The team has been hard at work on updates to Rec Room Plus, and we’re excited to roll them out… SoonTM. We think RR+ is the best way for players to support the game - so we’re focusing on making RR+ an obvious choice for active players. This means in the near future you’ll see changes to how we talk about RR+ in the app and changes to how we develop features for RR+ members. We want to strike a balance between providing a great free experience and making RR+ a premium membership well worth joining.
We’ve been talking a lot internally about monetization. We want to share this internal post from our CEO Nick to give some important context on the topic as we move forward. Here it is in its entirety:
Building a Sustainable Rec Room
For the last nine years, we’ve made an illogical choice as a business: we’ve kept the doors open while operating at a loss.
Rec Room has never been profitable. We’ve consistently spent more than we earn, and we’ve depended on investor funding to keep going. That’s how most software companies get started, but it’s not sustainable, and it has to change if we want Rec Room to be around for a long time as an independent company.
It’s time for Rec Room to stand on its own. It’s time for us to rely on the people that play Rec Room, that love Rec Room - not our investors - to keep us in business.
The Monetization Challenge
Let’s be honest: Rec Room isn’t great at monetizing. The numbers are clear. Fewer than 2% of our players spend money each month. That means 98 out of 100 people play for free. This has always been true, but it can’t remain true.
Some games can make that kind of conversion rate work. Match-3 games that have extremely low operating costs can. No real-time multiplayer, minimal support needs, no trust & safety costs, no complex content storage. Or, in some cases, games where a small group of players spends huge amounts of money can make that work, like social casino titles.
That’s not who we are, and it’s not who we want to be. We want to build a sustainable business by offering a fair value to a broad base of players, not by depending on a small group to carry the load with outsized spending.
Rec Room is Expensive to Run
We’re a live multiplayer platform. That means we need servers, moderation, storage infrastructure, and customer support. We recently made the very difficult decision to reduce team size to lower costs. That was painful for everyone. Still, we have substantial operating costs - people and systems - where there’s not much more we can easily cut. So to keep running Rec Room for a long time, we need a broader base of paying players.
The Good News
We have the players. We have the engagement. There are games at our scale that generate the revenue needed to sustain a business like ours.
Millions of people play Rec Room each month. Millions of them are deeply engaged playing regularly for six months or more. But even among this group, very few spend money.
We don’t need everyone to pay. That’s not realistic. And we don’t need people to pay on day one. But if someone has been playing Rec Room for months, or even years, it’s a strong signal that they like what Rec Room has to offer and we shouldn’t be shy about asking them to contribute.
And they don’t need to contribute much. Just frappuccino money. A Rec Room+ subscription costs about the same as a venti frappuccino at Starbucks. If just 1 in 5 of our long-term players (6+ month tenure) subscribed, Rec Room would be sustainable.
Lean Into Rec Room+
We’re going to focus on growing Rec Room+ among our deeply engaged players. That starts with three steps:
1. Explain Our Subscription Better
A lot of players already have Rec Room+. It’s a good deal, and retention is strong. But the way we present it? A giant wall of text? It’s awful. Let’s fix the basics and clearly communicate why it’s worth it.
2. Be Deliberate About Our Subscription
As we build new features—and even look at some existing ones—we need to assess whether they should be fully free, free up to a point, or part of a subscription. Different features have different costs to operate and different value to our players. We need to strike the right balance so what we’re offering aligns with what it takes to keep Rec Room sustainable. Obviously, we’ll need to do a great job at communicating this to the community. This isn’t easy to explain. So let’s be transparent and help them understand what we’re optimizing towards.
3. Get Comfortable Asking
We need to get over the discomfort of asking our most dedicated users to support the service. Yes, every monetization change gets us roasted on Discord and Reddit. That sucks—I hate it too. But I want Rec Room to stick around. If we can’t ask the people who play for dozens or hundreds of hours to spend a little money, then we’re not going to make it as an independent company.
The Path Forward
Here’s the good news again: we don’t need to reinvent the wheel. The users are here. The engagement is here. The infrastructure is already in place.
What we need to do is simple: ask more clearly, more confidently, and more effectively for our long-term players to support the service they love.
We had a tough start to the year. You’ve all been working hard to make sure we can bounce back. We’ve got an amazing set of features coming up. Let’s make sure we’re using that momentum to get Rec Room on a sustainable footing, so we can be around for a long time.