Although the demand for video games continues to climb as consumers remain engaged with their devices even as the economy reopens, online entertainment platform provider Roblox (RBLX) has been struggling to strengthen its market position due to its weak fundamentals. In contrast, its competitors Electronic Arts (EA), Playtika (PLTK), and Ubisoft (UBSFY (OTC:UBSFY)) are strategizing and building new platforms to meet escalating demand. So, we believe these companies are better positioned than RBLX to capitalize on the industry tailwinds. Let's discuss.The demand for video games remains robust despite people returning to outdoor activities as the end of the COVID-19 pandemic looms and distancing mandates are eliminated. Indeed, the global video gaming market is expected to hit $293.2 billion by 2027, growing at a 9.3% CAGR.
Despite the favorable backdrop, Roblox Corporation (RBLX), a San Mateo, Calif.-based online entertainment platform provider, hasn’t been able to keep up with industry trends. Although the newly public company has the potential to grow its user base in the long run, the company might not be able to retain its existing users and grow due to its weak financials. In its last reported quarter, RBLX’s net loss increased 80.5% to $134.22 million, and its loss from operations surged 85.1% to $135.06 million. The stock has declined 5.1% over the past month.
Conversely, video game companies Electronic Arts Inc . (NASDAQ:EA), Playtika Holding Corp. (PLTK), and Ubisoft Entertainment (UBSFY) are likely to experience a spike in sales because they are investing extensively in their R&D to introduce new games aligned with consumers' interests that will also enhance the overall experience.