Hey all, Robin here—I hope you enjoyed my last Substack on Meta’s wacky investments. Today, we will be covering something a bit different and telling the incredible story of Rec Room - a social VR startup that is making a massive pivot to the Metaverse.
Humble beginnings
Rec Room was born during the VR boom of 2014-2018. This boom was started by Facebook’s acquisition of Oculus. You can think of Oculus’s acquisition as a signal that VR was going to be a huge thing in the future. Naturally, dreamers and investors flocked to the space investing and creating incredible companies like VRChat and Rec Room. Rec Room first released in 2016 on the HTC Vive and it was extremely primitive.
The VR title only had 3 basic games including: paintball, 3D charades, disc golf, and tennis. Rec Room was pretty much a basic VR version of Wii Fit at this point. However, Rec Room immediately doubled down on the title and began creating even more and more games.
In 2017, Rec Room launched the “Expresso Update” which added a host of new maps, games, and the coveted “Sandbox Machine” which finally let users create their own rooms. It was at this point that Rec Room had an idea of what they wanted their long-term vision to be; users would create virtual worlds where they could have unique virtual experiences. It was at this point that Rec Room realized that the idea of letting the users—not the developers—create virtual worlds, would be their future.
In 2018 and 2019 they went further with the idea of letting creators be in control of virtual worlds by allowing for the creation of cosmetics (hats, shirts, and pants), costumes, consumables (starting with pizza), and the expansion of the maker pen tool (you can think of it as a way to create 3D models) to support it. With a steady foundation and a twist of fate, RecRoom began to climb the Playstation charts.
2020 is when things went parabolic.
Covid-19 and a new room every 20 seconds
2020 started relatively slowly with the Rec Room+ subscription—a subscription that gives users tokens that they can spend in the virtual store for cosmetics, furniture, and other virtual items.
Clubs were also added as a way for users to form communities during the pandemic.
Rec Room also experienced parabolic growth during Covid-19 as they pushed to launch on several platforms such as X-box and IOS. As Covid raged around the world in March, the game reportedly experienced a new being created every 20 seconds. The X-box rollout was by far Rec Room’s biggest success that year as the title held the spot of the X-box’s top free game beating out titles such as Fortnite, Rocket League, Roblox (a direct competitor), and even Call of Duty: Warzone. I find this success especially compelling since they have managed to stand on their own two feet against Roblox as Roblox is native to the X-box and has a relatively decently sized audience on the platform. The win is not very surprising since the X-box store is particularly lacking in social experiences and Rec Room profited extremely well from it by doubling their audience overnight.
In a year in review blog post, Rec Room disclosed some pretty hefty numbers revealing, “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.”
This number is comparable to Roblox’s 2.6 hours per day and is extremely impressive given that Rec Room does not have Roblox’s 31.1 million daily active users and does not have a lot of content.
2021, the year everything changed
In 2021, Rec Room started the year off with a bang by announcing the creation of a $1 million+ development fund and the raising of $100 million from venture capital firms Sequoia and Index (if you know anything about internet history those two firms have basically built the internet and computers as we know it with their vast finances).
Rec Room went even further with the launch of “Rec Rally” on September 29th.
Rec Rally was just like any other release, but due to the addition of vehicles, the game became a lot more than just a way to interact with friends; it slowly started to become more and more of a metaverse.
All of those rooms in Rec Room slowly became their own world with developers being more like rulers of virtual worlds that can make their own currency, sell goods, and create incredible virtual experiences.
In 2021, Rec Room grew it’s relatively small 15 million users (at the start of the year) to a whopping 37 million with the majority of users coming from mobile devices.
This is signaling a shift that all metaverse companies should be exploring; just like websites, metaverses must be accessible from all devices.
Is it a really Metaverse?
Rec Room is by far the closest example to a Metaverse that we have along with Roblox. Both of these titles have spatial audio, interoperable virtual worlds, the ability to “own” digital land, and are accessible from a wide variety of consoles. You could probably argue that Rec Room is even closer to Ready Player One than Roblox since it has such a massive emphasis on VR with the majority of players accessing the platform via VR headsets but potato pohtato.
How does Rec Room shape up against the competition?
Rec Room shapes up pretty well against the competition as users, on average, spend around 2.4 hours in the virtual world (as mentioned prior). However, when you compare it to Roblox it’s actually not half bad given how new the game is. The main thing that Rec Room lacks right now is a large creator economy; this is something Roblox has had for many years. The talent is just starting to appear in Rec Room and if Roblox hopes to hold their dominance in the very nascent metaverse, it would be an extremely wise call to open up more development funds and to be on good terms with developers. Roblox has struggled with this for some time as exchanging Robux (the currency) to USD is an often slow and laborious process. It is possible that Rec Room could steal developers to work on their platform.
In terms of facing off against Meta’s horizons, it’s too early to say. Horizons hasn’t even been out for a month, but I think Rec Room has a great advantage here: they are cross platform; Horizons is not. The Metaverse is a lot more than VR and unless Meta can whip up Horizons for IOS, Mobile, and PC they’re going to be at a severe disadvantage moving forward.
Looking towards the future Metaverse
As we look towards key companies and developments, one thing that Rec Room can teach us is that the Metaverse is a hell of a lot more than VR or AR; it needs to be accessible on every computing platform.
Rec Room’s success has also shined light on how people use their platform; the average user spends 2.4 hours a day in the virtual world; that is more than TikTok, an app that is designed to be the social media equivalent of heroin. This presents a huge opportunity for developers to build on Rec Room and Roblox; you’re tapping into a huge audience of people who are hungry for digital users. Just as social media was not built by the company and instead the creators, Metaverse companies will be built by creators.
Thank you for reading, do good in the world and remember to keep playing!
You never mention Minecraft. Is Minecraft not relevant to the Metaverse conversation?
You never mention Minecraft. Is Minecraft not relevant to the Metaverse conversation?