“Unrealistic Spending” forces Epic Games to cut 830 jobs

Epic Games, the creator of Fortnite, is set to lay off approximately 830 employees, citing financial concerns as the driving factor behind this significant workforce reduction.

Epic Games, the creator of the wildly popular title Fortnite, has announced a substantial reduction of its workforce, affecting approximately 830 employees, which amounts to about 16% of its total workforce. The decision comes as the company grapples with what CEO Tim Sweeney has termed “unrealistic” spending.

Sweeney conveyed this news to the employees through a letter, where he candidly acknowledged that Epic Games had been “spending way more money than they earn, investing in the next evolution of Epic.” While expressing his optimism about avoiding layoffs in the past, Sweeney admitted that such optimism was no longer tenable in the current financial climate.

Official Email from Tim Sweeney to Epic Games employees regarding the 16% (~900) layoffs. (Obtained by @InsiderGamingIG)

“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… pic.twitter.com/ELFbPuQaCj

— HYPEX (@HYPEX) September 28, 2023

 

As part of the company’s restructuring efforts, Epic Games intends to divest from Bandcamp, an online independent music platform it acquired just last year. This platform is set to be acquired by Songtradr, a music marketplace firm. Additionally, Epic Games will spin off a significant portion of its marketing division, SuperAwesome, into a standalone company.

These layoffs are the latest in a series of workforce reductions across the tech industry, prompted by the slowing growth seen by many companies following the peak of the COVID-19 pandemic. Notable tech giants like Meta, Microsoft, T-Mobile, Lyft, and Google parent company Alphabet have all trimmed their workforces earlier this year, reflecting the need for adjustment.

Epic’s official response to the situation

Sweeney clarified that around two-thirds of the layoffs would impact employees outside the company’s “core development” teams. Some affected employees have already made their situations public on LinkedIn, revealing that roles such as user experience for Fortnite, production, employee engagement, and recruitment have been affected.

In an effort to provide support during this challenging period, Epic Games will offer a severance package that includes six months of base pay, accelerated stock vesting, and other benefits to employees who have been laid off.

Sweeney emphasized the importance of cost-cutting measures to ensure that the company can remain focused on its ambitious plans. He noted that while some products and initiatives may experience delays due to resource constraints, Epic Games is willing to make these trade-offs to retain its ability to achieve its goals.

These layoffs come at a time when Epic Games is embroiled in a protracted legal battle with tech giant Apple over antitrust allegations related to Apple’s App Store payment practices. Both companies have recently appealed to the US Supreme Court to review a lower court ruling in the case, adding another layer of complexity to Epic Games’ ongoing challenges.

Header: Epic Games