Earlier today, it was reported that Epic Games had cut 16% of its staff, which translates to about 830 employees. Reporting from Bloomberg’s Jason Schreier indicates that Fall Guys developer Mediatonic “was hit very hard” by the layoffs, though the studio has not been shut down. In addition to the layoffs, Epic Games also announced that it is parting ways with some of the companies it purchased over the years; Bandcamp is being sold off, while SuperAwesome, an advertising company, will be going independent.
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“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,” Epic Games CEO Tim Sweeney wrote in an email to employees.
“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.”
The Games Industry Responds
Following the announcement, many in the video game industry responded to the layoffs with frustration on social media. While Sweeney blames Fortnite‘s transition to a “metaverse-inspired ecosystem” as the reason for the layoffs, many others laid their blame at the CEO’s feet.
“How can you screw up the Fortnite money?Well, huff your own aroma on building the metaverse, wage an unwinnable war on Steam, and enrage regulators with dark patterns to the tune of $250 million,” wrote Giant Bomb’s Jeff Grubb.
“I love this industry so much, but companies bragging to their investors in earnings calls in one minute and then firing half their team in the next just feels so despicable,” wrote Alanah Pearce of Sony Santa Monica.
Meanwhile, Paul Tassi of Forbes called out Epic’s spending on legal fees in the company’s batte with Apple. Epic Games broke the terms of its contract with Apple back in 2020, in a move that saw Fortnite removed from the App Store. Epic Games took Apple to court over the move and lost, but Sweeney’s own email today indicates that the company is still “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.”
“I wonder how much Epic has spent on Tim Sweeney’s endless crusade against Apple,” Tassi mused following the announcements.
The Future of Epic Games and the Industry
There has been a lot of uncertainty surrounding the video game industry over the last few months, following layoffs at Crystal Dynamics and Sega, and the closure of Volition. For those that have lost their jobs, and those that remain employed, things are sure to be scary at the moment. In Sweeney’s email to employees, the company’s CEO noted that the “prospects for the future are strong.” Hopefully that means the jobs of the rest of the staff will remain safe, as Epic Games charts a path towards the future.
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