Epic lay off 830 people thanks to "unrealistic" metaverse ambitions

Unreal Engine and Fortnite publisher Epic Games are making an absolutely enormous round of job cuts. As announced by billionaire founder and CEO Tim Sweeney in an email to staff today, the company will lay off approximately 830 people, totalling “around 16%” of their workforce, in order to achieve “financial sustainability” following a period of heavy investment and lower-than-hoped returns from Fortnite.

“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,” Sweeney wrote in the letter. “I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see that this was unrealistic.

“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. Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.

“Epic folks around the world have been making ongoing efforts to reduce costs, including moving to net zero hiring and cutting operating spend on things like marketing and events. But 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.”

Two-thirds of the layoffs are in teams “outside of core development”, Sweeney added. The company "aren't cutting any core businesses," he wrote, "and are continuing to invest in games with Fortnite first-party development, the Fortnite creator ecosystem and economy, Rocket League and Fall Guys." Epic also hope to avoid delaying any upcoming releases, including the next season of Fortnite and Fortnite Chapter 5, though Sweeney cautioned that "some [products] may not ship when planned because they are under-resourced for the time being."

As part of their bid to cut costs, Epic will also divest from Bandcamp, the audio distribution platform they acquired in 2022, and are spinning off most of SuperAwesome, a company that builds parental consent management tools for developers making games for kids, which Epic acquired in 2020. Bandcamp will become part of music marketplace Songtradr, while SuperAwesome are going independent, though Epic will retain ownership of SuperAwesome’s Kids Web Services.

Sweeney insisted in the letter that “Epic’s prospects for the future are strong” thanks to Unreal Engine and Fortnite. He's equally bullish about the future of Project Liberty, Epic’s grandiose legal soap opera battle with Apple and Google over whether or not Epic should be able to sell Fortnite stuff via their services. “We've been taking steps to reduce our legal expenses, but are continuing the fight against Apple and Google distribution monopolies and taxes, so the metaverse can thrive and bring opportunity to Epic and all other developers.”

Best of luck to all Epic staffers facing the chop today.