Tag: Metaverse Winter

UPDATED! Yet Another Sign that the Metaverse Winter is Here: ENGAGE XR is to be Liquidated After Losing Its Biggest Customer

I have already noted that we appear to be in a period I am calling a “metaverse winter,” where virtual worlds in general, and social VR/AR in particular, are limping along or even shutting down. As further evidence of a period of retrenchment and reassessment, I learned that the long-running educational social VR platform ENGAGE XR has announced today that the company has lost a major customer, can no longer meet its financial obligations, and as a result is liquidating.

A message to shareholders posted to its website states:

Suspension of Shares

01 September 2026

ENGAGE XR Holdings Plc, a Metaverse / Spatial Computing technology company, announces further to its Final Results announced on 2 June 2026 that the Group’s largest customer which renewed its commercial arrangements with the Group in May 2026 has communicated to the Company that it will not be taking any licences going forward. The consequence of this is that the funds that were expected to be remitted to the Company pursuant to the contract will now not be received. 

Following a board meeting held on 31 August 2026 and having regard to the Company’s financial position, the board has unfortunately determined that it needs to proceed with a court approved liquidation in accordance with Irish Law. It is currently not expected that this process would provide any return for shareholders. 

Given the significant impact of the above on the Group’s financial position and prospects, the Company has requested a suspension in the trading of its shares on AIM which will become effective from 7:30 a.m. today. Further announcements will be made as appropriate.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 (“MAR”), and is disclosed in accordance with the company’s obligations under Article 17 of MAR. 

I put on my trusty Valve Index, and paid ENGAGE a quick visit to take some screen shots (I had been in earlier this week).

A newer section called the School of AI, was announced as free for all to access all summer. I had paid a brief visit earlier, but I went back again.

There’s a teleporter sign at the entrance to whisk you to a portal where you can enter and engage (pun intended) in a conversation with a historical figure from the past, like Joan of Arc, Marie Curie, or Harriet Tubman.

I selected Joan of Arc, and entered the portal:

Immediately, I was immersed in a medieval forest outside a walled city, where Joan stood in her armour, next to a sign with some suggested starter questions:

(I didn’t stay very long; there were other visitors present, who had probably also heard the bad news about the liquidation, and I wanted to be sure that I could properly access these photos for this blog post so I could write up this report.)

This is a new and evolving situation. I do not know what will happen next, but I assume that at some point, you will not be able to access ENGAGE. So I would suggest if you want to pay a visit, do so soon. It’s up today, but it might not be up tomorrow!

The shocking news of ENGAGE’s liquidation, taken along with the demise of other metaverse platforms earlier this year— MeetinVR, Rec Room, Horizon Workrooms (with Horizon Worlds essentially dead as well)—clearly indicate that, as a whole, the concept of the metaverse is struggling to find a successful financial model. I fear that we are going to see more announcements of company pullbacks and shutdowns over the next twelve months.

The problem appears to be happening outside of social VR/AR, as well. For example, someone bought to my attention that even once-mighty Fortnite’s growth has stalled, leading to layoffs. In this April 2026 article, Tom Ffiske wrote:

Over the last few years, a string of immersive platforms has quietly shut down as dwindling player numbers and economic pressures have broken funding models. AltSpaceVR disappeared in March 2023. Rec Room has announced it will close in June 2026. And the VR version of Meta Horizon Worlds was announced for closure, before a last-minute reversal bought it a little more time. (If you listen carefully, you may hear the whistle of the guillotine swinging).

The trouble extends beyond VR headsets, too. Epic Games laid off around 1,000 people, largely because Fortnite’s growth had stalled. This is significant. Fortnite, one of the biggest games on the planet, the one every publisher has spent years trying to replicate… was struggling to grow. It is the lucrative, money-dripping pie that everyone sought after, picking up crumbs during the scramble. So much so that Sony tried to chase that model with a hard pivot toward multiplayer games, then quietly slowed down after Concord failed.

It’s not all bad news. Roblox is the obvious counterexample, and its success comes from a specific structural advantage: a creator ecosystem that produces content for free. Those creators build careers off the back of it, and the platform keeps going as a result. The strategy is similar to TikTok; let an army of young people make content for free, and let the platform grow via networking effects. The strategy works, as the platform hit 47mn concurrent players in 2025. It’s incredible what free talent can do.

So the problem is beyond VR. Across the board, most virtual hubs are shrinking. Players have stopped attending virtual concerts and conducting virtual meetings. They’ve moved on to other things (hello YouTube). So what happened?

On the VR side, there’s been a consistent pattern. Beyond the committed enthusiasts who genuinely love the technology, the wider market just hasn’t materialised as expected since 2021. Meta itself has noted that the number of Quest owners who continue using their headset long-term drops off after purchase. You can shift millions of VR headsets; but if player numbers drop off, then it’s much harder to monetise them over time.

But the bigger issue, in my view, is the astronomical costs of running these platforms. Tim Sweeney has said repeatedly that running Fortnite is one of the most expensive things Epic does, even accounting for the revenue it generates. “We’re spending significantly more than we’re making,” he said in a recent post. Reports differ, but Fortnite generates billions in revenue while costing billions to run. The Fortnite pie has a paper-thin crust.

What does all of this tell us, and what’s next? Well apart from Roblox, the era of the “behemoth platform” is over. In my view, the business case for building and maintaining a single massive virtual world — whether in VR or not — has proven weak. VR still has genuine traction in areas like training (and I have a soft spot for VR films), but as a social destination it hasn’t delivered. And as a virtual hub for players to play and hang, the economic case has proven to be incredibly hard to validate.

(Even though I would still classify Fortnite as more of a game than a virtual world, it has hosted virtual concerts in the past, so yes, the lines between games and metaverse platforms do get blurred a bit.)

As this is a breaking story, I expect that I will have updates for you. It saddens me to see ENGAGE go; I have been writing about this social VR platform since July of 2018 (you can see all my blogposts where I mention ENGAGE here).

UPDATE 7:26 p.m.: Okay, I’ve had an opportunity to let this news percolate a bit this evening, and I have some more thoughts I wanted to add.

For ENGAGE to choose this path after losing its “largest customer” means that, near the end, they probably didn’t have that many customers left, despite its website boasting “Over 200+ Enterprise and Education Clients Globally,” including some big corporate names, which must have been former customers:

Another thing I wanted to add was that, last November, I remember wandering around ENGAGE’s publicly-accessible venues and feeling that sadly rather familiar ghost-town feeling, that I had often felt before, in Sansar, and High Fidelity, and God knows how many other metaverse platforms which failed to take off.

The reason? Most likely because of the overall meh response by consumers to the virtual reality headsets required to visit these places (which Tom Ffiske points out in the quote above). It’s a theme I hope to discuss in more detail in the OER metaverse textbook I am researching and writing during my 12-month research and study leave: how so many companies (big and small) bet on the widespread adoption of virtual reality technology that did not happen, for various reasons.

Things must have been hectic, even frantic, behind the scenes over at ENGAGE headquarters. My heart goes out to any staff who will no doubt be impacted by this.

UPDATE 11:49 p.m.: Luke Williams of XR Beat has reported on the liquidation, including some public financial data that indicated ENGAGE’s difficulties:

ENGAGE XR’s June results listed 2026 renewals or new contracts with Optima Ed, Bank of America, University of Miami and a Fortune 500 technology company. The same announcement separately identified the latter three, before referring to a May renewal by its largest customer. The XR Beat was able to independently verify this as Optima Ed…

ENGAGE XR’s survival had already become dependent on customer payments arriving at the required time.

Revenue fell 43% to €1.94 million in 2025. The company recorded a €2.98 million pre-tax loss and €1.9 million operating cash outflow, while year-end cash fell from €3.57 million to €1.62 million.

Its June accounts warned of uncertainty over whether the group could continue operating. The expected payment from its largest customer formed part of the company’s cash forecast, with most anticipated 2026 revenue weighted towards the second half of the year.

ENGAGE XR hasn’t explained how long the platform will remain available, what will happen to existing customer content and licences or whether its technology could be sold during liquidation.

Optima Ed describes itself as “dedicated to forging partnerships with schools and parents to catalyze student learning and teacher development in the era of spatial computing,” with a focus on consulting within the K-12 community. And it sounds like there will be some other current customers who will definitely be impacted by whatever happens next.

UPDATE Sept. 3rd, 2026: This morning, I joined my metaverse friend Carlos Austin to explore ENGAGE XR. I could only stay for half an hour, but we did visit and have conversations with Winston Churchill and William Shakespeare in the above-mentioned School of AI section.

I already was well-aware of how well the new generative AI tools like ChatGPT, Claude, and Gemini could pretend to be a famous historical figure, and have a conversation with a user while staying completely in character, but adding the dimension of an immersive virtual world adds a whole new layer of presence and absorption.

Carlos was very good at throwing all kinds of questions (and a few curveballs!) at Winston and William, but both were able to conduct a very engaging conversation. (In one instance, as we were leaving, Carlos said “God save the Queen,” and Winston responded that he didn’t have a Queen, but said instead “God save the King!”)

The future is unknown, so I would urge everyone to visit ENGAGE XR as soon as you can, and try out the School of AI in particular. You can run it on desktop as well as on a variety of headsets (I have been able to access ENGAGE using both my Valve Index PCVR headset and my Meta Quest 3 headset.).

I went back into ENGAGE this afternoon for about an hour, chatting with a few more historical figures in the School of AI (like Leonardo da Vinci), and wandering around in both the Enterprise Plaza and the Education Plaza. Here are some more pictures (click on each to see it in a larger size):

The last two images in the gallery are from the Optima Ed world mentioned in Luke William’s article above.

Another Sign that the Metaverse Winter is Here: Social VR Platform Rec Room Is Shutting Down June 1st, 2026

NOTE: No generative AI has been used in the creation of this blogpost.

In yet another sign of what I am calling the “metaverse winter,” the popular social VR platform for kids, Rec Room, will be shutting down. In a website update posted yesterday, March 30th, 2026, there is a press release:

Rec Room will be closing down on June 1st 2026 at noon Pacific time.

Over the past decade, Rec Room grew into something amazing, reaching over 150 million players and creators along the way. Players made over half a billion friends on the platform. In total, people all around the world spent a cumulative 68 thousand years in Rec Room. The top UGC rooms saw over 500 years of play time each. That’s a lot of people having a lot of fun.

What this community built together is incredible, and something we’ll always be proud of. Even today, millions of people are showing up to spend time in this fun and welcoming place every month.

Despite this popularity, we never quite figured out how to make Rec Room a sustainably profitable business. Our costs always ended up overwhelming the revenue we brought in.

We spent a long time trying to find a way to make the numbers work. But with the recent shift in the VR market, along with broader headwinds in gaming, the path to profitability has gotten tough enough that we’ve made the difficult decision to shut things down.

We’re making this decision now, while we still have the ability to wind things down thoughtfully and do right by the people who built this with us.

This is a breaking story, and I will be updating this blog post as I get more details. While I was expecting smaller metaverse platforms to close during the current metaverse winter, I was not expecting Rec Room to be among them! I do expect that there will be much commentary about this decision among its userbase. You can see all my previous blogposts about Rec Room here.

Yet Another One Bites the Dust: Meta’s Shutdown of Horizon Workrooms

In a recent blogpost about the shutdown of MeetinVR, I wrote:

Facebook (which had gone to all the trouble and expense of rebranding as Meta during this ridiculous hype cycle) has dropped literally hundreds of millions of dollars into acquiring Oculus and trying to build a business metaverse platform, and failed to even to entice its own employees into using it (let alone anybody else)…

I predict that we are going to see a “metaverse winter,” much like the previous “AI winters,” when the initial promise and hype of the technology hits what the Gartner Group politely calls “the trough of disillusionment.” And I predict we are going to see a lot more shutdown announcements like this throughout 2026.

Well, guess what? Once again, I am late in reporting this, but Meta has finally shut down its Horizons Workrooms product, a social VR platform intended for business use. According to a Road to VR news report by Scott Hayden, Horizon Workroom’s final day was Feb. 16th, 2026.

Scott Hayden’s article on the shuttering of Horizon Workrooms, Road to VR, Jan. 16th, 2026

This is hardly a surprise. As I said up top, I don’t think anybody was using Workrooms. I wrote about the launch of the open beta of Workrooms in August 2021, at a time when Facebook Horizon (as it was then called) was still in closed, invitation-only beta. One neat feature is that it allowed you to bring your physical keyboard into the virtual space via keyboard tracking (this only worked for certain models of keyboard, though). One month later, they announced a collaboration with Zoom, but I don’t know if that went anywhere.

By October 2022, rumours were rumbling, with leaks from internal memos stating that even Meta’s own employees were avoiding the use of Workrooms. Shortly thereafter, The Verge issued a savagely critical evaluation of Workrooms. The product was buggy, the avatars were cartoony, and compared to simpler solutions like Zoom and Microsoft Teams, there just seemed to be too high a cost to entry for its designated use case. Meta finally decided this year to take the ailing dog out back and shoot it. I’m surprised it lasted as long as it did. Scott Hayden reported:

For existing users, Meta has not announced a direct replacement for Workrooms; the company suggests users look into third-party apps such as Arthur, Microsoft Teams Immersive and Zoom Workplace.

Oh, and Meta has also been shelving projects, and laying off staff in its Reality Labs division, according to Scott’s article and CNBC. So it would appear that our metaverse winter is now in full swing.

Photo by Bob Canning on Unsplash

But keep in mind that winter is only one season out of four. And winter has its own special beauty, even if it doesn’t seem like there’s very much going on under all that ice and snow.

Yes, we are probably going to see more platforms shut down, like Workrooms, and more companies go out of business (not Meta of course, smaller ones). But those of us who have already been active in the metaverse for many years aren’t going anywhere during these lean, cold times. We’ve found our people, our communities, wherever we happen to meet up, whether it’s a flatscreen virtual world like Second Life or a meetup in social VR like VRChat. We hop from world to world as needed.

Yes, the current marketplace struggles will still impact us all in some way. We can expect moments of panic and chaos (e.g. when Ready Player Me was bought out by Netflix, and thousands of developers had to scramble to replace their avatar systems). But we will hunker down, use the downtime productively, and wait for the next season to arrive.

Another One Bites the Dust: MeetinVR to Close on April 30th, 2026

Official announcement from the MeetinVR website.

I first read the news on LinkedIn this morning: MeetinVR, a social VR platform I last wrote about on my blog back in 2022, has announced that it is shutting down its services as of April 30th, 2026:

The technology landscape is characterized by constant change. As we look ahead, we recognize significant shifts occurring in the enterprise sector:

  • Industry Focus Shift:Key platform providers are strategically re-aligning their enterprise VR initiatives.
  • Market Maturity:The core VR market is evolving, allowing new forms of spatial computing to emerge.
  • The Rise of AI-Enabled Glasses:We are seeing an acceleration in the development and focus on AI-enabled glasses and next-generation augmented- and virtual reality, signaling the next generation for workplace collaboration.

In light of these industry dynamics, and to finish strong, we have made the strategic decision to conclude MeetinVR services.

MeetinVR services will officially cease on Thursday, April 30, 2026.

Now, there is enough technojargon in this press release to make me grit my teeth (and we are far, FAR away from “the rise of AI-enabled glasses,” in my opinion). And the “industry focus shift” gobbledygook of “key platform providers are strategically realigning their enterprise VR initiatives” can brutally be summarized as metaverse companies are folding because there’s still not a market for business users.

Let’s face some brutal facts in the harsh and unforgiving light of the inevitable crash of the artificially-heightened expectations of the recent metaverse hype cycle (of which I, being the writer of a popular blog on just that very topic, was actually around for during the beginning, middle, and end.) Still with me? Good.

Facebook (which had gone to all the trouble and expense of rebranding as Meta during this ridiculous hype cycle) has dropped literally hundreds of millions of dollars into acquiring Oculus and trying to build a business metaverse platform, and failed to even to entice its own employees into using it (let alone anybody else). Linden Lab (the makers of Second Life), a much smaller company than Meta, poured millions of dollars into building a shiny new social VR platform called Sansar, which never took off, and now languishes in a near-moribund state, supported only by a passionate cadre of volunteers determined to keep it alive. (Now, Sansar was designed for consumer as opposed to business use, but I’m quite sure the original development team would have been happy to see it take off for corporate use, too. Aside from a few music festivals, that never happened, though.)

And frankly, given the perilous political and economic times in which we now live, people have far greater concerns on their minds than whether they can meet up as avatars to conduct business in a flat-screen virtual world or on a social VR/AR platform accessible via a headset. The learning curve/cost of entry is still too high, compared to alternatives like Microsoft Teams, Cicso WebEx, and Zoom.

The current tsunami of generative AI tools like ChatGPT threatens to lead to massive layoffs among lower- and middle-management white-collar jobs (something that’s not being talked about enough, in my opinion). And if metaverse platforms weren’t able to sell themselves during a pandemic, when everybody was forced to sit at home, they certainly won’t be able to sell themselves now, when businesses are cutting costs, trying to stave off insolvency in some cases, and people are worried about keeping food on the table and a roof over their heads.

I predict that we are going to see a “metaverse winter,” much like the previous “AI winters,” when the initial promise and hype of the technology hits what the Gartner Group politely calls “the trough of disillusionment.” And I predict we are going to see a lot more shutdown announcements like this throughout 2026.

All the PR spin in the world (“to finish strong”? Really? Really??!?) cannot hide the fact that the metaverse business is in a period of retrenchment, possibly a long one. And no, generative AI is not suddenly going to be some sort of magic wand that can make everything all better again. That’s just laughable.

It’s time to go back to the drawing board, for a rethink (that, I can agree with in this press release). And, despite my sarcasm, I do wish the team behind MeetinVR every success in whatever they decide to do next.