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Rec Room, one of VR’s most prominent social platforms, is shutting down in June, with its creators noting they “never quite figured out how to make Rec Room a sustainably profitable business.” According to a GeekWire report (via Skarred Ghost), Snap has acquired select assets from Rec Room, which also includes talent moving to its XR-focused Specs Inc. subsidiary.

The News

Rec Room is slated to shut down servers on June 1st, 2026 at 12:00 PM PT (local time here), the studio announced in a blog post on Monday night.

“Over the past decade, Rec Room grew into something amazing, reaching over 150 million players and creators along the way. Players made over half a billion friends on the platform,” the studio says.

The Seattle-based studio managed to attract over $294 million since its founding in 2016. Its most recent round came in December 2021, bringing to the company $145 million and a $3.5 billion valuation.

Cracks began to show in August 2025 however, as the company laid off around half of its staff, citing costs related to a surge in low-level content flooding the platform from users on mobile and console.

Although Rec Room says “millions of people” are still showing up to spend time in its platform—available across VR headsets, console, PC, and Android and iOS mobile devices—the company says the business simply isn’t sustainable.

“Despite this popularity, we never quite figured out how to make Rec Room a sustainably profitable business. Our costs always ended up overwhelming the revenue we brought in. We spent a long time trying to find a way to make the numbers work.”

Some of this comes down to difficult market conditions in the gaming industry, Rec Room says, compounded by Meta signaling a monumental shift in its priorities as a supporter of VR gaming.

“But 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 things down.”

Notably, earlier this month Meta announced it’s allowing Quest users to use a legacy version of Horizon Worlds, although the company is shifting focus to develop the virtual social platform “almost exclusively” for mobile.

This comes amid a GeekWire report that Snap has acquired select assets from Rec Room in addition to hiring a number of its staff to work in the company’s Specs Inc subsidiary, which is working on the company’s upcoming XR glasses. The report suggests neither company has signaled that Rec Room will live in any capacity at Snap however.

As a last goodbye, Rec Room released a video recapping the last decade (seen below), including special events, games, and its evolution as a user-generated content platform.

My Take

While sad, Rec Room is being wound down in probably the most responsible way possible, as the company is making sure its third-party creatives will be paid out while it gives everyone at least two months for everyone to figure out next steps. This even includes the ability to download room and invention data for anyone who wants to recreate their own room in a game engine, such as Unity.

And love it or hate it, it also means VR headset-owning kids now have one less place to go to hang out. Over the years, Rec Room essentially became VR’s de facto family-friendly platform, as the studio pioneered the space as one of the first user-generated VR platforms to include built-in child safety layers.

I’m far from the right person to point parents to alternative platforms, although I can safely say VRChat is not the right place, as it lacks a dedicated kid mode, and often plays host to adult content that is generally poorly regulated.

More importantly though, the loss of Rec Room marks the death of one of the most valuable VR companies outside of Meta—one that notably pioneered a VR creator economy which the company said last year was paying out more than a million dollars per quarter to creators.

This should not only give VR game developers pause, but also the investor class, who can now point to not only the failure of Horizon Worlds on VR headsets, but one of the earliest, most consistent, and most accessible platforms too.