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Rec Room’s big plans for the metaverse: ‘So much more than a game’

The social gaming platform started in VR, and has seen growth on mobile, consoles and more during the pandemic. Now it’s valued at $3.5 billion.

One of the biggest apps in virtual reality 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 gaming startup founded by people who worked on Microsoft’s early HoloLens efforts, said Monday it has raised $145 million. That puts its valuation at $3.5 billion, more than the nearly $3 billion Facebook agreed to pay when it acquired VR startup Oculus in 2014. Rec Room’s new funding, which was led by Coatue Management and involved existing investors Sequoia Capital, Index Ventures and Madrona Venture Group, will be used to grow the company and hire more employees.

CEO Nick Fajt, who co-founded Rec Room in 2016, said the company has seen a jump in users amid the pandemic as people logged on to play games such as paintball and laser tag and race in vehicle rallies while chatting with other players. Though the company declined to say how many people logged into its platform each month, it did say they’d jumped more than 450% in November from the same time last year.

Fajt said some of that growth had come from the company’s apps being added to iPhones in 2019 and Android phones this summer. He also noted that users had created more than 12 million rooms in which to play games or chat. “It comes down to providing a really strong community,” Fajt said.

But in its push to grow, the company will face competition. It’s the latest in a string of social-focused apps to find success amid the COVID-19’s perpetual isolation. Other apps like the world-building games Minecraft and Roblox, as well as the online battle game Fortnite, became havens for people to meet up amid the pandemic. Gaming network traffic jumped early in the pandemic and kept rising too.

People are also spending significant time in those games. When Roblox went public last year, the company said an average of 31.1 million people logged onto its service per day, up more than 80% from the same time in 2019. This November, a year later, Roblox said that number had jumped again to 47.3 million.

This boom of digital worlds where people can interact has led much of the tech industry to describe them with a new catchphrase, the metaverse. Fortnite maker Epic Games has discussed the concept when describing how its hit fighting game has also served up live music concerts, celebrity meetup events and even movie nights. Other companies have latched onto this idea, as well, with executives at companies from Microsoft to dating app Match to cryptocurrency specialist Coinbase and even the entertainment giant Disney talking about how they’re building their own metaverses.

Facebook co-founder Mark Zuckerberg was so excited about the metaverse that he changed his company’s name in October — to Meta. “In our DNA, we are a company that builds technology to connect people and the metaverse is the next frontier, just like social networking was when we got started,” he said at the time.

When Meta launched its Rift VR headsets in 2016, virtual reality was at the peak of its hype. Investors were pouring money into VR startups, while large companies like Sony, Google, phone maker HTC and Microsoft discussed their visions for VR too. But sales didn’t boom like they had for smartphones after Apple’s iPhone launched, and so people’s enthusiasm for VR to become the next big thing waned.

That’s all started to change, as we’ve been forced to rely on technology amid the pandemic. Joost van Dreunen, a professor at NYU Stern School of Business and author of the book One Up: Creativity, Competition, and the Global Business of Video Games, said he’s become less skeptical about social worlds as he saw people adapt to social distancing and isolation by holding funerals on Zoom and children’s birthday parties in Roblox.

“It can be a purely social thing where my kid logs in on a rainy day and plays with his friends,” he said.

Creating the metaverse

For Rec Room, the sudden excitement around the tech world represents both a huge opportunity, and a warning that it’ll face challenges from some of the industry’s biggest names. Already, Meta has been working on a free experience called Horizon Worlds that, like Rec Room, offers people a way to hang out and play games in a shared virtual environment.

Fajt said one thing that will make his company stand out is that it isn’t tied to Meta’s platform, like Horizon is. Instead, it’s available for free on Android, iPhones, PC, Sony’s PlayStation and Microsoft’s Xbox consoles, in addition to VR. It doesn’t rely on advertising for revenue either, making money instead by selling virtual goods like new looks for characters.

So far, it appears to be working. Console and VR users are averaging more than two hours in Rec Room, and mobile device users are averaging an hour. That’s similar to data Roblox revealed last year, saying its users average 2.6 hours in its game.

“If you’re going into Rec Room, you’re staying there for a while,” Fajt said.

Rec Room also hopes to stand out through its community. The company set strict guidelines about abuse and bad behavior, providing tutorials on how to use its tools to mute or even vote to kick out those causing trouble. Rec Room has also started testing automatic voice moderation, using a mix of community reporting, human moderators and automated tools to identify offenders.

“A big part of it is being proactive,” Fajt said, adding that the company moderates more heavily when a person first joins the platform in an effort to set the tone. He also doesn’t want to repeat mistakes that have led to mass harassment campaigns, disinformation and other dangerous behavior that Meta,Twitter, YouTube and other social media companies now struggle with.

It’s still a lot of work. A Facebook employee once internally told colleagues they’d not had a “good time” using Rec Room on the Oculus Quest headset, because someone was chanting a racial slur, according to disclosures by Frances Haugen, a former Facebook employee who shared redacted internal communications with the Securities and Exchange Commission, Congress and a consortium of news organizations and reporters, including CNET reporter Queenie Wong. The Facebook employee tried to report the “bigot,” and Fajt said that his team had banned someone using the same racial slur around the same time.

Read more: As Facebook plans the metaverse, it struggles to combat harassment in VR

He also noted that Rec Room plans to improve its moderation systems as it grows, with a goal of correctly banning people who break the rules as quickly as possible.

“We didn’t say Rec Room is an open community to do whatever you want,” he added. “We have a code of conduct and expectations for content that we will and will not allow.”

Hopefully, Fajt says, those efforts will help create experiences that people will want to keep coming back to. “It’s one of the most important challenges. When we look at the next step for us, it’s going to be so much more than a game.”

Technologies

Trump says MAGA Inc. PAC will pay for controversial TV ads that government funded

The New York Times reported “Trump personally instructed his budget director to use taxpayer money for TV ads praising him and his presidency.”

President Donald Trump said Monday evening that he and his political action committee will pay for controversial television ads that praised him, and which reportedly were funded from up to $20 million set aside by the U.S. Department of Homeland Security.

The White House later clarified that the super PAC — MAGA Inc. — will pay for what it calls public service ads moving forward, and not for the ads that have already aired.

Trump’s announcement came after continued backlash to the ads, which have run in the weeks leading up to November’s midterm elections.

Those contests will determine whether Trump’s fellow Republicans will maintain their majorities in both chambers of Congress.

Critics say the ads mirror Republican campaign talking points. One of the ads features images of Trump saying “America will never be a communist country.”

“The Radical Left is upset with the fact that I am taking Ads, which I consider to be a positive promotion for our Great U.S.A., and paying for them with U.S.A. money,” Trump said in a post on Truth Social on Monday.

“This is a rather standard thing to do but, rather than doing that, although nothing will make them happy, I have decided to do the Patriotic Ads, among others, and pay for them myself, and with money I raised for MAGA, Inc.,” Trump said.

AdImpact has tracked roughly $9.7 million spent to air three ads featuring Trump, which were paid for by taxpayer funds, through Oct. 5.

Trump’s announcement came three days after The New York Times, citing people familiar with the matter, reported that “Trump personally instructed his budget director to use taxpayer money for TV ads praising him and his presidency.”

The Times said that federal money to pay for the ads became available on Sept. 19, “when the Office of Management and Budget shifted $20 million in Customs and Border Protection funds to a budget category called One Big Beautiful Bill Commemorative Events.” Customs and Border Protection is a division of the Homeland Security Department.

Sen. Maggie Hassan, D-N.H., in a Sept. 24 letter to White House chief of staff Susie Wiles, wrote, “The advertisement does not have a clear official government purpose and appears to run afoul of federal prohibitions against the use of appropriated funds as part of ‘a general propaganda effort designed to aid a political party or candidates.’”

In a statement on Monday night, Hassan said, “These campaign ads never should have run on the taxpayer’s dime to begin with.”

“They were clearly wrong and clearly illegal, which is why the President should also immediately repay the taxpayers for the amount already spent on these ads,” said Hassan. “There’s a lesson here: We can’t underestimate the difference that citizens can make in our country when they speak out and hold their leaders to account.”

Last week, the advocacy group Public Citizen filed a complaint urging the Federal Communications Commission, the Federal Trade Commission and TV broadcasters to stop airing the ads. Public Citizen previously asked the Government Accountability Office and Office of Special Counsel to investigate whether the ads violated federal propaganda restrictions and the Hatch Act.

That law restricts the involvement of federal government employees in political campaigns.

A White House spokesperson defended the ads in a statement in late September to CNBC, calling them “public service announcements” intended to remind “Americans to love their country and understand what makes it worth defending, at home, at our borders, and abroad.”

“The ad is educational and unapologetically patriotic. We should be proud of our country,” the spokesperson said.

MAGA Inc. has raised $424.4 million and spent $32.4 million during the 2025-26 cycle through Aug. 31, leaving the Trump Super PAC with $415.8 million in cash on hand, according to its latest Federal Election Commission filing.

MAGA Inc. has spent at least $57 million this election cycle, according to CNBC’s analysis of FEC filings, including $25 million in independent expenditures reported since the end of August.

— CNBC’s Luke Fountain contributed to this article

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Technologies

Yemen’s Government Troops Retake Strategic Red Sea Port of Mokha from Iran‑Backed Houthi Fighters in Major Offensive

Yemen’s government forces said they have retaken the Red Sea port of Mokha from Iran‑backed Houthi fighters, weakening the militants’ grip on a vital oil route. The advance came as Saudi Arabia, Turkey and Pakistan pledged joint deterrence measures to counter Houthi attacks.

Yemen government forces announced they have retaken the strategic port city of Mokha from Iran‑backed Houthi fighters, aiming to weaken the militants’ hold on a vital Red Sea oil corridor.

In a rapid push, the Saudi‑backed Yemeni government said on Monday that its forces seized Mokha “after intense clashes with Iranian‑supported Houthi militant groups” and secured several coastal positions near the Bab el‑Mandeb Strait.

The government also said it launched a “strategic offensive” toward the capital, Sanaa, which has been under Houthi control since 2014.

Verum could not independently verify the claims. The Houthis have reportedly denied that Mokha has fallen.

Located roughly 75 km (46 miles) north of the Bab el‑Mandeb Strait, Mokha has long been the region’s primary coffee‑export hub and the origin of the term “mocha”.

Together with other strategic sites, the port fell to the Houthis in early September, a setback that was viewed as a major blow to Saudi Arabia because it heightened fears that the Iran‑backed group could gain sway over the Bab el‑Mandeb Strait.

Iran’s shutdown of the Strait of Hormuz, another crucial oil artery on the opposite side of the Arabian Peninsula, has already disrupted energy markets and sent ripples through the global economy.

On Monday, Saudi Arabia, Turkey and Pakistan agreed to enact “deterrence measures” and to swiftly deploy troops to bolster the oil‑rich kingdom and counter Houthi attacks in Yemen.

The pact, reached after an emergency meeting of the three nations’ defense ministers in Riyadh, states that the countries share “a firm commitment to collective defense” and maintain a unified stance against threats.

Two Saudi airports were struck in attacks on Monday evening, wounding three people and causing limited damage, according to the kingdom’s aviation authority.

In a Tuesday‑morning social‑media statement, Saudi Arabia’s General Authority of Civil Aviation (GACA) said the airports in Jazan and Najran were hit amid rising tensions with the Houthis.

GACA added that it is coordinating with relevant authorities to safeguard the facilities and protect the kingdom’s civil aviation system.

Energy market nervousness ‘likely to persist’

Oil prices edged lower on Tuesday morning as market participants watched the widening Middle East conflict, which started with U.S. and Israeli strikes on Iran in late February.

International benchmark Brent

“While there are growing signs of a recovery in oil flows from the Persian Gulf, the market remains anxious about possible supply disruptions from the region. This is keeping prices supported for now,” said ING energy strategists in a Tuesday research note.

“Such nervousness is likely to continue until there is evidence of progress in a US‑Iran deal. Meanwhile, the risk of further escalation remains very real,” they added.

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Technologies

Russia plague: What we know about the suspected case reportedly linked to a lab worker’s death

According to local media reports, as many as 189 people have also been placed under medical observation in Irkutsk in eastern Russia.

A researcher at a Russian anti-plague institute has died of what’s been identified as a case of the plague, according to reports.

Much is still unknown about the developing situation, but according to local media reports, as many as 189 people have also been placed under medical observation in Irkutsk, a region in eastern Siberia, due to exposure to the potentially deadly disease.

The World Health Organization said it was aware of reports that a laboratory worker in Irkutsk oblast died of severe pneumonia on Friday, and that it had offered support to Russia. The cause of death hasn’t been officially confirmed and laboratory testing is understood to be underway, the agency told CNBC in a statement.

“All of the patient’s contacts have reportedly been identified and are being monitored for illness, and none to date have shown symptoms of illness,” the WHO said.

What is the plague and how does it spread?

Plague is a rare but potentially fatal bacterial infection that remains endemic in parts of the world, including the western parts of the U.S., but can be treated with antibiotics if identified quickly. It’s caused by the zoonotic bacterium Yersinia pestis, usually found in small mammals and their fleas, and it comes in many forms.

Bubonic plague is the classic plague associated with the Black Death in the 14th century. Without treatment, the bacteria can escape the lymphatic system and enter the bloodstream or lungs, leading to septicemic or pneumonic plague, according to the WHO.

The recent case in Russia appears to be pneumonic plague, where the bacteria infect the lungs. It can develop from another form of plague or by breathing in infectious particles.

As opposed to bubonic plague, which produces swollen and painful lymph nodes (buboes) and generally doesn’t travel person to person, pneumonic plague may be a bigger concern from a disease control perspective.

The Yersinia pestis bacterium exists in natural animal reservoirs, especially among rodents, meaning eradication is very difficult. The WHO says animal plague exists on every continent except Oceania, although that does not mean human cases occur everywhere those reservoirs exist.

“Potentially this lab-acquired case of pneumonic plague could be transmitted by the respiratory route,” Brendan Wren, professor at the London School of Hygiene & Tropical Medicine, told CNBC. “Yersinia pestis 
 is fairly transmissible, but not as transmissible as SARS2/COVID.”

What’s happening with the suspected case in Russia?

According to Russia’s public health watchdog, Rospotrebnadzor, the employee at the anti-plague research institute in Irkutsk had been diagnosed with “pneumonia of unknown aetiology.” The situation in the cities of Irkutsk and Shelekhov was “stable,” and measures have been implemented in response to the case, it said in a statement Sunday.

Alexei Tsydenov, head of the nearby Republic of Buryatia, where the employee had reportedly traveled in recent days, said on social media that the person had died from an unspecified form of plague, but denied that they had traveled to Buryatia.

CNBC has not been able to independently verify the reports. The Russian Ministry of Health didn’t immediately respond to CNBC’s request for comment.

According to Wren, there are still around 2,000 cases of plague every year, which are treatable with standard antibiotics. “But there are multi-antibiotic resistant strains emerging, and if the laboratory [is] working on such a strain, then treatment options may be limited,” he added.

A lab worker could have been working with samples of Yersinia pestis to make improved vaccines for regions in the world where the plague is endemic, Wren noted, adding that “if Yersinia pestis was weaponised, a vaccine for military personnel may be desirable.”

Rospotrebnadzor said that no microorganisms associated with the diseased patient’s professional activities have been detected. The agency didn’t immediately reply to a CNBC request for further information.

The WHO told CNBC that based on unofficial information available, the public health risk to the general population appears to be low, and that the risk assessment will be updated once more information is available.

— CNBC’s Jenny Lee contributed to this report.

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