After huge growth in 2020, Seattle startup Rec Room raises $20M to expand virtual hangout game – GeekWire

After huge growth in 2020, Seattle startup Rec Room raises $20M to expand virtual hangout game – GeekWire

After huge growth in 2020, Seattle startup Rec Room raises $20M to expand virtual hangout game – GeekWire

(Rec Room Images)

Rec Room, the eponymous Seattle-based development studio behind the virtual hangout/game creator Rec Room, has raised $20 million. Madrona Venture Group led the Series C round, which included participation from DAG, First Round, Index, and Sequoia. Total funding for the 4-year-old startup is nearly $50 million.

This caps off a big year for Rec Room, which has seen a period of explosive growth over the course of the pandemic lockdown. Developed in Seattle’s Belltown neighborhood, Rec Room bills itself on its website as an “online universe, where you play and create games with friends from around the world.”

Much in the spirit of similar projects such as Roblox — which is planning to go public — Rec Room is a free download which lets players use a collection of tools to make virtual rooms, objects, and playable games, such as paintball and laser tag, with a vast amount of community-created content that’s growing all the time. It initially premiered in June 2016 on the Steam digital storefront, but has since grown to include several other platforms, including iOS, PlayStation 4, and the Oculus, in both 2D and virtual reality versions.

When the pandemic hit earlier this year, Rec Room quickly found that its users were finding ways to use Rec Room to replicate social contact, with in-game events that included happy hours, birthday parties, math lessons, and even one-on-one therapy sessions. At one point in March, Rec Room CEO Nick Fajt noted on Twitter that a new room was being built by Rec Room users every 12 seconds.

As of September, Rec Room announced that its community’s size had tripled since the previous year, and players had created over 3 million of its “rooms,” or virtual environments, to hang around in. Since then, Rec Room’s 45-person team has debuted more tools and in-game rewards, including UI upgrades like a creator portfolio, while using Rec Room themselves to work from home amidst the pandemic.

While Rec Room still reportedly draws the bulk of its users from the VR community, its expansion dramatically accelerated following its debut on the Xbox on Dec. 3. According to Rec Room exec Shawn Whiting, speaking via email to GeekWire, Rec Room on Xbox was a surprise breakout hit that essentially doubled Rec Room’s audience size overnight. Its Xbox rev made a few headlines earlier this week for hitting No. 1 in the “free games” section of the Xbox store, beating out juggernauts including Fortnite, Rocket League, and Call of Duty: Warzone, and at time of writing, it’s still there. Rec Room has further noted that its Xbox community seems to be “stickier” than users on other platforms, where its users are more likely to come back to play it a second time and to recommend it to friends.

It’s hard to point to a single reason why Rec Room‘s taken off on the Xbox, although you can make a few educated guesses. Looking at the rest of the top 10 in the free games category, most of them are explicitly violent, fast-paced, skill-based, have a firmly established community that’s notorious for being toxic, or all four at once. Rec Room‘s only real competition within its niche is Roblox, which is enormously popular among children under 16 and almost nobody else. If you’re an adult Xbox user right now who’s looking for a social app, especially if you’re a new Series X|S owner, Rec Room is really the only game in its particular niche.

Playing paintball in Rec Room. (Rec Room press image)

In a Rec Room blog post, Fajt revealed that the game has surpassed 10 million members, with 1 million creators making more than 4 million unique rooms, with users spending an average of 2.4 hours per day in Rec Room.

“2020 hasn’t been the easiest of years, but the positivity and creativity of the Rec Room community has been a real bright spot,” Fajt wrote. “It’s been so wonderful waking up each morning to check and see a collection of new rooms, creations and events to explore. The endless number of friendly people to meet and creative places to visit made quarantine a bit more bearable and we have all of you to thank for building a wonderful community.”

Rec Room plans to launch a Creator Compensation Program for the game in the first quarter of 2021, which will pay out more than $1 million in bonuses to Rec Room users who’ve made particularly popular content for the game. The money from its latest round of funding is slated to go toward that program, as well as to help scale up the team at Rec Room to make the Creator Compensation Program possible.

To summarize: Rec Room is now working on Rec Room inside Rec Room to expand Rec Room so it can make Rec Room bigger.

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