Epic Games, the company behind the popular game Fortnite, has announced that it is laying off 16% of its staff, totaling 830 employees. This decision comes as a result of excessive spending and the slowing growth of Fortnite. In addition to the layoffs, Epic is also divesting its recent acquisition, Bandcamp, and spinning out SuperAwesome, resulting in an additional 250 people leaving the company. The layoffs are said to be necessary to stabilize Epic’s finances, as they have been spending more money than they earn.
In a memo shared by Epic CEO Tim Sweeney, he acknowledged that he had been optimistic about avoiding layoffs but realized that it was unrealistic given the company’s financial situation. He also mentioned that the company had attempted other cost-cutting measures, but they were unsuccessful. Laid-off employees will receive six months’ salary and healthcare as severance. Despite the layoffs, Epic is still hiring for critical roles.
The decline in Epic’s fortunes is attributed to a shift in Fortnite’s revenue model. While the game is experiencing growth again, it is primarily driven by creator content with significant revenue sharing, which is a lower-margin business compared to when Fortnite Battle Royale initially took off. Sweeney referred to this as a major structural change to their economics. The layoffs have not specified which division of Epic is most affected, 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 unclear how many Mediatonic employees are impacted. Bandcamp, another recent acquisition, will be operated by Songtradr, while SuperAwesome will become its own company led by current CEO Kate O’Loughlin.