Rec Room, which was valued at $3.5 billion less than four years ago, is reducing its workforce by "roughly half"

Rec Room, a social gaming platform, recently announced significant layoffs, affecting approximately half of its workforce.

Chief Creative Officer Cameron Brown, along with co-founder and CEO Nick Fajt, shared that they had undertaken one of the toughest decisions in the company’s history, emphasizing that the layoffs were not due to any lack of talent or dedication among the employees. The individuals who were let go were valued for their substantial contribution to the company's growth and culture.

In a statement on Rec Room's official blog, Brown remarked on the difficult nature of the decision, noting the immense talent and heart those departing had invested in Rec Room. The layoffs were described as a sad but necessary move given the current business realities facing the company.

The announcement stressed that those impacted had significantly contributed to the creation of content and features that have had a widespread appeal, establishing a cherished workplace culture. Brown reiterated the company's desire to retain all employees but acknowledged the necessity for organizational change to ensure Rec Room’s future success.

For those who are leaving, Rec Room committed to providing three months' salary, six months of health coverage, and allowing them to retain their computers to aid in their job search.

The statement also addressed that despite heavy investments across various platforms like PC, VR, consoles, and mobile, the most notable creative efforts mainly came from the PC and VR domains, leaving other investments less effective.

This strategic pivot comes as the company seeks to realign and adjust its course for sustainability. Despite the difficult circumstances, the leadership expressed deep regret and responsibility for the outcome.

Founded in Seattle in April 2016, Rec Room quickly grew into a notable player in the VR and AR space. Notably, in December 2021, the company raised $145 million, boosting its valuation to $3.5 billion. During that period, CEO Fajt reported a particularly successful month for user-generated content sales.