Rec Room is Now Valued at More than a Billion Dollars
Rec Room saw a rise in the number of users during the pandemic to become a billion-dollar Unicorn.
The free social VR gaming platform Rec Room has grown tremendously during the pandemic to become a Unicorn that was recently valued at $1.25 billion at a funding round of $100 million. This makes it probably the first virtual reality-focused startup to realize a Unicorn status since Facebook’s acquisition of Oculus VR for $2.4 billion, a deal that helped usher in virtual reality into mainstream big tech business.
Rec Room was founded in 2016 and is a free app that allows players to build custom virtual spaces and games which they can play across multiple platforms. Rec Room launched on Steam as a virtual reality-focused platform and it expanded into other non-VR platforms in 2018. Currently, the free social VR app is also available on PC, Xbox, iOS, and PlayStation. According to Rec Room CEO Nick Fajt, the platform saw a rise in usage over the holiday season partly due to the good sales performance of the Oculus Quest 2 headset.
Last year, Rec Room registered a 566% increase in its revenues with most of this coming from the in-game purchases. The platform now has over 15 million lifetime users as well as 1 million monthly active users. The number of active users on the platform tripled during the pandemic according to a report by The Wall Street Journal.
Rec Room’s primary users are teenagers between 13 and 16 and the platform, therefore, benefitted a great deal from students being mostly online during the 2020 lockdowns. However, the platform was registering strong growth even before the COVID-19 lockdowns were put in place with students confined inside their homes with little to do.
According to Fajt, the COVID-19 pandemic only accelerated the trends that Rec Room had been seeing for years. Many people want a distinct “digital third place” away from school, home, and work where they can meet, hang out, be creative and explore with their friends and Rec Room provides that.
Fajt acknowledged that the Rec Room usage numbers may decrease once the worst of the pandemic is over and teenagers are once again able to meet in person but Rec Room was providing teens with more than just an alternative to real-life socializing but a way to keep connections with friends who may be thousands of miles away. Rec Room may be an avenue for creating close human connections for those who are separated by large social and physical distances, even beyond the current pandemic.
The company is also preparing for an IPO a few years from now.
It is not just Rec Room that has seen the pandemic-inspired bump in usage and revenues. Other gaming platforms have similarly seen a boost in growth as a result of the pandemic. The online gaming platform Roblox which targets an even younger user demographic than Rec Room also saw a sharp rise in usage during the pandemic. Earlier this month, Roblox went public via a direct listing and according to the company’s prospectus, it has 31.1 million daily users spending 2.6 hours on average on the platform in the past year.
According to Roblox, more than half of US kids aged below 16 play the game. The pandemic may have confined kids to the screens but social games such as Rec Room and Roblox still give kids opportunities for virtual socialization.
Things are looking up for the XR industry post-pandemic. Sony has recently teased details on its next PlayStation VR headset which accompanied a formal product announcement, ending over two years of speculation on whether Sony would unveil a successor to the original PSVR.
Recently, a report by The Information also revealed that Facebook is currently ramping its VR/AR hardware development efforts and has some 10,000 employees or roughly one-fifth of its workforce working in its AR/VR projects. In a recent blog series, Facebook also showcased the prototypes of experimental research products and its plans to release a pair of Ray-Ban-branded smart glasses set to arrive later in the year. It has long been rumored that Apple is also working on some AR and VR hardware and recent reports seem to confirm these rumors with the reports stating that a VR device is set to debut sometime in 2022.