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Rec Room announced on August 25, 2025, that it was laying off roughly half its team. The founders framed the move as a financial necessity and said the company needed to narrow its focus. A later Washington state WARN filing, reported by GeekWire, listed 141 affected employees. Rec Room then announced a service shutdown for June 1, 2026; that date has passed.
How many Rec Room employees were affected?
Co-founders Cameron Brown and Nick Fajt announced the layoffs on August 25, 2025. The company described the reduction as roughly half its team. GeekWire reported that co-founder Nick Fajt said Rec Room had just over 100 employees after the cuts.
Two days later, GeekWire reported that a Washington State Employment Security Department WARN filing listed 141 affected employees. The figures describe different things: “roughly half” was the company’s description of the reduction, while 141 was the number in the reported filing.
Why did Rec Room say it was cutting staff?
The founders attributed the decision to the company’s financial trajectory, not to the performance of the employees losing their jobs. In the statement quoted by GeekWire, they called it “a business necessity based on the financial trajectory of the company.” GeekWire reported that the company offered affected staff three months of severance pay, six months of health benefits, and the option to keep their laptops or desktop computers.
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The founders said Rec Room had become stretched across a user-generated-content platform spanning VR, PC, consoles, and mobile. They assessed that its most engaged creations came from PC and VR players, while expansion on mobile and consoles had not delivered strong results. They also said a larger volume of lower-quality creations increased moderation and infrastructure demands. Those were the company’s explanations, not independently established findings about the causes of its financial position.
They described the strategic bind as being “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.”
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What was Rec Room’s plan after the layoffs?
The founders said the company would concentrate on areas they believed had stronger engagement and clearer value for players:
- Supporting top creators on PC and VR.
- Developing Rec Room Originals, including Paintball.
- Running curated monthly events.
These priorities represented the company’s announced direction after the August cuts; they should not be read as proof that the strategy would restore profitability.
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How did the 2025 cuts fit into Rec Room’s earlier history?
GeekWire reported that an earlier round in 2025 affected 16% of Rec Room’s workforce. It also reported that Rec Room raised $100 million in 2021 and raised another $145 million later that year at a $3.5 billion valuation. Those are historical fundraising figures, not measures of the company’s cash, staffing, or value at the time of the layoffs.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What happened to Rec Room after the layoffs?
On March 30, 2026, Rec Room announced that it would close on June 1 at noon Pacific. The scheduled closure date has passed. The company said users would no longer be able to log in and play, the website would go offline, and online Rec Room Studio services would end.
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In its closure announcement, Rec Room said it had not found a way to make the service sustainably profitable: costs had overwhelmed revenue. It cited changes in the VR market and broader gaming headwinds as factors that made a path to profitability difficult, and said it chose to wind down while it could do so thoughtfully. The company also announced a lead-up wind-down involving account creation, subscriptions, creator programs, token activity, and monetized user-generated content.
Rec Room’s closure post described a platform with more than 150 million players and creators, over half a billion friendships made, and 68,000 cumulative years spent in Rec Room. It also said each of its top user-generated-content rooms had accumulated over 500 years of play time. These are company-published figures, not independently audited statistics.
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