Fortnite, Unreal engine maker Epic Games lays off 16% of staff

Epic Games is a video game that makes gamers. FortniteManagement, according to reports, sent out an email Thursday with the bad news. Bloomberg News broke the news of layoffs long before Epic Games released its internal memo.

“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,” CEO Tim Sweeney wrote in an email to staff. “I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see that this was unrealistic.”

An Epic Games representative pointed Polygon to Sweeney’s memo.

Sweeney stated that Epic Games’ employees affected by layoffs would receive a six-month severance package and medical benefits. The company is also expected to “divest” from two acquisitions: selling recently-unionized music site Bandcamp and “spinning off” most of its marketing company SuperAwesome. Around 250 employees are being laid off due to Epic Games’ divestitures.

Epic Games’ estimated worth is valued at $31.5 billion, according to the Wall Street Journal. Fortnite alone generates billions of revenue each year — and is growing again, Sweeney said. Cary North Carolina is now one of the biggest privately owned video games companies. Chinese tech conglomerate Tencent has owned 40% of the company since 2012, when it paid $330 million for its stake, according to Tencent’s financial reports. CEO Tim Sweeney owns the majority of Epic Games’ remaining shares, Bloomberg said.

“While FortniteIt’s starting to grow, but the main driver is creator content and significant revenue-sharing. The margins are lower than they were when Fortnite Battle Royale took off and began funding our expansion,” Sweeney wrote. “Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.”

Sweeney noted that “two-thirds” of the cuts were “outside of core development.” He wrote that some projects will stay on schedule, while others may be delayed. In an FAQ published after the announcement, Epic Games said its priorities remain on its “must succeed initiatives,” like Fortnite’s upcoming season and chapter, as well as upcoming projects codenamed “Del Mar,” “Sparks,” and “Juno.”Epic Games is expected to continue hiring and there will be no layoffs.

Epic Games also addressed its ongoing legal battle with Apple: “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.”

The news of Epic Games’ mass layoff comes shortly after Sega announced the cancelation of loot shooter HyenasCreative Assembly is expected to make job cuts. Sega has said that other European subsidiaries will also be affected by the cuts. Only this month. Immortals from AveumAscendant Studios cut half of their staff. Embracer, the giant gaming publisher continued to cut positions after rapid growth. This year, thousands of jobs have been cut.

The year was a good one for the release of video games, but those who create them continue to struggle with difficult working conditions and insecurity.