Epic Games, renowned as the force behind the massively popular Fortnite, has taken a significant step by reducing its workforce by 16%, which translates to roughly 830 employees.
This substantial reduction comes as a response to the company’s overly optimistic projections regarding revenue derived from the metaverse concept, leading to excessive spending that outweighed earnings.
In a memo sent to Epic Games’ staff on September 29, CEO Tim Sweeney acknowledged the necessity of these layoffs to restore financial stability.
Sweeney, while reflecting on his initial optimism about weathering the transition without job cuts, admitted, “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 attributed its recent growth to the Fortnite Creator program, allowing players to create and sell in-game content while retaining a 40% share of the profits.
However, this shift has come at the cost of reduced profit margins.
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Sweeney commented, “Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.”
In addition to the layoffs, Epic Games also announced that 250 more employees would be parting ways with the company.
This decision accompanies the sale of the recently acquired music website Bandcamp and the spin-off of SuperAwesome, a child-safety tech firm that joined Epic in 2020.
Notably, Epic Games intends to provide some support for departing employees. Those leaving the company will receive six months of pay, with employees residing in the United States, Canada, and Brazil also receiving six months of paid healthcare.
Besides its flagship title, Fortnite, which boasts an impressive 400 million registered users, Epic Games is also renowned for the Unreal Engine, a video game development suite powering titles like God of War and PlayerUnknown’s Battlegrounds.
While this decision is undoubtedly challenging for affected employees, Epic Games aims to provide some support during this transition.
In conclusion, Epic Games’ decision to reduce its workforce by 16% reflects the company’s need to rectify its financial situation, which suffered due to unrealistic revenue expectations related to the metaverse concept.
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