Social gaming platform Rec Room, once worth $3.5 billion, has shut down

Rec Room, once hailed as a promising giant in the world of social gaming, announced Monday that it will shut down its platform on June 1.

If you’re a fan of the platform or have spent time creating or exploring in its virtual worlds, this news will likely be very important. Over the years, Rec Room has attracted more than 150 million players, becoming a favorite place for social gaming, especially during the pandemic when everyone was looking for ways to connect online.

Founded in 2016 by Nick Fajt and Cameron Brown, Rec Room has received significant attention and investment, reaching a valuation of $3.5 billion in December 2021.

Despite all these players, Rec Room struggled to figure out how to actually make money. Costs skyrocketed, and revenues couldn’t keep up. Even with a strong community and new features like Maker AI for creating games, the financial side hasn’t panned out, leading to massive layoffs earlier this year.

“We spent a long time trying to find a way to make the numbers work,” the company wrote in its announcement Monday. “But with the recent shift in the VR market, coupled with broader headwinds in gaming, the path to profitability has become difficult enough that we have made the difficult decision to shut things down.”

Starting now, new accounts or friend requests cannot be created. Creators will no longer be able to share monetized content, and the platform will shut down at 12 noon PT on June 1.