Technologies

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.

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 Maintains US‑Iran Negotiations Continue Amid Tehran’s Denials of Duplicity

President Trump insists that US‑Iran talks are ongoing despite Tehran’s denial of any negotiation plans, while warning that only a deal or total surrender will allow passage through the Strait of Hormuz. Conflicting statements from both sides have heightened uncertainty as the conflict enters its sixth month.

On Monday, President Donald Trump asserted that negotiations between the United States and Iran are still taking place, even after Tehran stated it has no intention of engaging in direct talks with Washington.

In a fiery Truth Social post, Trump labeled Iran’s leaders “unbelievably duplicitous,” claiming they are lying about ongoing peace talks “whether Iran wants to admit it or not.” He repeated his assertion that the United States completely controls the Strait of Hormuz, despite maritime traffic through the crucial route lingering at only a small fraction of pre‑conflict levels.

He wrote, “Nothing reaches Iran unless we allow it, and nothing will pass unless a deal—or total surrender—is achieved.”

Earlier that day, Iranian Foreign Ministry spokesperson Esmail Baghaei told reporters there is no imminent plan for U.S.–Iran negotiations, contradicting Trump’s earlier comment that talks would resume Monday afternoon. Baghaei added that Iran’s only current discussions are with Oman concerning the Strait of Hormuz.

The conflicting statements have heightened uncertainty over the peace‑talk process and the broader conflict, now in its sixth month.

Trump’s assertion about new negotiations came a day after he said on Truth Social that he had agreed to cancel a massive strike against Iran “subject to being able to rapidly make a DEAL.” He said in the same post that Iran and other Middle Eastern countries had asked him to hold off on that attack because “the perimeters of a deal has been agreed to.”

Trump has claimed dozens of times throughout the more‑than‑five‑month‑long war that a deal is at hand. No permanent deal has been signed, and a temporary ceasefire reached in June has fallen apart.

Trump has also repeatedly threatened to launch devastating strikes against Iran before backing off. After the latest example, oil prices on Monday fell and stocks surged.

BMI, a research unit of Fitch Solutions, said in a note Monday that a broader diplomatic understanding on reopening the Strait of Hormuz is still achievable this quarter, while raising the probability of its escalation scenario to 35% from 25%, citing mounting military, diplomatic and economic signs of rising U.S.-Iran tensions.

“Diplomatic progress is likely to be punctuated by periodic military flare-ups, while miscalculation by either side could trigger a renewed escalation,” BMI analysts wrote in a note. The firm said the key issue to watch is the future governance of the strait, as the Iran-Oman talks — potentially backed by Gulf states, China and the U.S. — point to efforts to build a post-conflict shipping framework.

Shipping risks persist even as diplomacy appears to be advancing. The United Kingdom Maritime Trade Operations Centre said it received a report of an incident 20 nautical miles (23 miles) northeast of Khasab, Oman — at the mouth of the strait — with a tanker’s master reporting an explosion in close proximity to the vessel at about 20:37 UTC Sunday (4:37 pm ET). The vessel and crew were safe and authorities are investigating, UKMTO said, advising ships to transit with caution.

The proposal Trump announced over the weekend calls for the U.S. and Iran to return to negotiations and continue ironing out some of the thorny issues that had derailed diplomatic efforts, according to The Associated Press, citing a regional official involved in the mediation efforts.

The official said the proposal also includes a reopening of the Hormuz Strait and halting attacks across the region, including by Iranian-backed militias in Iraq on the Arab Gulf countries and Jordan.

The U.S., for its part, will end its naval blockade on Iran and allow Tehran to export its oil, the official said, adding that no deal has been reached, although the mediation efforts remained underway.

Trump’s weekend reversal has lowered the temperature after days of escalating attacks across the Gulf. Kuwait said Saturday that Iranian forces launched a wave of drones within its airspace, with its military destroying multiple aircraft after Iran targeted critical infrastructure in the country’s north.

A parallel track with Muscat is also advancing. Iranian diplomats said Tehran was close to reaching a new arrangement with Oman to manage shipping through the Strait of Hormuz, a deal critical to preventing the war from escalating further, according to the Financial Times.

Iranian officials said negotiations over future management of the Hormuz Strait with Oman, which sits on the opposite shore of the waterway, are in their final stages. The agreed shipping route would be different from those used before, according to Iran’s Foreign Ministry spokesperson, Baghaei, adding that the new route was separate from the issue of the strait’s reopening or continued closure.

Technologies

Oil Prices Slide as Trump Halts Planned Iran Strike

Oil prices dropped after Trump cancelled a planned strike on Iran, with WTI down about 5% and Brent near 5% lower. He said the move followed requests from Tehran and regional allies for a pause while a deal shaping the Strait of Hormuz and Iran’s nuclear program is negotiated.

Oil prices fell on Monday after President Donald Trump announced he had cancelled a planned strike on Iran. WTI futures dropped roughly 5% to $80.34 a barrel, while Brent slipped about 4.7% to $83.77 a barrel.

Trump said early Sunday he called off the strike after Iran and several Middle Eastern nations asked him to hold off, noting that the outlines of a deal had been agreed upon. He added that the prospective accord would entail the immediate, full opening of the Strait of Hormuz and an end to Iran’s nuclear ambitions, according to his Truth Social post.

The president had been considering another round of strikes as diplomatic hopes waned since the conflict began on February 28. He said the U.S. and Iran would meet for talks on Monday, but Iran denied any scheduled negotiations with Washington, citing PressTV. Iran’s foreign‑ministry spokesperson Esmaeil Baghaei clarified that Tehran was only discussing shipping routes through the Strait of Hormuz with Oman. In a follow‑up Truth Social message, Trump insisted that, regardless of Iran’s acknowledgment, the United States is indeed discussing a solution to a long‑standing problem created by Iran.

Technologies

Oil Prices Drop as Trump Cancels Planned Attack on Iran

Oil prices fell sharply after President Trump announced the cancellation of a planned strike on Iran, citing a new deal that would open the Hormuz Strait and end Iran’s nuclear threat.

Oil prices fell sharply on Monday after President Donald Trump announced that he had called off a planned strike on Iran.

West Texas Intermediate futures, the U.S. benchmark, slipped roughly 5% to close at $80.34 per barrel, while Brent crude, the international benchmark, declined 4.7% to settle at $83.77 a barrel.

Trump made the announcement early Sunday, saying he had canceled the strike following requests from Tehran and other Middle Eastern countries.

In a Truth Social post, he wrote: “We have just been asked by Iran, and other Middle Eastern Countries, to hold off any attack in that the perimeters of a deal has been agreed to.”

The president indicated that the proposed agreement would include the immediate, complete, and total opening of the Hormuz Strait, as well as an end to Iran’s nuclear threat.

Trump had been weighing additional strikes amid diminishing prospects for a diplomatic resolution to the conflict that began on Feb. 28. He stated that the U.S. and Iran would hold negotiations on Monday.

Tehran denied that talks were planned with Washington, according to state news outlet PressTV.

Iran’s Foreign Ministry spokesman Esmaeil Baghaei said Tehran was only holding talks with Oman regarding the routes ships can use through the Strait of Hormuz.

In a subsequent Truth Social post, Trump added that whether “Iran wants to admit it or not, we are, in fact, talking of a solution to a problem that they have caused for decades.”