Epic Games recently announced that it will be laying off 830 employees, which accounts for 16% of its workforce. The layoffs are said to be a result of excessive spending and the slowdown in growth of the popular game Fortnite. In addition, the company is divesting recent acquisitions, including Bandcamp and SuperAwesome, resulting in an additional 250 employees leaving the company. Epic Games CEO Tim Sweeney acknowledged the company’s financial struggles and mentioned that layoffs were necessary to stabilize the company’s finances. Laid-off employees will receive six months’ salary and healthcare as severance.
The decline in Epic’s fortunes can be attributed to a shift in the paradigm at Fortnite. While the game’s growth is starting to rebound, it is primarily driven by creator content with significant revenue sharing, which is a lower margin business compared to when Fortnite Battle Royale first took off. This change in economics has prompted the need for a major structural change within the company. 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. Epic Games acquired Mediatonic in 2021, and it is unclear how many Mediatonic employees have been impacted by the layoffs.
Epic’s recent acquisitions, Bandcamp and SuperAwesome, are also being divested. Bandcamp was acquired in 2022 with the intention of expanding its resources for artists. Songtradr has acquired Bandcamp from Epic and plans to continue operating it as a marketplace and music community with an artist-first revenue share. SuperAwesome, a kid tech platform, is spinning off its advertising business under CEO Kate O’Loughlin, while Epic retains control of the Kids Web Service age verification tools.
In summary, Epic Games is undergoing significant changes, including laying off staff and divesting recent acquisitions. The company’s decision to downsize is attributed to overspending and the slower growth of Fortnite. Despite the layoffs, the company is still hiring for critical roles and is focused on stabilizing its finances.
