Social VR platform Rec Room introduced it’s shedding round half of its employees, citing low-level content material which has flooded the platform from customers on cell and console.
Based in 2016, the studio was as soon as valued at $3.5 billion following its most up-to-date funding spherical in 2021, which introduced the Seattle-based firm $145 million, making it probably the most invaluable XR corporations thus far.
As an early adopter of user-generated content material (UGC), Rec Room was additionally one of many first within the area to incentivize creators by letting them promote their creations for in-game tokens, which may very well be exchanged for actual money—following a monetization technique just like Roblox.
Now, the corporate has introduced wide-sweeping layoffs in a blogpost, authored by firm co-founders Cameron Brown and Nick Fajt. In response to a press release offered to GeekWire, Rec Room now has simply over 100 workers following the cuts.
The studio says departing workers will obtain three months of pay, six months of well being advantages, and the choice to maintain their computer systems.
In response to Rec Room management, layoffs stem from its overly bold try to make the app a common creation platform throughout VR, PC, consoles, and cell. Prime creators on PC and VR drove development, nevertheless efforts to increase creation instruments to cell and consoles underdelivered, creating technical pressure and monetary instability.
“Whereas we did see creation occurring on cell and consoles, we by no means received to the purpose the place these units have been good for constructing stuff that different gamers engaged with. And a few of our efforts to bridge that hole (e.g., Maker AI) simply pissed off our extra impactful creators,” Brown says within the blogpost.
In brief, user-generated content material created by means of its cell and console pipelines tended to be quite a few, however pretty low in high quality and optimization:
On the identical time, these lower-powered units nonetheless produced hundreds of thousands of items of content material. This put an enormous pressure on the workforce, who had to determine instruments and procedures to evaluation all of it. Making all this run throughout each system was a large technical problem and burden. Whereas our most expert creators optimized their content material cleverly, most creators didn’t – couldn’t, actually, as a result of we didn’t present them with the mandatory tooling. Supporting all this scope stretched us method too skinny, and our try at constructing one large scalable platform (Rooms 2.0) didn’t land like we would have liked it to. The imaginative and prescient made sense, however we received crushed underneath the size.
So we ended up in a tricky spot. Too small to appreciate the “anybody can construct wherever” imaginative and prescient, however too large to pivot to a extra targeted expertise that was extra reactive to what our gamers needed and would pay for. The consequence was that we began to dig a monetary gap that was getting bigger daily.
Rec Room says transferring ahead it is going to empower its finest (most revenue-generating) creators in an ostensible bid to refocus the core of its content material.
“These people are driving a lot of the development and income already. In July, gamers spent extra on [user-generated content] than ever. Creators had their highest incomes month ever. This section is definitely rising properly, nevertheless it’s closely targeted on PC – in order that’s the place we’ll focus our UGC efforts,” Brown says.
Brown additional notes Rec Room is “not abandoning UGC,” nevertheless “narrowing our focus away from ‘everybody can create’ in favor of serving our easiest creators.”
The corporate says it additionally hopes to spice up the platform not solely by bettering PC-based instruments, however by internet hosting extra curated occasions, featured content material, and fewer however higher-quality updates.
This follows a layoff spherical in March 2025, which affected 16 % of employees. On the time, Rec Room management maintained layoff have been needed to regulate prices to make sure the platform’s long-term survival. The studio stated fifficulties included a slowing gaming market development, increased rates of interest, and a more durable fundraising local weather.
You possibly can learn Brown and Fajt’s full assertion on the current layoff spherical right here.
