Epic Games, the maker of Fortnite, has announced that it is laying off 16% of its workforce, which would impact around 870 employees, in an effort to stabilise financials.
“For a while now, we’ve been spending way more money than we earn, investing in the next evolution of Epic and growing Fortnite as a metaverse-inspired ecosystem for creators. I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see that this was unrealistic,” Epic Games CEO Tim Sweeney said in a memo to employees.
The company has also revealed that it will be divesting Bandcamp, an online audio distribution platform it acquired last year, to Songtradr, a music marketplace. Additionally, it is spinning off SuperAwesome, a kid-safe technology developer it acquired in 2020, as an independent company led by the current CEO Kate O’Loughlin. This move will see another 250 employees leaving the company.
Employees affected by job cuts get 6 months of severance, health insurance, and accelerated stock vesting.
Early cost-cutting measures didn’t help
Sweeney explained that the company had been taking continuous measures to reduce costs, such as adopting a net zero hiring policy and cutting operating expenses on marketing and events. However, despite these efforts, the company failed to achieve financial sustainability. Consequently, Epic decided that laying off employees was the next necessary step. Sweeney further stated that implementing these layoffs at this time and on this scale would help stabilise the company’s finances.
Sweeney notes that while the company is laying off employees to cut costs, it is without affecting the core development or the main business lines. About two-thirds of the layoffs were made in teams that are not directly related to core development. While some products and initiatives will be released as planned, others may experience delays due to the lack of resources.
The company is prioritising the release of its successful projects, including the next season of Fortnite and Fortnite Chapter 5, Del Mar, Sparks, and Juno. Epic confirms that the release schedules for these initiatives remain unchanged.
According to Sweeney, the company has been taking measures to cut down on legal expenses, but they are still fighting against the distribution monopolies and taxes imposed by Apple and Google. This is crucial for the growth and success of the metaverse, which would create new opportunities for Epic and other developers.
“For a while now, we’ve been spending way more money than we earn, investing in the next evolution of Epic and growing Fortnite as a metaverse-inspired ecosystem for creators. I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see that this was unrealistic,” Epic Games CEO Tim Sweeney said in a memo to employees.
The company has also revealed that it will be divesting Bandcamp, an online audio distribution platform it acquired last year, to Songtradr, a music marketplace. Additionally, it is spinning off SuperAwesome, a kid-safe technology developer it acquired in 2020, as an independent company led by the current CEO Kate O’Loughlin. This move will see another 250 employees leaving the company.
Employees affected by job cuts get 6 months of severance, health insurance, and accelerated stock vesting.
Early cost-cutting measures didn’t help
Sweeney explained that the company had been taking continuous measures to reduce costs, such as adopting a net zero hiring policy and cutting operating expenses on marketing and events. However, despite these efforts, the company failed to achieve financial sustainability. Consequently, Epic decided that laying off employees was the next necessary step. Sweeney further stated that implementing these layoffs at this time and on this scale would help stabilise the company’s finances.
Sweeney notes that while the company is laying off employees to cut costs, it is without affecting the core development or the main business lines. About two-thirds of the layoffs were made in teams that are not directly related to core development. While some products and initiatives will be released as planned, others may experience delays due to the lack of resources.
The company is prioritising the release of its successful projects, including the next season of Fortnite and Fortnite Chapter 5, Del Mar, Sparks, and Juno. Epic confirms that the release schedules for these initiatives remain unchanged.
According to Sweeney, the company has been taking measures to cut down on legal expenses, but they are still fighting against the distribution monopolies and taxes imposed by Apple and Google. This is crucial for the growth and success of the metaverse, which would create new opportunities for Epic and other developers.
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