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 company announced yesterday. Snap Inc. confirmed the identical day that it has acquired choose property from the corporate.
“Regardless of this reputation, we by no means fairly discovered make Rec Room a sustainably worthwhile enterprise,” the corporate stated within the announcement. “Our prices at all times ended up overwhelming the income we introduced in.”
For the broader metaverse business, the closure is one other stark reminder that person development and not using a working income mannequin shouldn’t be a enterprise.
Snap picks up the items
Snap confirmed that it acquired choose property from Rec Room, and that some Rec Room workers will probably be becoming a member of Specs Inc., the Snap {hardware} subsidiary engaged on its Spectacles augmented actuality glasses, according to GeekWire. Snap stated it was drawn to the Rec Room staff’s experience in constructing social, multiplayer XR experiences.
Neither firm indicated that Rec Room can be revived at Snap in its present kind, GeekWire reported. Nick Fajt, Rec Room’s co-founder and CEO, stated he was “very pleased with the staff,” grateful to the neighborhood, and enthusiastic about what’s subsequent.
From $3.5 billion to zero
Rec Room raised $145 million in its December 2021 Series F round, 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. Whole funding throughout all rounds reached $294 million, according to research firm Sacra.
The corporate reduce employees twice earlier than calling it quits. In March 2025, Fajt introduced a 16 % discount in headcount, saying the corporate needed to cowl its personal prices with out counting on extra funding, according to a Rec Room blog post.
Then in August 2025, the corporate laid off half of its staff.
After the August layoffs, Fajt published an unusually candid breakdown of the corporate’s funds.
UGC income was rising 70 % 12 months over 12 months, Fajt stated 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 gadgets the corporate made itself, in accordance with that put up. He stated 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 good friend additions, and new sign-ups for its Rec Room+ subscription service. After Might 1, gamers will not be capable of buy tokens. After Might 18, creators will not be capable of earn new tokens. A remaining creator payout will probably be processed on June 1, in accordance with the announcement.
On June 1, gamers will not be capable of log in, the rec.internet web site will go offline, and on-line companies associated to Rec Room Studio will stop, the corporate stated. As a farewell gesture, the corporate discounted first-party content material by 80 % 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 information in codecs appropriate with different instruments, equivalent to Unity, permitting them to doubtlessly rebuild their work on different platforms, the corporate stated. That export function is accessible solely by 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 cell model of the app lively. You possibly can read more about it in our previous story here.
Rec Room had been making progress on its creator economic system earlier than the tip. In September 2025, the company announced that creators had earned greater than $1 million in a single quarter for the primary time — a milestone that had taken your 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 motive we’ve the World Vast Net as an alternative 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?
