- Rec Room lays off 16% of its workforce as the studio adapts to slower market growth and financial challenges.
- Plans for a leaner, more autonomous structure include fewer management layers and smaller, cross-functional teams.
- Upcoming updates focus on user-generated content, with “Rooms 2.0” and enhancements to the Rec Room Plus subscription.
Rec Room, the popular social gaming platform, has announced a significant reduction in its workforce, cutting 16% of its staff as part of a broader effort to adapt to changing market conditions. The studio, known for its presence across VR headsets and flatscreen devices, outlined its plan to become more self-sufficient while navigating financial difficulties.
The company cited a dramatically shifting gaming market as a key reason for the layoffs, pointing to slower industry growth, rising interest rates, and a challenging investment climate. Despite previous efforts to stabilize finances, the studio determined that additional measures were necessary to ensure long-term success. As part of the transition, affected employees will receive three months of severance pay and six months of healthcare coverage, along with personalized career support.
Before resorting to layoffs, Rec Room implemented cost-cutting strategies such as reducing infrastructure expenses and reassigning staff to different roles. The studio also sought to improve financial performance through initiatives like the Nintendo Switch release and a high-profile Destiny 2 collaboration. However, leadership acknowledged that these efforts alone were insufficient to sustain the company’s growth.
Looking ahead, Rec Room plans to restructure its internal teams to operate with greater efficiency. A shift toward a flatter organization with fewer management layers is expected to speed up decision-making and enhance team autonomy. The company also emphasized the need for a more resourceful and cost-effective approach as it adapts to the evolving market landscape.
On the development front, Rec Room intends to expand its user-generated content capabilities with new tools aimed at broadening its creator base. The upcoming “Rooms 2.0” update is being positioned as a major leap forward, enabling more complex virtual spaces. Additionally, the studio is evaluating ways to add value to its Rec Room Plus subscription service, though details remain undisclosed.
