Epic Games, the company behind the Fortnite video game, has cut 16% of its workforce – roughly 830 staff – after “unrealistic” expectations of Metaverse-inspired income caused it to splash “way more” cash than it had been making.
It is also selling Bandcamp, the online music site it acquired in 2022.
Epic Games CEO Tim Sweeney said in a note sent to staff yesterday: “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 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.”
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: we’re offering a severance package that includes six months base pay and in the US/Canada/Brazil six months of Epic-paid healthcare.
“We’re offering to accelerate people’s stock option vesting schedule through the end of 2024 and are giving two additional years from today to exercise the options. In the US we’re also offering to vest any unearned profit sharing from their 401k. And we’ll provide benefits including career transition services and visa support where we can.
“We’re cutting costs without breaking development or our core lines of businesses so we can continue to focus on our ambitious plans. About two-thirds of the layoffs were in teams outside of core development. 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.
“We’re ok with the schedule tradeoff if it means holding on to our ability to achieve our goals, get to the other side of profitability and become a leading metaverse company.”
Fortnite is popular worldwide, with approximately 400 million registered users. Epic is also known for Unreal Engine, which powers a number of successful titles including Fortnite and Gears of War.