Rec Room was valued at $3.5 billion in 2021 during the metaverse craze in the pandemic. But Seattle social gaming company is closing.
And the twist? Part of Rec Room will live on with Snap, which acquired some of the assets this evening.
The company is shutting down its platform on June 1, according to an announcement on Rec Room’s web site today. As the company said a little flippantly, school’s out. Geekwire did a great job covering the news. I also covered a lot of Rec Room news over the years and I am sad to see it go.
It’s hard to believe that a company that had such promise has fallen so hard, much like many other metaverse companies like Magic Leap and Meta. Rec Room served more than 150 million players across a decade.
“Players made over half a billion friends on the platform. In total, people all around the world spent a cumulative 68 thousand years in Rec Room. The top UGC rooms saw over 500 years of play time each. That’s a lot of people having a lot of fun,” Rec Room said in a post. “What this community built together is incredible, and something we’ll always be proud of. Even today, millions of people are showing up to spend time in this fun and welcoming place every month.”
Now that would have been a sad ending. But that’s the old news cycle. Snap, the owner of Snapchat and its AR glasses, said late Monday it is acquiring some assets from Rec Room.
Geekwire reported that some of Rec Room’s employees will become part of Snap. Those employees will not be part of a resurrected Rec Room. Rather, they will be part of Specs Inc., Snap’s hardware subsidiary to supports its augmented reality work. Terms of the deal were not released.
Snap has been revealing developer-focused AR features in recent months and it is expected to unveil its Specs glasses this year.
Snap said it appreciate dthe Rec Room team’s social, multiplayer XR experiences.
Starting now, Rec Room will stop the creation of new accounts and new friend requests, and it will stop taking subscriptions to its Rec Room Plus membership.
Nick Fajt and Cameron Brown started Rec Room in 2016 during the launch phase for the Oculus VR headset and Steam VR from Valve. That led to a boom in VR that petered out but then got a second wind in the pandemic when no one could go out anymore. At that time, the metaverse seemed like a great social online community, but it too petered out when the pandemic ended and people returned to in-person social activities.
Rec Room went on to raise $294 million and become one of Seattle’s unicorn valuation companies.
“Despite this popularity, we never quite figured out how to make Rec Room a sustainably profitable business. Our costs always ended up overwhelming the revenue we brought in,” Rec Room said. “We spent a long time trying to find a way to make the numbers work. 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.”
The company said it was making the decision now while it still had the ability to wind things down thoughtfully and do right by its people.
Players will be able to download their data, including all the photos they have by following the instructions here. In addition, the company fans can download a “final report card” that is a memento of their avatars — follow the instructions here.
“On behalf of the team we’d like to thank you for being a part of the Rec Room community and helping us create a fun and welcoming place for players from all walks of life over the past ~10 years. Your boundless creativity and enthusiasm has been a source of great inspiration and joy. We wish we could have found a way to keep things rolling, but unfortunately this is the end of the road,” the company said. “We’d also like to thank everyone who has been part of the amazing Rec Room team over the years. It has been an honor and a career highlight to work with the talented, creative and dedicated Rec Room team. Thank you for your innumerable contributions to something that brought a lot of joy (and some heartache!) into the world.”