characters from their popular shows "CoComelon" and "Blippi". NFTs are digital certificates that represent ownership of virtual and real goods. Unlike the Bored Ape Yacht Club collection, which sold for hundreds of thousands of dollars, Zigazoo's NFTs are much more affordable, with packs ranging from $5.99 to $49.99.

In the past year, Forrester Inc. has estimated that children between the ages of 12 and 17 have spent an average of $92 a month on the internet. This is more than double the amount spent two years prior. The majority of this money was used to purchase videogames and virtual goods, with clothing and accessories coming in second.

Titania Jordan, chief parent officer at Bark Technologies Inc., noted that for those who have grown up with the internet, spending virtual money is second nature. Jordan commented that the idea of a piggy bank or cash is "really archaic" in comparison. Bark Technologies Inc. was founded in 2015 and provides a service for monitoring children's online activity.

For parents, understanding the value of virtual goods can be a difficult concept to grasp. It may take some time to comprehend, and they may be concerned that their children are being taken advantage of.

At first, Jason Baffrey and his wife were not in favor of their 12-year-old son, Jaxson Baffrey, buying virtual goods in videogames. The idea of spending actual money on something that was not physical was unfamiliar to the couple. "We were raised in a time when we didn't do that," he commented.

Recently, Jaxson's parents wanted to give him a reward for his good behavior. When they asked what he would like as a gift, he asked for a virtual outfit for his character in the game "Fortnite". After considering this, the couple decided to go with his request.

Mr. Baffrey, a 52-year-old public-affairs director for the state of Oklahoma, posed the question, "What's the difference if it gives him the same pleasure, if you will, as a toy?" He then added, "At least he can't break it."

Various organizations that advocate for children, politicians, and researchers who specialize in online commerce have expressed their worries about videogames that offer virtual goods to young people, particularly when the goods are sold in packs that are not transparent, such as baseball cards. Numerous popular videogames for children, including those on Roblox, use this method of selling or rewarding players.

A three-year study recently published by Newcastle and Loughborough Universities in the U.K. has concluded that the sale of blind packs of virtual goods in video games can cause harm to teenagers and children, both financially and emotionally. The study tracked the gaming habits of 42 families with children aged 5 to 17, and also determined that the design of in-game, paid-reward systems utilizes elements from regulated gambling to encourage players to spend more time and money in the game.

Advocacy organizations suggest that parents have conversations with their kids about the possibility of being let down when purchasing blind packs, as well as the actual cost of any virtual item when it is converted to traditional currency.

Mr. Robleto, a father from Maryland, revealed that his daughters were initially disappointed when their Robux allowances were depleted before they could purchase all the virtual items they desired. He then demonstrated to them how one of his daughters had spent almost double her weekly chore money, which was equivalent to $9, on a single pair of virtual boots on the platform.

He stated that they had done an activity to help the students comprehend the cost of a digital item. He believed that it assisted them in comprehending the worth of money.