Rec Room announced on March 3, 2025, that it was eliminating 16% of its workforce. In a public memo to employees, CEO Nick Fajt said the company had cut other costs and improved its financial position, but payroll remained its largest monthly expense. The March layoffs were not the company’s last: Rec Room announced a further reduction in August 2025 and later said its game and related online services would close on June 1, 2026.
What Rec Room’s March 2025 memo said
Fajt presented the staff reduction as a response to the gap between company spending and revenue, against a difficult backdrop for video games and fundraising. “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 in the company’s March 3, 2025 update. Rec Room said the public version of the employee memo redacted a small amount of information about proprietary projects in development.
The memo’s central financial point was that earlier efforts had helped, but had not addressed the company’s largest monthly cost. Fajt put the goal plainly: “We need to control our own destiny by bringing in more money than we spend.”
What the company had already done to reduce costs
Before announcing layoffs, Rec Room said it had tried several measures to improve its finances:
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- Retrained existing employees rather than hiring externally for some roles.
- Reduced user-acquisition spending.
- Cut third-party spending and brought some systems in-house.
- Reduced infrastructure costs.
- Launched the game on Nintendo Switch.
Fajt said these actions improved the company’s financial position, but payroll still outweighed the savings. The memo therefore described the layoffs as part of an effort to bring spending into line with the business—not as the first cost-control step.
The fundraising and market context
Fajt cited slower growth in the video game market, higher interest rates and a more difficult fundraising environment. GeekWire’s March 3, 2025 report said the company had budgeted for more than five years of runway at its prior raise, but was then planning around its existing cash instead of assuming it would raise again.
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GeekWire also reported that Rec Room raised $145 million in December 2021 at a $3.5 billion valuation and cited LinkedIn for a contemporaneous employee count of 372. Those are figures reported at the time, not a current employee count or an independently verified measure of Rec Room’s finances.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What happened after the 16% reduction
The March 2025 cut was followed by further setbacks. In an August 25, 2025 update, Rec Room announced another reduction, affecting roughly half its team.
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In March 2026, the company announced that Rec Room would shut down on June 1, 2026. The closure included the game, rec.net and online services related to Rec Room Studio. Because that date has passed, Rec Room should be understood as a closed service, not an operating game. In its shutdown announcement, the company reported that the platform had reached more than 150 million players and creators, and that users had spent a cumulative 68,000 years in it. These are company-reported historical totals.
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