Fortnite maker, Epic Games, has confirmed reports that it plans to lay off around 830 employees, about 16% of its total workforce.
Bloomberg reported the development, citing sources. Epic said approximately two-thirds of those job cuts are in teams “outside of core development”.
Approximately 250 employees will be departing from the company due to Epic’s recent announcement of divesting Bandcamp and SuperAwesome.
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“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,” Epic CEO Tim Sweeney wrote in an all-staff email now shared on the company’s website.
“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,” he said.
Sweeney adds that the company has been “making ongoing efforts to reduce costs” globally, including “moving to net zero hiring and cutting operating spend on things like marketing and events”, but it remains “far short of financial sustainability”. Sweeney insists that “doing [layoffs] now and on this scale will stabilize our finances.”
All employees affected by the recent job cuts will be provided with a severance package that includes six months of base pay. Additionally, they will receive six months of healthcare coverage paid for by Epic in the United States, Canada, and Brazil.
“We’re offering to accelerate people’s stock option vesting schedule through the end of 2024 and are giving two additional years from today to exercise the options,” Sweeney adds. “In the US we’re also offering to vest any unearned profit sharing from their 401k. And we’ll provide benefits including career transition services and visa support where we can.”
Epic has emphasized that no further layoffs are anticipated beyond the 830 announced today, asserting that these changes are intended to bring financial stability to the business.
In response to the recent job cuts, Epic has outlined its priorities, which include the next Fortnite Season and Fortnite Chapter 5. Additionally, Epic has mentioned projects codenamed “Del Mar, Sparks, and Juno.” Speculations suggest that Del Mar and Juno may refer to a Fortnite car racing mode and a Fortnite Lego collaboration, respectively.
An FAQ provided alongside Sweeney’s announcement indicates that Epic is committed to ongoing investments in various areas. These include first-party development for Fortnite, fostering the Fortnite creator ecosystem and economy, maintaining support for Rocket League and Fall Guys, and offering services for developers such as Unreal Engine for both games and enterprise, the Epic Games Store, Epic Games Publishing, Epic Online Services, Kids Web Services, MetaHuman, Twin Motion, Quixel Mega Scans, Capturing Reality, ArtStation, Sketchfab, and Fab.
The announcement of job cuts at Epic Games comes in a year marked by significant layoffs across the gaming industry. Several major companies, including Microsoft, Take-Two, Riot Games, EA, Twitch, Meta, Unity, Ubisoft, CD Projekt, Roblox, Embracer, Amazon, and Sega, have all disclosed plans for workforce reductions in 2023. Additionally, Sega has indicated the possibility of further redundancies following the cancellation of Creative Assembly’s Hyenas project.