Tim Sweeney, CEO of Epic Games, attributed recent layoffs to structural changes in the company’s finances, stating that “we’re spending way more than we earn.”
Epic Games, which made the difficult decision to reduce its workforce by 16%, affecting approximately 830 employees, had high hopes for revenue growth inspired by the metaverse but did not meet these expectations. As a result, the company was spending significantly more money than it was generating.
In a Sept 29 memo to staff, Tim Sweeney, CEO of Epic Games, acknowledged: “We concluded that layoffs are the only way and that doing them now and on this scale will stabilize our finances”
He added, “I had long been optimistic that we could power through this transition without layoffs, but in retrospect, I see that this was unrealistic”
The success of the Fortnite Creator program has come at the cost of reduced profitability, as the shift in focus towards user-generated content impacted the company’s profit margins.
“Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.”
However, In addition to layoffs, Sweeney noted that a further 250 employees would leave Epic Games, as the company plans to sell the recently acquired music website Bandcamp and spin off its child-safety technology company, SuperAwesome, which joined Epic in 2020.
As part of its layoffs, Epic Games has committed to supporting departing employees with six months of pay, as well as providing six months of paid healthcare for those in the U.S., Canada, and Brazil. While Fortnite is Epic Games’ most popular product, the company is also known for the Unreal Engine, a widely used video game development suite that powers some of the most popular games, such as God of War and PlayerUnknown’s Battlegrounds.