In a recent announcement, Epic Games, the creator of popular game Fortnite, revealed that it will be laying off 16% of its workforce, affecting approximately 870 employees. This news comes as an effort by the company to stabilize its finances and ensure its long-term sustainability.
Key Takeaway
Epic Games, the creator of Fortnite, is laying off 16% of its workforce, impacting around 870 employees. The layoffs are aimed at stabilizing the company’s finances after years of spending more than it earns. Despite the challenges, Epic Games is determined to continue shipping its important projects and initiatives and is also focused on fighting against perceived monopolies and taxes imposed by Apple and Google.
The Need for Layoffs and Financial Stability
In a memo to employees, Epic Games CEO Tim Sweeney explained that the company has been investing heavily in the development of Epic and the growth of Fortnite as a metaverse-inspired ecosystem for creators. However, the company has been spending more money than it earns, making layoffs a necessary step to address its financial challenges.
Sweeney acknowledged that while efforts were made to reduce costs, including cutting operating spend and implementing a net zero hiring policy, the company fell short of financial sustainability. Conducting the layoffs at this time and on this scale is seen as a means to stabilize the company’s finances.
It is worth noting that the majority of the layoffs, about two-thirds, were in teams outside of the core development. Despite this, Epic Games reassures that important products and initiatives, such as the upcoming Fortnite Season and Fortnite Chapter 5 projects, will proceed according to schedule.
Divesting Bandcamp and SuperAwesome
In addition to the layoffs, Epic Games also announced its decision to divest Bandcamp, an online audio distribution platform it acquired in the last year. Bandcamp will now join Songtradr, a music marketplace company. SuperAwesome, a kid-safe technology developer that Epic Games acquired in 2020, will spin off its advertising business into an independent company under the SuperAwesome brand.
Challenges and Legal Battles
While these layoffs are taking place, Epic Games is concurrently facing other challenges. The company recently filed a cert petition with the Supreme Court, seeking a reexamination of a 2021 ruling regarding Apple’s App Store policies. This move could potentially reopen the legal battle between Epic Games and Apple that started in August 2020.
Epic Games remains committed to fighting against what they perceive as Apple and Google distribution monopolies and taxes, as they believe this will allow the metaverse to thrive and create opportunities for Epic and other developers.
