Epic Games is laying off roughly sixteen percent of its staff, or 830 employees, per an announcement from CEO Tim Sweeney. An email was sent to staff, followed by a public announcement, that Epic Games has, so far, failed to meet its expectations of investing in transitioning Fortnite into “a metaverse-inspired ecosystem”. Sweeney said that while creator content is growing its revenue share is a lesser margin than EG had with Battle Royale and thus a structural change is needed.
Per Epic Games:
“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.”
Severance packages and other changes
Sweeney goes on to share that the laid-off employee’s severance package includes six months’ pay, including health care for the same time period for those in the US/Canada/Brazil, along with stock and 401K options. Other restructuring plans involve Bandcamp joining SongTradr and its SuperAwesome advertising department will become a standalone company.
“We’re also making some divestitures. Bandcamp is joining Songtradr, a music marketplace company supporting artists. SuperAwesome’s advertising business will become an independent company under the SuperAwesome brand, led by their current CEO Kate O’Loughlin. Kids Web Services (KWS), the parent verification and consent management toolset, will remain part of Epic.”
Even though Epic Games is laying off employees, according to the announcement, there are no other planned layoffs and it will continue to hire for critical positions. Epic also says that it will continue to fight its legal battle with Apple and Google over distribution and taxes.