Epic Games, the company behind Fortnite, Unreal Engine 5, and Gears of War, is laying off around 870 staff members, which represent 16% of the total workforce. The reports follow after multiplayer shooter Hyenas has been canceled by Sega, with Total War and Alien Isolation developer Creative Assembly also announcing job losses and redundancies.
One of the biggest battle royale games in the world, Fortnite is the flagship shooter from Epic, which also develops and licenses Unreal Engine 5, operates the Epic Games Store, and develops the Gears of War series. Around 40% of Epic Games’ stock is owned by Chinese parent company Tencent, while the majority of the company belongs to founder and CEO Tim Sweeney.
The latest Fortnite update, Fortnite Chapter 4 Season 4, began on Friday, August 25, as the multiplayer game enters its eighth year after launching in 2017. Despite Fortnite’s enormous success and the growing popularity and use of Unreal Engine 5 among other game developers, Epic Games will lay off 16% of its employees.
“As we shared earlier, we are laying off around 16% of Epic employees,” CEO Tim Sweeney says. “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.
“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.”
Epic is also selling off Bandcamp, the audio distribution platform it acquired in 2022. Sweeney says that employees affected by the layoffs will receive six months pay and health insurance, as well as accelerated stock vesting.
“Epic’s prospects for the future are strong,” Sweeney says. “We have amazing game experiences across multiple platforms. 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.”