Epic Games, the maker of Fortnite, has laid off 16% of its staff, or about 830 employees. CEO Tim Sweeney said in an open letter to employees that the company has been spending “way more money” than it earns, and that layoffs are the “only way” to stabilize its finances.
Sweeney said that the layoffs will affect teams outside of core development, and that the company is focused on reducing costs by freezing hiring and cutting spending on marketing and events. He also said that Epic is focused on developing infrastructure for its games to exist in the metaverse ecosystem.
The layoffs come as Epic Games is facing increasing competition from other gaming companies, such as Microsoft and Sony. The company is also investing heavily in the metaverse, which is still in its early stages of development.
It is unclear how the layoffs will impact Epic Games’ games, such as Fortnite and Unreal Engine. However, Sweeney said that the company is committed to its core development teams and that it will continue to invest in its games.
The layoffs are a sign that the gaming industry is not immune to the current economic downturn. Other gaming companies, such as Netflix and Activision Blizzard, have also laid off employees in recent months.
It remains to be seen how Epic Games will emerge from this challenging period. However, the company has a proven track record of success, and it is clear that Sweeney is committed to making Epic Games a leader in the gaming industry and the metaverse.
Here are some additional details about the layoffs:
- The layoffs will affect employees in all levels and functions of the company.
- Severance packages will include six months of base pay, healthcare, and other benefits.
- Epic Games is also offering to accelerate employee stock option vesting schedules through 2024, while giving two additional years to exercise the options.
- About two-thirds of the layoffs will affect teams outside of core development, such as marketing, sales, and support.
Epic Games has not released a list of the specific teams or departments that will be affected by the layoffs. However, the company has said that it is committed to supporting its employees through this difficult time.
After today’s layoffs and the statement from Epic Games CEO Tim Sweeney, do you fear for competitive heading into 2024? pic.twitter.com/PVnx76Xolc
— Fortnite Comp Report (@FNcompReport) September 28, 2023
In addition to laying off 16% of its staff, Epic Games is also divesting Bandcamp, an online music platform it acquired in mid-2022. Bandcamp will be sold to Songtradr, a music licensing platform. SuperAwesome, a kid-friendly developer Epic acquired in 2020, is also being broken apart and partially spun out. Its advertising business will become an independent company, while the Kids Web Services segment and the parent verification and consent management toolsets will remain part of Epic.
These moves are seen as a way for Epic to cut spending and stave off pressure from investors like Tencent and Sony. However, Epic’s flagship game, Fortnite, remains banned from Apple’s App Store and Google’s Play Store, which will continue to impact its bottom line. Epic has also incurred $520 million in penalties from the FTC and is currently appealing a ruling that cleared it of antitrust violations.
It is unclear how these moves will impact Epic’s long-term strategy. However, it is clear that the company is facing some challenges. It remains to be seen how Epic will emerge from this period.
Here are some additional details about the divestitures:
- Bandcamp is an online music platform that allows artists to sell their music directly to fans. It has over 7 million artists and 80 million users.
- SuperAwesome is a kid-friendly developer that creates tools and services to help developers make their games and apps safe for kids.
- The advertising business of SuperAwesome will become an independent company called SuperAwesome Ads.
- The Kids Web Services segment and the parent verification and consent management toolsets will remain part of Epic and will be renamed to Epic Kids Web Services.
It is unclear how much Epic will receive from the sale of Bandcamp or how the spin-out of SuperAwesome will be structured. However, it is clear that Epic is trying to streamline its operations and focus on its core businesses.
It will be interesting to see how Epic Games performs in the coming months and years. The company is facing some challenges, but it has a proven track record of success. It remains to be seen whether Epic can overcome these challenges and continue to grow and innovate.
Epic Games (which is based in Cary) today asked the Supreme Court to take up its case against Apple over alleged anti-competitive App Store practices. pic.twitter.com/Cri6Cz4IwI
— Brian Gordon (@skyoutbriout) September 27, 2023
Despite the layoffs and divestitures, Epic Games CEO Tim Sweeney says the company’s “prospects for the future are strong.” He attributes this to the success of Fortnite and the Unreal Engine.
Next week, Epic will be hosting Unreal Fest, a gaming event that showcases games and technologies developed using the Unreal Engine. Sweeney says that some products and initiatives will continue to land on schedule, but others may fall behind due to restrictions on resources. However, he says that the company is “ok with the schedule tradeoff” if it means achieving its goals and becoming a leading metaverse company.
Sweeney also says that Epic will not cut any funding for its core businesses and that it will continue to invest in Fortnite first-party development and the Fortnite creator ecosystem.
This suggests that Epic is focused on its long-term goals, even if it means making some short-term sacrifices. The company is betting that Fortnite and the Unreal Engine will continue to be successful in the years to come, and it is investing in its future accordingly.
It is also worth noting that Sweeney’s comments come at a time when the gaming industry is facing some challenges. The global economy is slowing down, and inflation is on the rise. This is putting pressure on gaming companies, which are seeing their costs rise while their revenue remains flat or even declines.
Despite these challenges, Epic Games is confident in its future. The company has a strong track record of success, and it is well-positioned to benefit from the long-term growth of the gaming industry.