Makers of Fortnite and Unreal Engine Epic Games has announced that it has laid off a significant number of employees.
Bloomberg reported that Epic Games is laying off 830 employees, or about 16 percent of its staff. Epic Games then shared a memo that CEO Tim Sweeney sent to staff in a new blog post on the official website.
Sweeney revealed that the company is divesting music service platform Bandcamp and will spin off most of SuperAwesome, which is a kid-safe technology company. There will be around 250 staff leaving Epic via the divestitures from Bandcamp and SuperAwesome. Note that both music service platform and company were acquired in 2022 and 2020.
“As we shared earlier, we are laying off around 16% of Epic employees,” Sweeney started. “We’re divesting Bandcamp and spinning off most of SuperAwesome.”
“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.
“While Fortnite is starting to grow again, the growth is driven primarily by creator content with significant revenue sharing, and this is a lower margin business than we had when Fortnite Battle Royale took off and began funding our expansion. Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.
“Epic folks around the world have been making ongoing efforts to reduce costs, including moving to net zero hiring and cutting operating spend on things like marketing and events. But we still ended up far short of financial sustainability. We concluded that layoffs are the only way, and that doing them now and on this scale will stabilize our finances.”
Sweeney revealed that at first the growth of Fortnite was primarily driven by creator content with significant revenue sharing, this changed later on. The company was spending way more money than it earned so in order to reduce costs, it decided to lay off some people. It was the only way to stabilize the company’s finances.
There have been a lot of changes in the industry and it seems revenue sharing with content creators is not enough anymore. Most of the employees who suspect that they got laid off have now posted on social media and they have accepted their fate. They are moving on and trying to find new work in other companies.