One of the biggest VR apps just got a boost in its bid to become one of the biggest players in the next big tech trend, the Metaverse.
Rec Room, a Seattle-based social game startup founded by people who worked on Microsoft’s early HoloLens efforts, said on Monday it had raised $ 145 million. That puts its valuation at $ 3.5 billion, more than the nearly $ 3 billion Facebook agreed to pay when it acquired virtual reality startup Oculus in 2014. The new funding for Rec Room, led by Coatue Management and involving existing investors Sequoia Capital, Index Ventures and Madrona Venture Group, will serve to grow the business and hire more employees.
CEO Nick fajt, who co-founded Rec Room in 2016, said the company has seen a surge in user numbers amid the pandemic as people log on to play games such as paintball and laser tag and run in vehicle rallies while chatting with other players. Although the company declined to say how many people logged into its platform each month, it said they jumped more than 450% in November compared to the same time last year.
Fajt said part of that growth was due to the company’s apps added to iPhones in 2019 and Android phones this summer. He also noted that users have created over 12 million rooms in which to play games or chat. âIt’s about providing a really strong community,â said Fajt.
But in its growth spurt, the company will face competition. It is the latest in a series of social-oriented apps to succeed in the perpetual isolation of COVID-19. Other apps like Minecraft and Roblox world building games, as well as online fighting game Fortnite, have become havens for people to meet in the midst of the pandemic. Gaming network traffic and kept going up too.
People also spend a lot of time in these games. When Roblox went public last year, the company said an average of 31.1 million people log into its service per day, up more than 80% from the same period in 2019. In November, a year later, Roblox said that number had risen again to 47.3 million.
This boom in digital worlds where people can interact has led much of the tech industry to describe them with a new tagline, the metaverse. Fortnite maker Epic Games discussed the concept, describing how its hit fighting game has also served live music concerts, celebrity dating events and. Other companies have clung to the idea as well, with business executives from Microsoft to the Match dating app to cryptocurrency specialist Coinbase and even entertainment giant Disney explaining how they build their own metavers.
Facebook co-founder Mark Zuckerberg was so excited about the metaverse that he changed his company name in October.. âIn our DNA we are a company that builds technologies to connect people and the metaverse is the next frontier, just like social media was when we started,â he said at the time.
When Meta launched its Rift VR headsets in 2016, virtual reality was at its peak. Investors were pumping money into VR startups, while big companies like Sony, Google, phone maker HTC and Microsoft also discussed their visions for VR. But sales haven’t exploded like they did for smartphones after the launch of Apple’s iPhone, so people’s enthusiasm for VR to be the next big thing has waned.
Everything started to change as we were forced to rely on technology in the midst of the pandemic. Joost van dreunen, a professor at the NYU Stern School of Business and author of the book One Up: Creativity, Competition, and the Global Business of Video Games, said he became less skeptical of social worlds as he saw the people adjust to social distancing and isolation by hosting funerals on Zoom and children’s birthdays at Roblox.
âIt can be a purely social thing where my kid goes online on a rainy day and plays with his friends,â he said.
Create the metaverse
For Rec Room, the sudden excitement around the tech world represents both a huge opportunity and a warning that it will face challenges from some of the biggest names in the industry. Already, Meta has beenwhich, like Rec Room, provides a way for people to hang out and play games in a shared virtual environment.
Fajt said that one thing that will make his company stand out is that it is not tied to the Meta platform like Horizon is. Instead, it’s available for free on Android, iPhones, PCs, Sony’s PlayStation consoles, and Microsoft’s Xbox, in addition to virtual reality. He also doesn’t rely on advertising for his income, but makes money by selling virtual goods like new looks for the characters.
So far, it seems to be working. Console and VR users spend an average of over two hours in the game room, and mobile device users an average of one hour. This is similar to the data Roblox revealed last year, claiming that its users have an average of 2.6 hours in their game.
âIf you go into the playroom, you stay there for a while,â Fajt said.
Rec Room also hopes to stand out through its community. The company has strict guidelines on abuse and bad behavior, providing tutorials on how to use its tools to mute or even vote to kick out those who cause trouble. Rec Room has also started testing automatic voice moderation, using a mix of community reporting, human moderators, and automated tools to identify offenders.
âIt’s largely about being proactive,â Fajt said, adding that the company moderates more heavily when someone first joins the platform in an effort to set the tone. He also does not want to repeat the mistakes that led to, misinformation and other dangerous behavior .
It’s still a lot of work. A Facebook employee once told colleagues internally that they hadn’t had a “good time” using Rec Room on the Oculus Quest headset, because someone was chanting a racial insult, according to disclosures by Frances Haugen, a former Facebook employee who shared written internal communications. with the Securities and Exchange Commission, Congress and a consortium of news agencies and journalists, including CNET reporter Queenie Wong. The Facebook employee attempted to report the “bigot,” and Fajt said his team banned someone from using the same racial slur at around the same time.
Read more: As Facebook plans the metaverse, it struggles to tackle VR harassment
He also noted that Rec Room plans to improve its moderation systems as it grows, with the goal of properly banning people who break the rules as quickly as possible.
âWe didn’t say Rec Room is an open community to do whatever you want,â he added. “We have a code of conduct and expectations for the content that we will and will not allow.”
Hopefully, Fajt says, these efforts will help create experiences people will want to come back to. “It’s one of the biggest challenges. When we look at the next step for us, it will be more than a game.”