Rec Room, a Seattle-based social digital world that raised $294 million and briefly reached a $3.5 billion valuation, will shut down on June 1, 2026, the corporate introduced yesterday. Snap Inc. confirmed the identical day that it has acquired choose belongings from the corporate.
“Regardless of this reputation, we by no means fairly found out find out how to make Rec Room a sustainably worthwhile enterprise,” the corporate mentioned within the announcement. “Our prices all the time ended up overwhelming the income we introduced in.”
For the broader metaverse business, the closure is one other stark reminder that consumer development with no working income mannequin will not be a enterprise.
Snap picks up the items
Snap confirmed that it acquired choose belongings from Rec Room, and that some Rec Room workers can be becoming a member of Specs Inc., the Snap {hardware} subsidiary engaged on its Spectacles augmented actuality glasses, in response to GeekWire. Snap mentioned it was drawn to the Rec Room crew’s experience in constructing social, multiplayer XR experiences.
Neither firm indicated that Rec Room could be revived at Snap in its present kind, GeekWire reported. Nick Fajt, Rec Room’s co-founder and CEO, mentioned he was “very happy with the crew,” grateful to the group, and enthusiastic about what’s subsequent.
From $3.5 billion to zero
Rec Room raised $145 million in its December 2021 Collection F spherical, bringing its complete valuation to $3.5 billion, the corporate introduced on the time. The spherical was led by Coatue Administration, with Sequoia Capital, Index Ventures, and Madrona Enterprise Group additionally collaborating. Complete funding throughout all rounds reached $294 million, in response to analysis agency Sacra.
The corporate lower employees twice earlier than calling it quits. In March 2025, Fajt introduced a 16 p.c discount in headcount, saying the corporate needed to cowl its personal prices with out counting on further funding, in response to a Rec Room weblog put up.
Then in August 2025, the corporate laid off half of its employees.
After the August layoffs, Fajt printed an unusually candid breakdown of the corporate’s funds.
UGC income was rising 70 p.c 12 months over 12 months, Fajt mentioned on the time, however the economics had been punishing: when a participant purchased a UGC merchandise, Rec Room saved solely about 30 cents on the greenback after paying platform charges and creator cuts, in comparison with 70 cents on objects the corporate made itself, in response to that put up. He mentioned the corporate had runway projected into 2029.
It didn’t make it.
What’s shutting down — and when
Efficient instantly, Rec Room has stopped permitting new account creation, new buddy additions, and new sign-ups for its Rec Room+ subscription service. After Could 1, gamers will now not be capable to buy tokens. After Could 18, creators will now not be capable to earn new tokens. A remaining creator payout can be processed on June 1, in response to the announcement.
On June 1, gamers will now not be capable to log in, the rec.internet web site will go offline, and on-line companies associated to Rec Room Studio will stop, the corporate mentioned. As a farewell gesture, the corporate discounted first-party content material by 80 p.c and unlocked many Rec Room+ subscription options for all customers at no cost.
Saving your creations
Creators can not obtain working copies of their rooms, however can export room and invention knowledge in codecs suitable with different instruments, corresponding to Unity, permitting them to doubtlessly rebuild their work on different platforms, the corporate mentioned. That export characteristic is obtainable solely via the Steam PC construct and was in remaining inner testing as of the announcement, with availability anticipated inside a couple of week.
Gamers can obtain their pictures and a “remaining report card” avatar memento.
A broader sample
The Rec Room closure comes as Meta retreated from its personal digital social platform. As of June 15, Quest headset customers will lose entry to Horizon Worlds fully and the power to create or publish VR content material will finish, leaving solely the cellular model of the app energetic. You may learn extra about it in our earlier story right here.
Rec Room had been making progress on its creator financial system earlier than the tip. In September 2025, the corporate introduced that creators had earned greater than $1 million in a single quarter for the primary time — a milestone that had taken the complete 12 months of 2021 to succeed in when this system first launched.
My take-away from all this? That creators ought to be cautious of placing their eggs into one basket, particularly one with a closed, proprietary ecosystem. There’s a cause now we have the World Vast Internet as a substitute of America On-line.
Will probably be good to see an open various for the metaverse. Perhaps, as soon as AI coding will get a bit higher, we are able to improve OpenSim for the brand new period?
