Social Gaming Platform Rec Room to Shut Down June 1 After Failing to Find Path to Profitability

Rec Room, a social gaming platform that was valued at $3.5 billion in December 2021, will shut down its service on June 1, 2026, after the company said it could not find a path to profitability, according to a report by Todd Bishop at GeekWire published Monday. The company had accumulated more than 150 million registered users across its virtual game room platform, which allowed players to build and share experiences across VR headsets, consoles, and mobile devices. Despite that user base, Rec Room was unable to generate the revenue needed to sustain operations. The closure marks one of the starkest examples of the gap between peak metaverse-era valuations and the commercial realities that followed. Rec Room's $3.5 billion valuation came during a period of intense investor enthusiasm for social VR and user-generated content platforms, driven partly by Meta's announcement of its pivot to the metaverse. In the years since, the metaverse investment thesis has broadly deflated. Meta wrote down billions in losses from its Reality Labs division, Horizon Worlds failed to reach adoption targets, and several startups that raised large rounds on metaverse narratives have struggled or closed. Rec Room had raised over $190 million in total funding from investors including Index Ventures, Sequoia Capital, and Madrona Venture Group. The company was headquartered in Seattle. Users will have until June 1 to access the platform. The company said it would provide information on how players can export or preserve content before the shutdown date.