Rec Room social gaming platform to shut down after $3.5B valuation peak

Social gaming platform Rec Room announced on Monday that it will be shutting down its service, with the platform scheduled to go offline on June 1.

For many users who have spent time building or exploring its virtual environments, the announcement marks the end of a platform that played a major role in online social gaming. Over the years, Rec Room attracted more than 150 million players. It became a popular destination for social interaction, particularly during the pandemic when people turned to virtual spaces to connect with others.

The company was founded in 2016 by Nick Fajt and Cameron Brown. It quickly gained traction in the gaming industry and secured significant investment, eventually reaching a valuation of $3.5 billion in December 2021.

Despite its large user base, Rec Room faced ongoing challenges in building a sustainable revenue model. Operating costs continued to rise while revenue growth failed to keep pace. Even with a strong community and the introduction of new features such as Maker AI, which was designed to enhance game creation, the company was unable to achieve financial stability. These difficulties led to layoffs earlier this year.

“We spent a long time trying to find a way to make the numbers work,” the company said in its announcement. “But with the recent shift in the VR market, along with broader headwinds in gaming, the path to profitability has gotten tough enough that we’ve made the difficult decision to shut things down.”

As part of the shutdown process, the platform has already stopped allowing the creation of new accounts and the sending of friend requests. Content creators can no longer publish monetised experiences, and all platform operations will officially cease at 12 p.m. PT on June 1.