Breaking Down Sanrio's Successful UGC Virtual Merchandise Strategy
Back in April while reviewing the top Roblox branded experiences, I was impressed that Sanrio's My Hello Kitty Cafe had grown 100% month-over-month to claim the top spot with over 27 million visits.
As I looked at top trending UGC items in the Roblox Marketplace (which used to be called "Avatar Shop"), I started noticing several items from Sanrio. These item stuck out because they were the just about the only UGC items from a brand (the only other brand I saw items from was Forever21).
For those of you who don't know, "UGC" (which stands for user generated content) is the term that Roblox uses to describe virtual merchandise and fashion items that are created by users.
Free UGC for Top of Funnel Awareness
As part of a major game update around Easter, My Hello Kitty Cafe started offering a free Cinnamoroll hat. As I've seen firsthand helping retailer Hot Topic launch officially-licensed items with Paramount and Universal, hat items featuring well-known IP can be quite popular. So it made sense that Sanrio would offer this type of item for free as it would drive lots of interest for sure.
How to Claim Free UGC
In order to claim free UGC, Roblox requires that games feature some sort of challenge to earn the item. Sometimes, these challenges can be easy. In the Twice Carnival from K-Pop Band Twice, made by our friends at Karta, players had to ride a carnival ride to claim a free UGC item. The Twice game went on to offer additional UGC items that were much trickier to claim.
How hard was it to claim this coveted Cinnamoroll hat in My Hello Kitty Cafe? Well, it wasn't super hard, but it did require a serious investment of either time or Robux (Roblox's in-game currency). The way to unlock the item was to reach level 35 in the game, which is focused on building a restaurant with customers. If you're an existing player of the game and have already reached level 35, you were rewarded with the free item automatically. But if you've never played the game, or have played only a bit like me, you had to put in considerable the time to level up.
NOTE: Roblox used to let brands offer almost unlimited free UGC items within experiences, but that policy has recently changed. Now brands must pay per free UGC item they give away. That means that instead of giving away millions of items to players, brands will likely only be able to afford to give away tens of thousands or hundreds of thousands.
Free UGC Drives Deeper Game Engagement
Out of curiosity, I entered the Hello Kitty game to see what level I was at and discovered I was at level 15. I figure that I had played at least 3 hours to get to level 15, which was months ago. Over several of days when I started writing this article, I played more (about 2 hours), and went from level 15 to level 21.
I then watched a couple of YouTube videos that helped me understand how to level up faster. I used that information to buy more furniture for customers to sit on, added more equipment so my restaurant can attract more customers, and even walked around the map looking for treasure chests to complete the daily tasks. I also went to spin the special prize wheel that gives you various in-game prizes. (Confession - I have the game running right now while I'm typing up this article, and I'm slowly leveling up. Hey, I just hit level 22! BOOM!)
What is all of this activity I did playing the game on Roblox and watching videos on YouTube? It's engagement! I'm going deeper into the game, spending hours upon hours playing for a cute digital good that costs the company almost nothing to produce.
Free UGC Also Drives Monetization
If I didn't want to spend more hours playing, I could have purchased in-game gems using Robux. Those gems can then have been used to purchase Gatcha tickets. Those tickets are used to hire staff. Hiring staff would have allowed me to serve more customers. You need to serve a lot of customers if you want to get to level 35!
So just to recap, Sanrio updated it's game with a major update focused on the character Cinnamoroll. The update included the chance to earn a free UGC item. That drove players into the game and drove game playing. And it also likely drove increased monetization because there were certainly players who wanted the "free" item and were willing to spend their Robux to level up faster in the game to earn the item.
How much revenue did this drive? It's hard to say. But if this coveted UGC item would have sold for let's say 299 Robux in the Avatar Shop, I'm guessing that players are spending around that much in the game to level up faster. Averaging about a million visits over the last few days, let's say that 1% of visitors spend 299 Robux. That comes out to about $37,500 in gross revenue per day. After Roblox takes 30%, that leaves Sanrio / Rock Panda $26,250 per day. Over 30 days, that's $787K.
(Confession 2 - I spent about the last 25 minutes playing and was able to score some "free" gems from the prize wheel from being in the game longer! I used those gems to hire not 1, but 2 more staff members! One of them is a little bear that requires a stool to reach the counter, so I don't think it's going to be super productive, but oh well! I need all of the help I can get if I'm going to make it to level 35 in the next few days).
One really smart and interesting move, among many, that Sanrio did was release additional Cinnamoroll items in the Roblox Marketplace. These items give players a chance to buy Cinnamaroll merchandise and fashion items to equip their avatars with, whether or not they grind away playing the game to reach level 35.
Check out the items, which have been "favorited" by players thousands of times...
What do these items have in common? They all feature the lovable character Cinnamoroll.
Releasing similar items in a themed collection makes it easy for video to creators to produce content about it. It also makes players want to collect all of the related items in the set. Revenue! So instead of spending $1 on just one time, players have the chance to spend $8 on multiple items. That brings the average revenue per user (ARPU) up. So our recommendation when releasing UGC is to put out more than just one item. Give players more options to purchase.
These appear to other Cinnamoroll items that had been released earlier.
(Confession 3 - i went back to check my game, and I got disconnected for being idle for 20 minutes. Oh, no! all of that time wasted! I could have been at level 25 if I had just paid more attention).
TikTok (not so much YouTube) Delivers Referrals
Ever since helping Hot Topic release Invader Zim UGC last December, I've seen the power of TikTok to drive awareness and actual conversion into virtual goods sales.
You can see from this screenshot that just 6 TikTok videos amassed over 1 million views...
As you can tell from this article, we believe that Sanrio is doing an excellent job bringing its IP to Roblox and using the platform for both marketing and monetization. If you have a well-known IP that you're looking to monetize on Roblox, we would love to help you out. Just email email@example.com to connect.
Stephen Dypiangco is the CEO of Metaverse Marcom, a strategy and consulting firm helping entertainment and sports brands enter the metaverse.