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

Google races to put Gemini at the center of Android before Apple’s AI reboot

Google is using its latest Android rollout to position Gemini as the AI layer across phones, Chrome, laptops and cars.

Google is using its latest Android rollout to make Gemini less of a chatbot and more of an operating layer across the phone, browser, car and laptop, just weeks before Apple is expected to show its own Gemini-powered Apple Intelligence reboot at WWDC.
Ahead of its Google I/O developer conference next week, the company previewed a number of Android updates, including AI-powered app automation, a smarter version of Chrome on Android, new tools for creators, a redesigned Android Auto experience, and a sweeping set of new security features.
Alphabet is counting on Gemini to help Google compete directly with OpenAI and Anthropic in the market for artificial intelligence models and services, while also serving as the AI backbone across its expansive portfolio of products, including Android. Meanwhile, Gemini is powering part of Apple’s new AI strategy, giving Google a role in the iPhone maker’s reset even as it races to prove its own version of personal AI on the phone is further along.
Sameer Samat, who oversees Google’s Android ecosystem, told CNBC that Google is rebuilding parts of Android around Gemini Intelligence to help users complete everyday tasks more easily.
“We’re transitioning from an operating system to an intelligence system,” he said.
As part of Tuesday’s announcements. Google said Gemini Intelligence will be able to move across apps, understand what’s on the screen and complete tasks that would normally require a user to jump between multiple services. That means Android is moving beyond the traditional assistant model, where users ask a question and get an answer, and acting more like an agent.
For instance, Google says Gemini can pull relevant information from Gmail, build shopping carts and book reservations. Samat gave the example of asking Gemini to look at the guest list for a barbecue, build a menu, add ingredients to an Instacart list and return for approval before checkout.
A big concern surrounding agentic AI involves software taking action on a user’s behalf without permissions. Samat said Gemini will come back to the user before completing a transaction, adding, “the human is always in the loop.”
Four months after announcing its Gemini deal with Google, Apple is under pressure to show a more capable version of Apple Intelligence, which has been a relative laggard on the market. Apple has long framed privacy, hardware integration and control of the user experience as its advantages.
Google’s Android push is designed to show it can bring AI deeper into the device experience while still giving users control over what Gemini can see, where it can act and when it needs confirmation.
The app automation features will roll out in waves, starting with the latest Samsung Galaxy and Google Pixel phones this summer, before expanding across more Android devices, including watches, cars, glasses and laptops later this year.
The company is also redesigning Android Auto around Gemini, turning the car into another major surface for its assistant. Android Auto is in more than 250 million cars, and Google says the new release includes its biggest maps update in a decade and Gemini-powered help with tasks like ordering dinner while driving.
Alphabet’s AI strategy has been embraced by Wall Street, which has pushed the company’s stock price up more than 140% in the past year, compared to Apple’s roughly 40% gain. Investors now want to see how Gemini can become more central to the products people use every day.
WATCH: Alphabet briefly tops Nvidia after report of $200 billion Anthropic cloud deal

Technologies

Waymo recalls 3,800 robotaxis after glitch allowed some vehicles to ‘drive into standing water’

Waymo issued a voluntary recall of about 3,800 of its robotaxis to fix software issues that could allow them to drive into flooded roadways.

Waymo is recalling about 3,800 robotaxis in the U.S. to fix software issues that could allow them to “drive onto a flooded roadway,” according to a letter on the National Highway Traffic Safety Administration’s website.
The voluntary recall is for Waymo vehicles that use the company’s fifth and sixth generation automated driving systems (or ADS), the U.S. auto safety regulator said in the letter posted Tuesday.
Waymo autonomous vehicles in Austin, Texas, were seen on camera driving onto a flooded street and stalling, requiring other drivers to navigate around them. It’s the latest example of a safety-related issue for the Alphabet-owned AV unit that’s rapidly bolstering its fleet of vehicles and entering new U.S. markets.
Waymo has drawn criticism for its vehicles failing to yield to school buses in Austin, and for the performance of its vehicles during widespread power outages in San Francisco in December, when robotaxis halted in traffic, causing gridlock.
The company said in a statement on Tuesday that it’s “identified an area of improvement regarding untraversable flooded lanes specific to higher-speed roadways,” and opted to file a “voluntary software recall” with the NHTSA.
“Waymo provides over half a million trips every week in some of the most challenging driving environments across the U.S., and safety is our primary priority,” the company said.
Waymo added that it’s working on “additional software safeguards” and has put “mitigations” in place, limiting where its robotaxis operate during extreme weather, so that they avoid “areas where flash flooding might occur” in periods of intense rain.
WATCH: Waymo launches new autonomous system in Chinese-made vehicle

Technologies

Qualcomm tumbles 13% as semiconductor stocks retreat from historic AI-fueled surge

Semiconductor equities reversed sharply after a broad AI-driven advance, with Qualcomm suffering its worst day since 2020 amid inflation concerns and rising oil prices.

Semiconductor stocks fell sharply on Tuesday, reversing course after an extensive rally that had expanded the artificial intelligence investment theme well past Nvidia and driven the industry to unprecedented levels.

Qualcomm plunged 13% and was on track for its steepest single-day decline since 2020. Intel shed 8%, while On Semiconductor and Skyworks Solutions each lost more than 6%. The iShares Semiconductor ETF, which benchmarks the overall sector, fell 5%.

The sell-off came after a key gauge of consumer prices came in above forecasts, and as conflict in Iran pushed crude oil higher—prompting investors to shift away from riskier assets.

The preceding advance had widened the AI opportunity set beyond longtime industry leader Nvidia, which for much of the past several years had largely carried the market to new peaks on its own.

Explosive appetite for central processing units, along with the graphics processing units that power large language models, has sent chipmakers to all-time highs.

Market participants are wagering that the shift from AI model training to autonomous agents will lift demand for additional AI hardware. Among the beneficiaries are memory chip producers, which are raising prices as supply remains tight.

Micron Technology slid 6%, and Sandisk cratered 8%. Sandisk’s stock has surged more than six times over since January.