Rec Room Layoffs Hit 16% Of Staff As Studio Addresses 'Dramatically Changed' Market

16% of Rec Room's staff face layoffs, and the studio outlined how it plans to become more self-sufficient.

Initially launched in 2016, Rec Room is a social platform widely available across most VR headsets and flatscreen devices. Publicly sharing a message sent to the wider team, a new blog post from CEO Nick Fajt revealed the team size will be reduced by 16%. “This is no reflection on them or their work,” states Fajt, calling this decision one he had to make “for the long-term success of Rec Room.”

Addressing why he's taken these steps, Fajt states the market has “changed dramatically” compared to the start of this decade. He points to slower gaming market growth, higher interest rates and “a more challenging fundraising environment” as causing financial difficulties, stating Rec Room needs to become self-sufficient.

The blog states affected employees will each receive three months of paid severance and six months of healthcare premiums. Wider career help with finding new employment, such as 1:1 assistance for resume writing and career coaching, were also mentioned.

Calling the layoffs a “last resort,” Fajt advised the team used preventive measures like reducing third-party and infrastructure spending, and re-training individuals for new disciplines. He also points to last year's Nintendo Switch port, which arrived several months after its Destiny 2 crossover. Although Fajt states these measures improved finances, “they weren’t enough on their own.”

Moving forward, Fajt outlined various key changes Rec Room's looking to make. The studio will move to a flatter organizational structure with fewer managers, stating this allows for faster decision making. Internal teams will be smaller, cross-functional and operate with more autonomy, and the blog also details the need to be “scrappier and more efficient.”

As for the game itself, Rec Room aims to “dramatically expand who can create” with two currently unnamed changes. Rooms 2.0 is also mentioned as “the largest bet we've made as a company” that allows for bigger and more complex rooms. Finally, Fajt explains that the studio is looking to “put more value” into the Rec Room Plus subscription, though in what form is currently unknown.