Epic Games, the renowned developer behind the Fortnite phenomenon, is taking drastic measures to address its financial challenges, cutting 830 employees – approximately 16% of its workforce. This significant downsizing comes as a response to the company’s ambitious aspirations for metaverse-related revenue, which led to extravagant spending that outpaced its earnings.
In a memo addressed to Epic Games’ staff on September 29, CEO Tim Sweeney candidly acknowledged the need for these layoffs to stabilize the company’s financial health. Sweeney expressed optimism in the past that they could navigate this transition without resorting to job cuts, but in hindsight, he deemed such optimism unrealistic.
While attributing recent growth to the Fortnite Creator program, which enables players to create and sell in-game content with a 40% share of the profits, Sweeney also recognized that this shift brought about reduced profit margins. He referred to the success of the creator ecosystem as a significant but disruptive change to the company’s economic structure.
In addition to the workforce reductions, Epic Games revealed plans to part ways with another 250 employees. The company also disclosed its intention to divest the recently acquired music website, Bandcamp, and spin off SuperAwesome, a child-safety tech firm that became part of Epic Games in 2020.
Notably, departing Epic Games employees will receive six months of salary as part of their severance package, and those residing in the United States, Canada, and Brazil can expect six months of paid healthcare benefits.
Epic Games, beyond its flagship Fortnite with an impressive 400 million registered users, also operates the renowned Unreal Engine. This game development suite serves as the backbone for titles like God of War and PlayerUnknown’s Battlegrounds.