Despite its significant user base and widespread appeal, the Seattle-based company struggled to find a profitable business model, ultimately leading to this difficult decision. “Even with our popularity, we never managed to transform Rec Room into a sustainably profitable venture,” the company shared in a reflective blog post. “Our operational costs consistently overshadowed our revenue.”

Founded in 2016 by Nick Fajt, Cameron Brown, and a team of visionary co-founders under the name Against Gravity, Rec Room quickly became a beloved platform. It enabled players to create and share games, virtual goods, and experiences across a variety of devices, including phones, consoles, PCs, and VR headsets.

The financial strain was evident earlier this year when Rec Room laid off 16% of its workforce in March 2025. The situation escalated five months later with a significant reduction of nearly half the remaining staff, cutting 141 positions and reducing the team size from around 310 employees to just over 100.

Rec Room was founded in 2016 by Nick Fajt, Cameron Brown and other co-founders under the name Against Gravity. The startup built a cross-platform social gaming app that let players create and share games, virtual goods and experiences across phones, consoles, PCs and VR headsets.

Rec Room laid off 16% of its staff in March 2025 and then cut roughly half its remaining workforce five months later, eliminating 141 positions and shrinking from about 310 employees to just over 100.

The company blamed the “recent shift in the VR market” and “broader headwinds in gaming” for its inability to turn a profit. It’s not alone: Meta announced this month it was scaling back its Metaverse and shutting down Horizon Worlds, the virtual reality social network.

Users logging on Monday found the platform already beginning to wind down. Rec Room immediately blocked account creation, friend requests and new subscriptions to its Rec Room Plus membership. Token purchases will end May 1, creator earnings will stop May 18, and the platform will go fully dark at noon Pacific Time on June 1.

Cameron Brown, Rec Room’s chief creative officer known to users as “Gribbly,” “often described Rec Room as ‘an explosion of love and creativity all around the world,’” the company wrote. “We hope it was that for you. It certainly was for us.”

Rec Room users can download their photo archives and a personal “final report card” via the platform’s website before June 1. Gift cards can be redeemed through April 30, and unused balances can be refunded through June 15.