Epic Games is reportedly laying off around 870 jobs, cutting 16% of its workforce in an effort to overhaul its economics. Bloomberg broke the news, revealing an internal memo from Epic Games CEO Tim Sweeney, which described an untenable financial situation wherein company management had been spending more money than it was earning in revenue.
According this memo, and reporting from those impacted by the layoffs, the companies expected to take the brunt of these cuts are Mediatonic (Fall Guys) and marketing leg, SuperAwesome. In addition, Sweeney announced that music platform Bandcamp had been sold as part of the cuts – despite Epic only acquiring this company in early 2022.
“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,” Sweeney’s internal memo, sent to staff at Epic Games, reportedly reads. “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 stabilise our finances.”
The news from Epic Games arrives amidst major, widespread changes in the games industry, as several companies are now contending with rising business costs, global inflation, and the need for structural change amidst years of over-investment. Unfortunately, as is often the case with management-led decisions, it’s everyday staff that will wear the consequences of these decisions.
In recent months, several companies have initiated significant layoffs, with staff at Blizzard, EA, CD Projekt Red, Riot Games, Amazon, Ascendant Studios, Private Division, 2K, Firaxis, and Crystal Dynamics all being impacted in recent months.
Our thoughts are with those set to face job losses as Epic Games works on “major structural change”.