UGC creators, including partner brands, can now sell Roblox UGC Limited items
On April 5, 2023, Roblox announced a big change affecting its UGC virtual item program. In a post titled "Announcing Limiteds for the UGC Program [Marketplace]," the company explained that creators in their Roblox UGC Program now have the ability to created limited items.
Previously, Roblox itself was the only entity that could created limited items. Roblox staff had to approve the creation of each limited item, and their standards for what items could be limited were quite high. But with this new policy change, the floodgates have been opened for the creation of limited items of all shapes, sizes and quality levels from all approved UGC creators.
But What Are UGC Limiteds?
Within the Roblox Marketplace (formerly known as the "Avatar Shop"), players can purchase UGC items, which are virtual merchandise, fashion and accessories items that avatars can wear or carry with them from game to game. They could be purses, t-shirts, pets, swords, hats, etc.
Regular UGC items are unlimited, meaning there's an infinite amount available for purchase. If there are a million people who want to buy a regular black UGC beanie, then they can do so.
But Limiteds are, as the name implies, limited in availability. There may only be 100 available for purchase or 10,000. Since the supply of these items is restricted, creators can charge more for them.
New Policy Guidelines for UGC Limiteds
Here are some key points to know regarding UGC Limiteds:
Creators can dictate the quantity of items, thereby controlling scarcity
Creators set the pricing
Limiteds can be resold, and the original creator earns 10% every time the item is resold
There's an uploading fee creators must pay, including for limiteds they give away for free
Creators earn 30% of the sale price (Roblox takes 30%, and the item seller takes the remaining 40%)
Only 1 limited item can be put up for a sale in a 24 hour period, to prevent the market from being totally flooded
The 10% payout when items are resold is a major development. In the past, limiteds could be resold, but the original creator did not benefit from those transactions. It's interesting to see how the practice of paying out royalties, which has become standard in the world of NFTs, has made its way into Roblox via UGC limiteds.
Lots of UGC Limiteds Already Being Made
Since Roblox made this announcement 5 days ago, there have been 338 UGC Limiteds posted for sale in the Roblox Marketplace.
They range in styles, quantities available, and pricing.
There has been lots of excitement within the UGC creator community around testing out this new ability. Roblox creator Junozy has outlined via this Twitter post all of the UGC Limiteds they'll be putting out in the coming weeks...
Creators Offering Free UGC Limiteds
An interesting early trend is seeing UGC creators offering FREE UGC Limiteds. Why are creators doing this when they still have to pay to upload these free items? Well, it seems like it helps them build followers and good will within the community.
Some UGC Creators are using their sizable Twitter followings to promote FREE UGC Limiteds.
In this case, this creator uses free UGC Limiteds to drive increased engagement on his tweet, thereby expanding the reach of his social following and bringing in more audience who can potentially convert into paying customers in the future.
Mixed Reactions from Community
In these very early days of the program, there are those who find the whole thing exciting, and those who find it annoying.
Here's what prominent Roblox YouTube KreeKCraft had to say about pricing skyrocketing...
While this Roblox community felt similarly about UGC pricing getting out of control...
Roblox YouTuber Flamingo believes that all of the purchase activity happening now is based on initial hype that will eventually die down as the market gets flooded with more UGC Limiteds...
Brands Have Made Limiteds Before
While it seems like UGC Limiteds are the shiny new object for UGC Creators, they have been available for some top brands putting out high quality virtual items such as Gucci, Forever 21, and Tommy Hilfiger.
Gucci has been very active, creating UGC Limiteds...
Now that the ability to sell UGC Limiteds is open, will more fashion brands enter platform to test the waters? We imagine so.
Potential Paths Forward for Brands
As we at Metaverse Marcom have seen over the past several months covering the space, there are several industries that have seen great success on Roblox, especially entertainment, music, sports, apparel and toys. For brands within these industries, experimenting with UGC and UGC Limiteds can be an interesting and affordable way to reach young audiences and gain powerful learnings ahead of their competitors.
Here are some considerations for brands interested in experimenting with UGC Limiteds:
Limiteds Provide a Pathway to Higher Margins - When looking at the regular UGC marketplace, there's not a ton of price elasticity. 50-150 Robux is typically how much brands can expect to charge for virtual items, which ends up being about $.60-$1.80. But when you consider that the UGC item creator only takes home 30% of the sale price, you're talking about bringing in $0.18-$0.54 per item sale. That means that in order to drive any sort of meaningful revenue, creators must sell LOTS of items (tens of thousands if not hundreds of thousands or millions). But if you're selling limiteds for 5,000 Robux ($62) and taking home $17.50 from each purchase, suddenly selling 1,000 - 5,000 gets really interesting with higher and higher revenue potential.
Will the Secondary Market Drive Meaningful Revenue? - As mentioned above, it's very interesting that creators will now be able to make 10% off of secondary sales. If a limited item becomes very popular and drives lots of sales, could this activity drive more and more revenue that adds up for brands? Time will tell.
What Will Experiences Look Like that Drives Secondary Sales? - Also super interesting to note is that Roblox games / experiences that facilitate a secondary sale will earn 50% of the sale. Yes, 50%! That's huge. What will those experiences look like? Hard to say. But whoever can crack facilitating the resale of UGC Limiteds stands to profit significantly from this relatively generous policy. Will a brand be able to create this unique marketplace? I sure hope so. If you're a brand interested in this unique revenue opportunity on Roblox, please reach out. We'd love to help.
Stephen Dypiangco is the CEO of Metaverse Marcom, a strategy and consulting firm helping entertainment and sports brands enter Roblox via UGC items.