Roblox, the massively popular gaming platform played by over half of U.S. kids under 16, has raised $520 million in a new Series H funding round that includes investors Warner Music Group, Altimeter Capital and others. (Warner’s investment was eight-figures, according to a source familiar with the situation.) The new round increases Roblox’s valuation to $29.5 billion, and the company plans to use the additional funds to “advance Roblox’s growth initiatives.”
This isn’t the first time Warner Music Group has partnered with Roblox, with Atlantic Records artist Ava Max hosting a launch party for her album Heaven & Hell on the platform in September. Roblox vice president and global head of music Jon Vlassopulos told VentureBeat at the time that the company had struck a partnership with Warner Music Group to launch more virtual concerts and “enable WMG’s artists to tap into the power of Roblox’s platform in the weeks and months ahead.”
Warner Music Group has been focused on growing its footprint in gaming for some time. “Ultimately, everything is going toward gaming, and we want to make sure we’re capturing value within it. It’s the future of entertainment,” Oana Ruxandra, Warner Music Group’s chief digital officer, told Billboard last September. The music industry has certainly been flocking toward gaming platforms over the past year, with Travis Scott pulling in 27.7 million participants during his Fortnite in-game performance last April, kicking off a wave of artists looking to set up virtual concerts on similar platforms. Roblox launched its first virtual concert in November, with a virtual concert by Lil Nas X that racked up 33 million views.
“COVID has supercharged the demand for 2D and 3D live streaming events, and we’ve successfully facilitated virtual concerts on platforms like Wave XR, Roblox and Fortnite,” Warner CEO Steve Cooper said during the company’s fourth quarter earnings call in November. “On track to be a several hundred billion-dollar market by 2025, gaming is among the fastest-growing sectors of digital media, and we’ve positioned ourselves to forge meaningful partnerships within the gaming community.”
The move to raise another funding round hasn’t been a long-term plan for Roblox, which was supposed to go public in 2020 before delaying its IPO due to uncertain market conditions. Like many gaming companies, Roblox saw a huge surge in user engagement at the beginning of the pandemic, with a 40% increase in users in March 2020. Last April, Roblox reported that two-thirds of all kids between the ages 9 and 12 in the U.S. were using its platform.
A pandemic isn’t necessarily a bad time to make a strategic investment. Warner’s income growth stalled in the quarter ending Sept. 30 but record labels and publishers have been somewhat protected from disruptions in live music and retail. Moreover, the time is good for an investment because debt is cheap. In October, Warner raised $250 million in a 3% note sale with the specific intent “to fund a portion of the aggregate cash consideration for certain acquisitions.”
Glenn Peoples contributed to this report.