The Tool Desk
Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Rec Room said it laid off 16% of its workforce on March 3, 2025. In a public memo, CEO Nick Fajt said payroll remained the company’s largest monthly expense despite earlier cost cuts, and that Rec Room needed to spend less than it brought in. The announcement was not the end of the story: the company later announced another major staff reduction and, in March 2026, said its game and related online services would close on June 1, 2026.
What Rec Room’s March 2025 memo said
In its March 3, 2025 update, Rec Room announced a 16% workforce reduction and said the public version of the employee memo had a small redaction covering proprietary projects in development.
Fajt presented the cuts as a response to financial pressure and a step intended to improve the company’s long-term prospects. “This wasn’t an easy decision, but ultimately it’s one we had to make for the long term success of Rec Room,” he wrote.
The memo’s central financial point was that the company needed to bring in more money than it spent. Fajt wrote: “We need to control our own destiny by bringing in more money than we spend.”
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#1 Best Overall
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Why the company said it was cutting jobs
Fajt said Rec Room had already taken steps to reduce costs and support its finances, but those steps had not offset payroll, which he described as its largest monthly expense. The company listed these actions:
- Retraining existing employees instead of hiring externally.
- Reducing user-acquisition spending.
- Cutting third-party spending and bringing some systems in-house.
- Reducing infrastructure costs.
- Launching Rec Room on Nintendo Switch.
Rec Room’s memo also cited slower growth in the video game market, higher interest rates and a more difficult fundraising environment. GeekWire’s March 3, 2025 report added local startup context: it said Rec Room had budgeted for more than five years of runway at its previous fundraise and was planning around its existing cash rather than assuming another raise.
Rank #2
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What was known about Rec Room’s size and funding at the time
GeekWire reported that Rec Room raised $145 million at a $3.5 billion valuation in December 2021, and cited LinkedIn for a contemporaneous employee count of 372. These are figures reported in March 2025, not a current headcount or valuation. The 16% reduction figure came from Rec Room’s memo; the available sources do not provide an independently audited employee count or a separate public record of how individual employees were notified.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.The March layoffs were followed by further cuts and closure
The March 2025 reduction was not Rec Room’s final workforce announcement. In an August 25, 2025 update, the company announced another reduction of roughly half its team.
Rank #3
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On March 30, 2026, Rec Room announced that the game, rec.net and online services related to Rec Room Studio would shut down on June 1, 2026. That date has passed. In its shutdown announcement, the company said the platform had reached more than 150 million players and creators and that users had spent a cumulative 68,000 years in it. Those totals were reported by Rec Room and are not independently audited figures.
Quick Recap
Rank #4
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