A hard day at Rec Room
This is long, so here’s the TLDR:
Today, Nick and I made the difficult decision to lay off roughly half the Rec Room team
This is not a reflection on those individuals, who are amongst the most talented people we’ve worked with in the industry. This is a business necessity based on the financial trajectory of the company.
We are looking after those impacted as best we can, e.g., by offering a generous severance package.
Today’s tough decision means we can keep supporting and building Rec Room to its full potential. Ultimately, that is why we are doing this.
This sucks.
What’s happening?
Today Nick and I had to make one of the toughest choices in Rec Room history: We’re saying goodbye to about half the Rec Room team. These are incredible people who have poured their talent, heart, and creativity into this company. They shaped our culture, built features loved by millions, and made Rec Room better in so many ways it’s impossible to count. We are heartbroken to see them go - this is a painful day for a lot of people.
Rec Room is more than a game, and more than a company. It’s a community, and it’s one of the best teams we’ve ever had the privilege to work with. That only makes this moment harder. This is not a reflection on the talent or dedication of those departing - we wish we could keep every one of them. I’m gonna say that again, to make it clear this isn’t just “one of those things you say in a layoff message”. We TRULY wish we could keep every one of these people on the team.
But we can’t. This is a reflection of the tough reality we face as a business and the change needed to give Rec Room a chance to thrive in the years ahead.
This decision affects people we consider colleagues and friends. People we’ve shared years of work and life with. People who built Rec Room line-by-line, asset-by-asset, test-by-test. This is not the outcome any of us hoped for, and Nick and I take full responsibility for the position we’re in.
In the rest of this note, we want to be open about why we had to take this step, the mistakes we made along the way, how we’re supporting those who are leaving, what’s next for Rec Room, and why we remain deeply committed to building Rec Room into the future.
How are we supporting impacted people?
First, we want to say how grateful we are to the people who helped build Rec Room into what it is today. This will be a difficult transition for those leaving, and we want to do as much as we can to help them move on to their next chapter.
Everyone departing will continue to be paid for the next three months, and will receive health benefits for the next six months. Also, we feel a computer is an important tool to find new work, so all departing employees will have the option to keep their laptop or desktop.
If you want to reach out to anyone, you should feel free to do that. Please be aware that this is a challenging time for them, so be mindful that they may need additional space and time to process right now.
How did we get here?
Years ago, we raised a lot of money to build an enormous vision: A social UGC platform where anyone could create anything, on any device.
We invested heavily in creation tools across PC, VR, consoles, and mobile. But the reality has been harsh. The most impactful creation comes almost entirely from creators on PC (using mouse and keyboard, and Studio) and VR.
While we did see creation happening on mobile and consoles, we never got to the point where those devices were good for building stuff that other players engaged with. And some of our efforts to bridge that gap (e.g., Maker AI) just frustrated our more impactful creators.
At the same time, those lower-powered devices still produced millions of pieces of content. This put a huge strain on the team, who had to figure out tools and procedures to review it all. Making all this run across every device was a massive technical challenge and burden. While our most skilled creators optimized their content cleverly, most creators didn’t - couldn’t, really, because we didn’t provide them with the necessary tooling. Supporting all this scope stretched us way too thin, and our attempt at building one big scalable platform (Rooms 2.0) didn’t land like we needed it to. The vision made sense, but we got crushed under the scale.
So we ended up in a tough spot. Too small to realize the “anyone can build anywhere” vision, but too big to pivot to a more focused experience that was more reactive to what our players wanted and would pay for. The result was that we started to dig a financial hole that was getting larger every day.
The crossroads
For the past few years, we’ve been stuck in this uncomfortable middle ground. Pushing a giant vision we couldn’t realistically deliver, while disappointing existing players who just want us to supply great experiences like we used to, and fix the many bugs that they encounter.
We struggled hard with this dilemma. Do we keep pushing on the big UGC vision, to the ever-increasing frustration of our players and the team? Or do we scale back the vision, cut the team we love in half, and focus on what we can do well?
Both paths were painful. But ultimately we got to a point where it was clear that staying the course meant low growth, a high burn rate, and no clear path forward. In a word: Unsustainable. The writing on the wall became very clear.
Now what?
We remain committed to supporting and building Rec Room to its full potential. Moving forward, we will focus on two things:
Empowering our very best creators.
Ensuring Rec Room is a great experience for our players.
Empowering our very best creators
This means:
Less work on broad UGC expansion - e.g., Maker Pen on mobile/controller, Maker AI.
More support for our top creators. These folks are driving most of the growth and revenue already. In July, players spent more on UGC content than ever. Creators had their highest earning month ever. This segment is actually growing nicely, but it’s heavily focused on PC - so that’s where we’ll focus our UGC efforts.
More investment in what players show us they like and want - such as revisiting our Rec Room Originals with a view to (a) making them better, while (b) turning them into a sustainable business. For example, expect new features (some free, some paid) for Paintball in the near term. If the financial model works, we may expand into new RROs. For the past few years, we’ve required RROs to use the UGC tools. This made production costs much higher. Moving forward, we’ll do this work directly in Unity.
We are not abandoning UGC. But we are narrowing our focus away from “everyone can create” in favor of serving our very best creators.
The closest analogy is Sega stepping out of hardware to focus on games. A large, painful, but necessary change.
Ensuring Rec Room is a great experience for our players
This means:
Increased investment in monthly events (“fests”) that ensure Rec Room always feels fresh, and give players concrete reasons to come back regularly to check out the activities and rewards on offer.
Players can expect more featured content from our top creators, less algorithmic churn, more curated experiences tied to the fests, and - if we can get the economics to work - increased investment in RROs.
Less frequent client ships. Over the past few years we’ve done a lot of work to move various types of content (e.g., avatar items) out of the client. Shipping less frequently will help us stabilize the app and be more intentional with changes that impact our creators and players.
Our goal with our players is simple - earn back their excitement and engagement with quality rather than quantity.
In closing
The reality is that what we’ve been doing these past few years wasn’t working for the team, for the company or for our players. That’s on Nick and me. It’s our job to align those needs, and we failed. This change, however imperfect, and however shocking, gives a chance to reset and correct our course.
Today sucks. For Nick and myself. For everyone who remains at Rec Room. And especially for those we are parting ways with. We hate that it came to this. We hate letting go of so many talented people who worked so hard. And we hate stepping away from a huge vision we strongly believed in.
If you’re in industry - please take a look at the amazing people on our RIF list. They are some of the most talented developers, builders and teammates we’ve ever worked with. We truly wish we could keep them all. You’d be lucky to have any of them on your team.
For those leaving - you will always be part of the Rec Room story. We thank you for everything, and wish you the best for your next chapter.
For those staying - we know this sucks. We know this hurts. Thank you for pushing forward with us - we have hard work ahead, but with a new focus we believe strongly in the future we can build together.
With heavy hearts,
Cam and Nick