Roblox Competitor Rec Room Shuts Down After 150M Users

Rec Room, a Roblox-like social gaming platform that allows users to create games and experiences for others to play, is shutting down on June 1st. Despite reaching more than 150 million players and creators and, at one point, being valued at $3.5 billion, the company says in a blog post that "we never quite figured out how to make Rec Room a sustainably profitable business" and that "our costs always ended up overwhelming the revenue we brought in."

The company also notes that "with the recent shift in the VR market, along with broader headwinds in gaming, the path to profitability has gotten tough enough that we've made the difficult decision" to shut down the platform. This marks the end of an era for the Seattle-based virtual reality startup, which had positioned itself as a direct competitor to Roblox in the user-generated gaming and metaverse space.

Rec Room's shutdown is a blow to the broader virtual and augmented reality industry, which has seen significant investment and growth in recent years. The platform's closure also highlights the challenges of building a sustainable business model in the user-generated content and social gaming sectors, where competition is fierce and monetization can be elusive.

The company's founders expressed their gratitude to the Rec Room community, saying, "The decision to close Rec Room was not made lightly. We are incredibly proud of what we've built and the community we've been a part of, and we are deeply grateful to all of you who have joined us on this journey." They assured users that the platform will remain operational until its June 1st shutdown date, after which all user-created content and accounts will be permanently deleted.

The shutdown of Rec Room is a sobering reminder of the difficulties faced by even well-funded and ambitious social gaming platforms in the current market. As the metaverse space continues to evolve, the lessons learned from Rec Room's closure may inform the strategies and business models of future virtual and augmented reality startups seeking to carve out a sustainable niche in this rapidly changing landscape.