Video Games News

Home

Quizzes

Newsletter

- Image of Rec Room, Courtesy of Rec Room

Rec Room Layoffs 2025: What Went Wrong and What’s Next

Originally posted on Total Apex Gaming | By Mollie Dominy | Last updated Aug 28, 2025 8:39 AM ET

Rec Room, the social gaming platform once riding high on a $3.5 billion valuation (now that’s a price tag), is now laying off “roughly half” its team. That’s not a pivot—that’s a full-blown reset. Less than three years after its funding peak, the company is cutting deep, and the execs aren’t pretending it’s anything but painful.

The Announcement

Chief Creative Officer (CCO) Cameron Brown and CEO Nick Fajt broke the news in a blog post that reads more like a breakup letter than a corporate memo. Brown called it “one of the toughest choices in Rec Room history,” and made it clear this wasn’t about performance—it was about survival.

“We TRULY wish we could keep every one of these people on the team. But we can’t.”

These aren’t empty words. Brown emphasized that the people leaving are “amongst the most talented” they’ve worked with, and that the company is doing what it can to soften the blow.

The Fallout

Here’s what Rec Room is offering to affected employees:

3 months of pay
6 months of health benefits
Their work laptops or desktops (because yes, they know you’ll need it to job hunt)

A thoughtful package, but doesn’t really take away from the scale of the layoffs, which is mind-boggleling. Brown and Fajt say they’re taking full responsibility—and they’re not hiding behind market conditions or vague restructuring language.

What Went Wrong

Image of Rec Room, Courtesy of Rec Room

Rec Room went all-in on creation tools across PC, VR, consoles, and mobile. But the return didn’t match the investment. According to Brown, the most impactful content came almost entirely from creators using PC and VR—mouse, keyboard, Studio. The rest? Not pulling weight.

“The reality is that what we’ve been doing these past few years wasn’t working for the team, for the company or for our players. That’s on Nick and me.”

Translation: they bet big on accessibility, but the creative core stayed niche.

The Reset

This isn’t just a course correction—it’s a hard reboot. Brown called the move “imperfect” and “shocking,” but necessary. The goal? Refocus on what actually works and stop chasing platforms that aren’t delivering.

Founed in 2016, Rec Room started as a small team passionate about VR, AR, and multiplayer social experiences. By 2021, it had raised $145 million and hit that unicorn status. It even had a record-breaking month recently. But momentum alone couldn’t sustain the burn rate.

Final Word

Rec Room wasn’t just a game—it was a creative playground. A place where players built worlds, made friends, and shaped digital culture. That’s what makes this so gutting. It’s not just a business decision—it’s a fracture in the community.

Brown and Fajt are owning the fallout. And while that doesn’t soften the blow, it does show a rare level of transparency. Here’s hoping Rec Room finds its footing again. But for now, it’s a hard reset—and a reminder that even billion-dollar dreams can hit the wall.

This article first appeared on Total Apex Gaming and was syndicated with permission.

More must-reads: