Epic Games Cuts Almost 900 Jobs In Video Game Industry's Latest Mass Layoff
"For a while now, we've been spending way more money than we earn."
Epic Games is the latest major game studio to enact a round of layoffs. The same day that Sega announced major cuts at Creative Assembly, Epic Games has confirmed it's laying off about 16% of its workforce, which amounts to around 870 people. Additionally, Epic is divesting the audio platform Bandcamp and spinning off "most" of its SuperAwesome team.
250 are leaving via Epic's divestures of Bandcamp and SuperAwesome. Epic confirmed these changes after announcing V-Bucks price increases. Epic's Mediatonic studio, which created and runs the whimsical battle royale game Fall Guys, was impacted by the cuts, too.
"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. I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see that this was unrealistic," CEO and founder Tim Sweeney said in a memo to staff and shared on Epic's website.
"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," he added. "Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics."
About two-thirds of the job cuts came from teams outside of "core development," Sweeney said. "Some of our products and initiatives will land on schedule, and some may not ship when planned because they are under-resourced for the time being," he said.
Sweeney went on to say that efforts have been made to reduce costs, including a "net zero hiring" freeze and cutting spending on marketing and events. However, this wasn't enough. "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," Sweeney said.
What Epic has not stopped spending on is Project Liberty, which is Epic's legal battle against Apple and Google. Sweeney said Epic is pushing so hard here "so the metaverse can thrive and bring opportunity to Epic and all other developers."
He added: "Saying goodbye to people who have helped build Epic is a terrible experience for all. The consolation is that we're adequately funded to support laid off employees."
Epic is giving affected developers six months severance and six months of Epic-paid healthcare benefits. Additionally, Epic is accelerating stock option vesting and giving people two additional years to exercise their options. Impacted developers in the US can vest any unearned profit sharing from their 401k.
Sweeney said Epic's "prospects for the future are strong," adding that the aim now is to become a profitable company again and cement itself as a "leading metaverse company."
Layoffs in the video game industry have been a major storyline in 2023. In addition to Epic and Creative Assembly, Microsoft plans to cut 10,000 jobs this year, including many at Xbox. Other layoffs this year happened at Blizzard, Unity, Relic, Amazon Games, Ubisoft, Take-Two, Striking Distance, and more.