Roblox as Coal Scrip for Kids?

I’d love more informed gamer takes on this issue, and whether it’s being overdramatized or portrayed fairly.

I’ve at least been pleasantly surprised that the games people covering this are aware of the history of scrip. That history was lost on many blockchain people, in my experience.

IMO its roughly 60% fair, 40% clickbait

Fair: big corporation making too much money from user-generated content, neither supply-side nor demand-side can plausibly negotiate with big corporation, weird dark patterns

Clickbait: game industry has been exploitative forever, market shenanigans are ancient too. This is merely an aggregation of off-the-shelf villainy, which we suddenly care about because children, unlike Uber drivers or game artists, sorry.

There’s also no universally fair way to divide revenue between platforms and creators, that’s the subject of much ongoing litigation among alleged adults. But since our social policy on this is “let them sue each other I guess” it seems convenient that kids are less likely to sue than usual

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Thanks so much. I really appreciate your perspective!

So the theory here is competition. “Platform” just means a broker, reseller, retailer, or other company that sells other people’s stuff … online. So if Platform X charges 30% and Platform Y charges 15%, Platform X had better sell more volume or offer other benefits that justify the extra 15%, or we’ll expect a natural migration to Platform Y.

Those benefits might be better distribution. They might be marketing help. They might be an independently valuable brand and curation, acting as a seal or approval or endorsement. Ideally, you’d want to see a diversity of competitors, some of whom we’d more readily compare to music labels or specialty dealers than mass-market outlets.

The problem is all the myriad ways this breaks down. Just running with the Roblox example, shallowly as I understand it:

  • millions of kids are on Roblox, and not on other platforms (network effect)

  • Roblox is the only platform of its kind moderating aggressively for kid-friendly content, which is all many parents will allow their kids to play (regulatory monopoly)

  • millions of potential customers for your kind of game go looking for it through Roblox (attention monopoly)

  • exclusive, lock-in deals with creators

  • effective lock-in by training talent and developing libraries of inputs exclusively marketable through them, for whatever reason

Some of these things sound in the kinds of unilateral anticompetitive behavior antitrust and competition law are supposed to address. The other big one is collusion: X and Y deciding on the sly they’ll go no lower than 25%. I recall Epic made a big to-do of undercutting the incumbents when its store launched.

The big pattern I’m seeing so far is basically the old movie studio or record label play: the “platforms” monopolize distribution and make that the fulcrum of their leverage. But in technical terms, the bottleneck here isn’t actually getting the bits to people’s computers, or giving them a place to exchange money for those bits. It’s installing and running the bits on your device once you’ve got them.

Steam moved early, back when there was no question about running what you managed to download. They took a big lead for reasons other than controlling distribution: convenience, name rec, and so on. To my recollection, that only started to break down when the mobile app stores came along. Now we see both Microsoft and Apple making it less convenient and more scary to install anything outside their app stores.

Of course, I write all this with IndieCC in the back of my head!

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They took a big lead for reasons other than controlling distribution: convenience, name rec, and so on. To my recollection, that only started to break down when the mobile app stores came along.

Not to be a downer, but I’d push back on the optimistic case of market clearing here. It is difficult to overstate how much platform shenanigans go on in games and always have. e.g. one huge player is price-fixing, the other is tying, consoles have always been locked down, that’s before we even get into DLC, exclusives, subscriptions, lootboxes etc etc…

From a certain perspective, the appearance of a Roblox, or even an App Store, etc. can only increase market competition no matter how bad their policies might be. After all they add to the choices consumers have already.

It’s only when we have a strong intuition that consumers aren’t getting a good deal as we expect that we go looking for answers, and then we find the answers we were looking for. Markets would have worked, if it wasn’t for you meddling kids! (network effects, natural monopolies, install base, people’s habits, tying, government regulation, dopamine, etc…)

If you think about, it’s a strange way to learn about the world. If we want to learn what medicines are effective, we use an evidence-based framework and we pick the interventions that work. If an intervention doesn’t work, it may be because of confounding factors, but we’re not satisfied just to think those factors are out there, we’re satisfied to treat the disease with all its meddling kids.

In the case of US regulation, we’re satisfied to increase competition, and just assume there is some way this has to advantage consumers eventually. But if you suppose there really is some daylight between market competition and consumer power, the more you can do to make market competition the beachhead of the regulatory framework, the more shenanigans you can do on your platform

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