Kids Don’t Want Money Any More

“They were handing it right back to me and saying, ‘Can you convert this to Robux?’ ” said Mr. Robleto, a 46-year-old web designer in Rockville, Md. “I don’t even need to have cash in the house. I can just go online and put $5 into their accounts.”

Kaylee Robleto, 12, recently bought a virtual Louis Vuitton handbag, while her 10-year-old sister, Ginelle, got a virtual Gucci jacket. Each item cost less than the equivalent of $5 in Robux.

“If I were to spend money in real life, I’d have to ask my parents to take me to stores,” Kaylee said. “I have control over what I buy on Roblox.”

The Robleto girls are part of a massive cohort of tech-savvy youngsters who are learning to flex their financial independence through Roblox, one of the most popular kids’ online hangouts and a place where brands are increasingly setting up shop to reach them. About half of Roblox’s 60 million daily users are under the age of 13.

Roblox and other virtual economies are changing families’ conversations about money, and helping solve the perennial parenting problem of controlling how kids spend online. Most virtual items cost less than the equivalent of $10. Parental controls implemented in recent years mean out-of-control spending by children is less of a concern than it once was. By topping up virtual wallets with a little cash, parents save money and time compared with a trip to Target and don’t have to take out their wallets for every little purchase. 

“Developers quickly realized that to monetize a young audience base, they first had to cater to the needs of parents,” said

Joost van Dreunen,

who teaches the business of videogames at New York University’s Stern School of Business.

This is why many games including Roblox also sell virtual currency as monthly subscriptions, similar to an allowance, he said.

Children are spending more time and money in Roblox’s free-to-play, 3-D online world, a so-called metaverse where people create and engage in all sorts of virtual activities via avatars. Roblox revenues grew six times over the past three years to $1.9 billion last year—almost all of it from sales of Robux.

As adults struggle to find uses for the metaverse, kids are already immersed in the technology, as they earn and spend virtual currency while playing games and socializing on Roblox.

In April,

Chipotle Mexican Grill Inc.

launched “Chipotle Burrito Builder,” a game on Roblox that invites players to simulate making entrees in a virtual store in exchange for the restaurant chain’s own virtual currency called Burrito Bucks. Some players can then cash in the currency for an offline entree at a real Chipotle location. The company repeated the promotion in September but tasked players with grilling virtual steaks to highlight its new beef filling.  

The strategy behind the game was to create a fun, interactive experience, “rather than plastering advertising,” said

Chris Brandt,

Chipotle’s marketing chief.

Roblox isn’t like most videogame companies. Rather than rely on Hollywood-like budgets and rock-star talent to produce blockbuster games, it outsources development to anyone willing to put in the effort, including hobbyists, professional developers and a fast-growing number of advertisers.

Though the cost of making a game on Roblox can run into the hundreds of thousands of dollars, an increasing number of companies are doing so because it’s essentially marketing disguised as entertainment, said Emma Hazan, chief executive and founder of Sidekick Comms Ltd., a communications and brand consulting company. 

“Traditionally the way to reach kids was an advert,” she said. “Now brands are embracing online gaming platforms like Roblox.” 

The main difference between the old and the new, added Ms. Hazan, is that games that double as ads are interactive and designed to be fun. That’s typically not the case with static online ads. With Roblox, she said, “brands themselves are getting in on the action.”

In September,

Walmart Co.

launched two games on Roblox, following in the footsteps of

Kellogg Co.

, Chobani Inc. and others. New games from advertisers debut weekly.

In Walmart Land, kids can find and earn virtual coins for “verch”—as in virtual merchandise—such as headphones as well as clothes from Walmart’s in house-brands for their avatars. William White, chief marketing officer at Walmart, appeared as a blocky “Robloxian” wearing a Walmart letterman jacket to promote the experience, saying it was “making the best of Walmart’s aisles virtual.”

Nike Inc.’s

Nikeland—modeled on the shoe company’s Beaverton, Ore., headquarters—was one of the first branded experiences on the platform. In it, users can earn coins by playing basketball and other games, which they can then spend on virtual sneakers and other items.

“Nike is meeting young athletes, wherever they are,”

John J. Donahoe,

chief executive officer of the sneaker company, said on an earnings call last year following the launch of Nikeland.    

Soon advertisers will be able to do more. Starting next year, they’ll gain the option to purchase “portals” in other creators’ games that take users directly to theirs. They’ll also be able to buy virtual billboards in games made by other creators. Developers will get a cut of revenue from both features.

“We have just scratched the surface of what it means to be a thriving and monetizing economy in these 3-D immersive experiences,” Manuel Bronstein, Roblox’s chief product officer, said at the company’s investor day in September.

While Roblox is one of the biggest virtual worlds where kids are spending virtual money, it is not alone.

Microsoft Corp.’s

building game “Minecraft” has Minecoins, the multiplayer shooter game “Fortnite” from Epic Games Inc. has V-bucks and Niantic Inc.’s augmented-reality game “Pokémon Go” has PokéCoins.  

This year, Moonbug Entertainment Ltd. began selling kids’ nonfungible tokens, or NFTs, of characters from its kids’ shows “CoComelon” and “Blippi” on a new social-media platform for tots called Zigazoo. NFTs are digital certificates of ownership of virtual and real goods. These collectibles for kids are not expensive like the infamous Bored Ape Yacht Club collection, which sold for hundreds of thousands of dollars earlier this year. Packs of Zigazoo’s NFTs sell for $5.99 to $49.99.

Last year kids ages 12 to 17 spent an average of $92 a month online, more than double the average from two years earlier, estimates Forrester Inc. Most of that was spent on videogames and virtual goods, followed by clothing and accessories, the market research firm said.  

Spending virtual money is second nature for generations who’ve grown up with the internet, said Titania Jordan, chief parent officer at Bark Technologies Inc., a service for monitoring children’s online activity that was founded in 2015. “The concept of a piggy bank or even cash is really archaic,” she said.

For parents, though, it can be harder to grasp. It can take time to understand the value of virtual goods. Meanwhile, they worry their kids may be getting conned.

Jason Baffrey said he and his wife were initially opposed to letting their 12-year-old son, Jaxson Baffrey, buy virtual goods in videogames. The notion of spending real money on something intangible was foreign to the couple. “We grew up in a generation where we didn’t necessarily do that,” he said.

But recently they wanted to reward Jaxson for good behavior and when they asked what kind of gift he’d like most, he requested a virtual outfit for his character in “Fortnite.” After some thought, the couple changed their tune.

“What’s the difference if it gives him the same pleasure, if you will, as a toy,” said Mr. Baffrey, a 52-year-old public affairs director for the state of Oklahoma. “At least he can’t break it.”

Some children’s advocacy groups, politicians and online-commerce researchers have raised concerns about games that sell virtual goods to adolescents, particularly when the goods are sold in blind packs like baseball cards. Many popular children’s videogames, on Roblox and elsewhere, sell or reward players this way. 

A newly released three-year study concluded that in-game sales of blind packs of virtual goods can cause “financial and emotional harm” to teenagers and children. The study, published by Newcastle and Loughborough Universities in the U.K., tracked the videogaming habits of 42 families with children between the age of 5 and 17. It also concluded that the design of in-game paid-reward systems borrows elements from regulated gambling to entice players to spend more time and money in games.

Advocacy groups recommend that parents talk to children about the potential for disappointment when buying blind packs, and the actual cost of any virtual item in terms of traditional currency. 

Mr. Robleto, the father in Maryland, said his daughters initially got upset after their Robux allowances ran out before they could buy all the virtual goods they wanted. He then showed them how one of his daughters had paid the equivalent of $9—almost double her weekly chore money—for a single pair of virtual boots on the platform.

“We did that as an exercise for them to understand how much money one digital item can cost,” he said. “I think it helped them recognize the value of money.”

Write to Sarah E. Needleman at [email protected]