Rec Room, the developer behind Rec Room, a preferred free-to-play user-generated content material sport, has introduced that will probably be shedding “roughly half” of its workforce. The layoffs are justified as essential and painful cuts, given the trajectory of the corporate. The announcement publish is moderately prolonged, however the gist of it appears to be that the studio bit off greater than it may chew and ended up spreading its builders too skinny in an try to help content material creation throughout too many units. As a part of the severance packages, the affected staff will probably be allowed to maintain their laptop computer or desktop computer systems, and they’re going to proceed to obtain their salaries and advantages for 3 and 6 months, respectively, after being laid off.
Together with the layoffs, Rec Room will probably be scaling again its help efforts to focus extra on PC creators, which make up the majority of the sport’s UGC creators. Which means that the remaining growth efforts will spend much less time and vitality engaged on instruments for cell, controller, and Maker AI. Rec Room will even sluggish the shopper launch cadence, which is in accordance with earlier efforts to maneuver extra of the sport’s key content material out of the shopper and into the server. Rec Room launched in September 2021, and, in line with SteamDB, its concurrent participant depend on Steam reached 7,154 in February 2022. Since then, it has steadily declined, with the every day participant depend hovering at round 900-1,500 gamers. Regardless of this, Rec Room claims within the layoff announcement replace that gamers spent extra on user-generated content material in July 2025 than ever earlier than.
That is lengthy, so here is the TLDR:
As we speak, Nick and I made the tough determination to put off roughly half the Rec Room workforce
This isn’t a mirrored image on these people, who’re amongst probably the most gifted folks we have labored with within the business. It is a enterprise necessity primarily based on the monetary trajectory of the corporate.
We’re taking care of these impacted as finest we will, e.g., by providing a beneficiant severance package deal.
As we speak’s robust determination means we will hold supporting and constructing Rec Room to its full potential. Finally, that’s the reason we’re doing this.
This sucks.
What’s taking place?
As we speak Nick and I needed to make one of many hardest selections in Rec Room historical past: We’re saying goodbye to about half the Rec Room workforce. These are unbelievable individuals who have poured their expertise, coronary heart, and creativity into this firm. They formed our tradition, constructed options cherished by hundreds of thousands, and made Rec Room higher in so some ways it is unimaginable to depend. We’re heartbroken to see them go – it is a painful day for lots of people.
Rec Room is greater than a sport, and greater than an organization. It is a group, and it is among the best groups we have ever had the privilege to work with. That solely makes this second more durable. This isn’t a mirrored image on the expertise or dedication of these departing – we want we may hold each one among them. I am gonna say that once more, to make it clear this is not simply “a kind of belongings you say in a layoff message”. We TRULY want we may hold each one among these folks on the workforce.
However we won’t. It is a reflection of the robust actuality we face as a enterprise and the change wanted to present Rec Room an opportunity to thrive within the years forward.
This determination impacts folks we contemplate colleagues and associates. Individuals we have shared years of labor and life with. Individuals who constructed Rec Room line-by-line, asset-by-asset, test-by-test. This isn’t the result any of us hoped for, and Nick and I take full duty for the place we’re in.
In the remainder of this observe, we need to be open about why we needed to take this step, the errors we made alongside the best way, how we’re supporting those that are leaving, what’s subsequent for Rec Room, and why we stay deeply dedicated to constructing Rec Room into the longer term.
How are we supporting impacted folks?
First, we need to say how grateful we’re to the individuals who helped construct Rec Room into what it’s right now. This will probably be a tough transition for these leaving, and we need to do as a lot as we will to assist them transfer on to their subsequent chapter.
Everybody departing will proceed to be paid for the following three months, and can obtain well being advantages for the following six months. Additionally, we really feel a pc is a crucial software to seek out new work, so all departing staff may have the choice to maintain their laptop computer or desktop.
If you wish to attain out to anybody, it is best to be at liberty to do this. Please bear in mind that it is a difficult time for them, so be aware that they could want further area and time to course of proper now.
How did we get right here?
Years in the past, we raised some huge cash to construct an infinite imaginative and prescient: A social UGC platform the place anybody may create something, on any system.
We invested closely in creation instruments throughout PC, VR, consoles, and cell. However the actuality has been harsh. Probably the most impactful creation comes nearly solely from creators on PC (utilizing mouse and keyboard, and Studio) and VR.
Whereas we did see creation taking place on cell and consoles, we by no means obtained to the purpose the place these units had been good for constructing stuff that different gamers engaged with. And a few of our efforts to bridge that hole (e.g., Maker AI) simply pissed off our extra impactful creators.
On the similar time, these lower-powered units nonetheless produced hundreds of thousands of items of content material. This put an enormous pressure on the workforce, who had to determine instruments and procedures to overview all of it. Making all this run throughout each system was a large technical problem and burden. Whereas our most expert creators optimized their content material cleverly, most creators did not – could not, actually, as a result of we did not present them with the required tooling. Supporting all this scope stretched us means too skinny, and our try at constructing one massive scalable platform (Rooms 2.0) did not land like we would have liked it to. The imaginative and prescient made sense, however we obtained crushed below the size.
So we ended up in a troublesome spot. Too small to appreciate the “anybody can construct wherever” imaginative and prescient, however too massive to pivot to a extra targeted expertise that was extra reactive to what our gamers needed and would pay for. The outcome was that we began to dig a monetary gap that was getting bigger on daily basis.
The crossroads
For the previous few years, we have been caught on this uncomfortable center floor. Pushing an enormous imaginative and prescient we could not realistically ship, whereas disappointing present gamers who simply need us to provide nice experiences like we used to, and repair the numerous bugs that they encounter.
We struggled laborious with this dilemma. Can we hold pushing on the large UGC imaginative and prescient, to the ever-increasing frustration of our gamers and the workforce? Or can we reduce the imaginative and prescient, minimize the workforce we love in half, and concentrate on what we will do effectively?
Each paths had been painful. However finally we obtained to some extent the place it was clear that staying the course meant low development, a excessive burn charge, and no clear path ahead. In a phrase: Unsustainable. The writing on the wall turned very clear.
Now what?
We stay dedicated to supporting and constructing Rec Room to its full potential. Transferring ahead, we’ll concentrate on two issues:
Empowering our absolute best creators.
Guaranteeing Rec Room is a good expertise for our gamers.
Empowering our absolute best creators
This implies:
Much less work on broad UGC enlargement – e.g., Maker Pen on cell/controller, Maker AI.
Extra help for our prime creators. These people are driving many of the development and income already. In July, gamers spent extra on UGC content material than ever. Creators had their highest incomes month ever. This phase is definitely rising properly, nevertheless it’s closely targeted on PC – in order that’s the place we’ll focus our UGC efforts.
Extra funding in what gamers present us they like and wish – equivalent to revisiting our Rec Room Originals with a view to (a) making them higher, whereas (b) turning them right into a sustainable enterprise. For instance, anticipate new options (some free, some paid) for Paintball within the close to time period. If the monetary mannequin works, we might develop into new RROs. For the previous few years, we have required RROs to make use of the UGC instruments. This made manufacturing prices a lot greater. Transferring ahead, we’ll do that work instantly in Unity.
We’re not abandoning UGC. However we’re narrowing our focus away from “everybody can create” in favor of serving our absolute best creators.
The closest analogy is Sega stepping out of {hardware} to concentrate on video games. A big, painful, however essential change.
Guaranteeing Rec Room is a good expertise for our gamers
This implies:
Elevated funding in month-to-month occasions (“fests”) that guarantee Rec Room all the time feels contemporary, and provides gamers concrete causes to come back again frequently to take a look at the actions and rewards on provide.
Gamers can anticipate extra featured content material from our prime creators, much less algorithmic churn, extra curated experiences tied to the fests, and – if we will get the economics to work – elevated funding in RROs.
Much less frequent shopper ships. Over the previous few years we have accomplished quite a lot of work to maneuver numerous sorts of content material (e.g., avatar gadgets) out of the shopper. Delivery much less steadily will assist us stabilize the app and be extra intentional with adjustments that influence our creators and gamers.
Our purpose with our gamers is straightforward – earn again their pleasure and engagement with high quality moderately than amount.
In closingThe truth is that what we have been doing these previous few years wasn’t working for the workforce, for the corporate or for our gamers. That is on Nick and me. It is our job to align these wants, and we failed. This alteration, nonetheless imperfect, and nonetheless stunning, provides an opportunity to reset and proper our course.
As we speak sucks. For Nick and myself. For everybody who stays at Rec Room. And particularly for these we’re parting methods with. We hate that it got here to this. We hate letting go of so many gifted individuals who labored so laborious. And we hate stepping away from an enormous imaginative and prescient we strongly believed in.
For those who’re in business – please check out the superb folks on our RIF checklist. They’re a number of the most gifted builders, builders and teammates we have ever labored with. We actually want we may hold all of them. You would be fortunate to have any of them in your workforce.
For these leaving – you’ll all the time be a part of the Rec Room story. We thanks for all the things, and want you the very best on your subsequent chapter.
For these staying – we all know this sucks. We all know this hurts. Thanks for pushing ahead with us – we’ve laborious work forward, however with a brand new focus we imagine strongly sooner or later we will construct collectively.
With heavy hearts,
Cam and Nick
