Epic Games is laying off 16% of its staff

Epic Games is laying off around 16% of its workforce, it’s announced.

The company, which is responsible for the Unreal Engine and Fortnite, “is laying off around 830 employees”.

The job cuts were announced in a memo to staff from Epic CEO Tim Sweeney, in which he states that two-thirds of the layoffs are in teams outside of core development (ie, Fornite and Unreal Engine).

Music marketplace Bandcamp has been sold, and web services firm SuperAwesome has acquired “most” of its company back from Epic. Around 250 people are leaving Epic through its divestitures from Bandcamp and SuperAwesome

Staff members of Fall Guys developer Mediatonic posted on social media claiming they had been affected by the layoffs.

https://twitter.com/edfear/status/1707454892900491620

“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 memo 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 stabilize our finances.”

This is the latest example of widespread redundancies taking place across the games industry this year, as companies make corrections on their post-pandemic expansion.

Earlier this year Microsoft confirmed plans to lay off approximately 10,000 employees, including some at Xbox and Bethesda.

CD Projekt Red announced plans in July to lay off around 10% of its staff, with CD Projekt CEO Adam Kiciński stating that the company wants to have “teams that are more agile and more effective”.

Layoffs have also recently been occurring at a number of other companies, including Unity, Riot Games, Blizzard, Crystal Dynamics, Bioware and The Callisto Protocol studio Striking Distance.

Further reading

6

Analysis: Why are video game companies laying off staff?

While it's been a bleak month for video games, overall the industry is in remarkably good health

In a recent analysis for VGC, GamesIndustry.biz’s Christopher Dring suggested that the widespread layoffs could partly be attributed to companies expecting to maintain momentum following the pandemic, but saw game sales that were lower than expected.

“For other companies, particularly public ones like Microsoft, a decline in sales is a problem,” Dring wrote. “Shareholders don’t want to see their investments go backwards.

“As a result, the management teams are required to look at the business and see if there are any efficiencies that need to be made, or if there are departments that just aren’t delivering.”