Rec Room to shut down as profitability challenges persist

Social gaming platform Rec Room will cease operations on June 1, 2026, ending a decade-long run that saw the company grow into one of the most widely used user-generated virtual experiences.

The Seattle-based company confirmed that its platform will go offline at noon Pacific time, with services gradually winding down in the weeks leading up to the shutdown. New account registrations, subscriptions, and monetized content publishing have already been halted, while in-app purchases will stop by May 1 and creator earnings will end later in the month.

Despite reaching more than 150 million users over its lifetime, the company said it was unable to establish a sustainable financial model. Operational costs continued to outpace revenue, even as engagement remained high and millions of users continued to access the platform monthly.

Founded in 2016, Rec Room built a cross-platform ecosystem spanning mobile, console, PC, and virtual reality devices, allowing users to create and share interactive experiences. The company raised nearly $300 million from investors and reached a valuation of $3.5 billion in 2021, positioning it among the more prominent startups in the social gaming and metaverse segment.

However, shifts in the virtual reality market and broader gaming industry slowdown have made profitability more difficult. The company had previously reduced its workforce through multiple rounds of layoffs in 2025 as it attempted to extend its financial runway and move toward self-sufficiency.

Rec Room’s business model relied heavily on user-generated content, but margins remained constrained. The platform retained a smaller share of revenue from creator-driven transactions compared to first-party content, limiting its ability to scale profitably. Investments in new features, including AI-driven creation tools, also introduced additional costs that exceeded subscription revenue.

As part of the shutdown process, users will be able to download certain account data, while creators will receive final payouts. However, full migration of user-created experiences will not be supported due to the platform’s reliance on its backend infrastructure.