Epic Games Cuts 16% Workforce Due to Overspending Amid Metaverse Predictions
Summary:
Epic Games, the parent company of Fortnite, has decided to lay off 16% of its workforce, comprising roughly 830 employees, due to excessive expenditure outweighing earnings. This move was made in response to misguided expectations regarding metaverse-inspired profits. The layoffs span various departments and those affected will receive six months of severance. CEO Tim Sweeney also revealed plans to offload Bandcamp and divest SuperAwesome, leading to the exit of an additional 250 workers. Despite the company's growth attributed to the Fortnite Creator program, the economic shift it caused lowered profits.
Fortnite's parent company, Epic Games, has recently decided to cut down about 16% of its total workforce, counting a total of roughly 830 workers, due to their fervent belief in the metaverse causing excessive expenditure in relation to their earnings. In an internal memo dated September 29, CEO Tim Sweeney admitted that he initially believed they can survive the transition without laying off staff, but later realized this expectation was unrealistic. He also mentioned that the tactic of large-scale and immediate layoffs is their strategic solution for financial stabilization.
The company has let go of approximately 870 workers today from a variety of departments, equivalent to almost one-sixth of their entire workforce. These individuals will receive severance for the next six months as part of their exit. Even though their creator program has spiked growth in recent times, the resulting shift in their economic structure has resulted in decreased margins.
Sweeney explained that their thriving creator ecosystem, while a significant achievement, has led to a substantial shift in their operating economics. The Fortnite Creator program, which enables players to craft and vend their unique in-game content for a 40% share of the revenue, has been a driver of this shift.
In another shocking revelation, Sweeney disclosed the upcoming departure of another 250 workers as Epic Games decides to offload its recently purchased Bandcamp and divests its marketing company SuperAwesome, a company focused on child safety tech that integrated with Epic in 2020. Notably, departing employees will be given six months of salary, along with paid healthcare for those who live in the United States, Canada, and Brazil.
Beyond Fortnite, a game that enjoys about 400 million registered players, Epic Games is also responsible for managing the Unreal Engine, which is the powerhouse behind some popular titles like God of War and PlayerUnknown’s Battlegrounds.
Published At
9/29/2023 6:16:52 AM
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