Epic Games has announced that it will be laying off 16% of its staff, which equals approximately 830 employees. This decision was driven by excessive spending and a slowdown in the growth of the popular game Fortnite. In addition to the layoffs, the company is also divesting its recent acquisition, Bandcamp, and spinning out SuperAwesome. Bandcamp will join Songtradr, while SuperAwesome will become its own company led by CEO Kate O’Loughlin. These changes aim to stabilize Epic Games’ finances.
CEO Tim Sweeney shared a memo explaining the layoffs, stating that the company had been spending more money than it earned. Sweeney admitted that he had previously been optimistic that the company could weather this transition without layoffs but now sees it as unrealistic. Other cost-cutting measures were explored but ultimately deemed unsuccessful. Laid-off employees will receive six months’ salary and healthcare as severance. The company is still actively hiring for critical roles.
The decline in Epic Games’ fortunes can be attributed to a shift in the Fortnite paradigm. While the game is experiencing growth again, it is primarily driven by creator content with significant revenue sharing. This lower-margin business model has resulted in a major structural change to the company’s economics. The exact division most affected by the layoffs has not been disclosed, but former employees of Mediatonic, the developer of Fall Guys, have mentioned being affected on social media. Epic acquired Mediatonic in 2021, and it is uncertain how many Mediatonic employees have been impacted.