VR social pioneer "Rec Room" closes its doors, Snap buys assets

The development team announced that users will no longer have access to “Rec Room” offerings starting in early June. The reason for the platform's end is a permanently unsolved problem: revenues were never sufficient to cover ongoing costs. “Rec Room” was temporarily valued at 3.5 billion US dollars and raised 294 million US dollars in capital across several funding rounds.

Shortly after the announcement, Snap Inc. announced that it would acquire parts of “Rec Room's” assets without providing details. So far, it is only known that some workforce is to move to the Snapchat operator. However, Snap will not continue to operate “Rec Room.” Instead, the company is likely interested in strengthening the subsidiary founded for the upcoming AR glasses “Specs”.

Large Reach, Weak Business Model

“Rec Room” was long considered a flagship project for social VR experiences. Founded in 2016, the Seattle-based company built a cross-platform environment where users could create and share their games, rooms, and items with others. The company states that it has reached over 150 million users in the past ten years. The total usage time is said to have summed up to tens of thousands of years worldwide.

So there was never a lack of audience. The core of the problem lay simply in the structure of the business. “Rec Room” relied heavily on user-generated content, which brought growth but only low margins: the company kept only a small share of the revenue, while the majority went to platform operators and creators. Although the content developed by the company itself was more lucrative, it played only a minor role for users.

This imbalance led to increasing activity not automatically resulting in higher profits. Additionally, “Rec Room” invested in new features, including AI tools for game creation and other features that caused high operating expenses. The company already reacted in 2025 with layoffs and tried to adjust the cost structure. Nevertheless, these measures were apparently not sufficient.

Core Problem: Social Gaming

In the official statement on the closure, the team also points to changes in the VR market and an overall more difficult situation in the gaming industry, which have further complicated the path to profitability. The weakening VR market was probably the smallest problem for “Rec Room.” Since its porting to consoles, PC, Android, and iOS, the platform has reached far more “traditional” players than VR users, and these seem to be increasingly turning to other media or forms of entertainment.

Even the significantly larger Epic Games cut nearly 1000 jobs last week due to declining “Fortnite” user numbers. Meta scaled down its social project Horizon Worlds and even wanted to completely discontinue its VR development before being persuaded by its community to reverse course.

“Rec Room” itself speaks of consciously making the decision now, as long as an orderly withdrawal is still possible. This way, creators can finalize their projects and export parts of their data.

(joe)