Rec Room Reduces Workforce by 16% Amid ‘Dramatically Changed’ Market Conditions

Rec Room is undergoing significant changes as the company is letting go of 16% of its staff, aiming for a path toward greater self-sufficiency. Launched in 2016, this social platform has become a staple on various VR headsets and traditional devices. CEO Nick Fajt shared an open message to the team through a blog post, explaining the rationale behind the workforce reduction. Fajt emphasizes that the decision is not a reflection of the employees’ performance but rather a necessary move for Rec Room’s sustained success.

Fajt noted that the gaming market has shifted drastically since the beginning of the decade, which necessitated these actions. The growth in gaming has slowed, interest rates have climbed, and securing funds has become more challenging. These factors have driven home the need for Rec Room to become more financially independent.

For those affected by the layoffs, Rec Room is offering a package that includes three months of severance pay and six months of healthcare coverage. They are also providing additional support for job hunting, such as personalized help with resume writing and career coaching.

Fajt described the layoffs as a “last resort” and mentioned that several preventative measures had been attempted. They tried to cut costs by reducing spending on third-party services and infrastructure and retrained staff for different roles. However, despite some financial improvement, these efforts alone couldn’t entirely solve the issue. For instance, even notable moves like launching Rec Room on the Nintendo Switch after its collaboration with Destiny 2 didn’t suffice.

Looking ahead, Rec Room plans to overhaul its organizational structure by reducing management layers to facilitate quicker decision-making. Teams will be more compact, interdisciplinary, and empowered to work with greater independence. Fajt stresses the importance of being more resourceful and efficient as a company.

Regarding the platform itself, there are ambitious plans to broaden content creation capabilities, hinted at with two major, yet-to-be-disclosed developments. Rooms 2.0 is highlighted as a groundbreaking initiative, designed to enhance and complicate the spaces users can create. Additionally, Fajt hinted at augmenting the Rec Room Plus subscription, though specifics remain under wraps for now.