UPDATED: Epic Games has announced the layoffs to the company publicly.
The scope of the layoffs, per Epic, involves “around 830 employees*”. Two-thirds of the cuts were “in teams outside of core development” while 250 more people are leaving the company as a result of divestitures from both SuperAwesome and Bandcamp.
Lastly, Sweeney said there won’t be more layoffs as these cuts “financially stabilize the business.”
You can read the full memo CEO Tim Sweeney sent out to employees below.
Hi everyone,
As we shared earlier, we are laying off around 16% of Epic employees. We’re divesting Bandcamp and spinning off most of SuperAwesome.
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.
We’re also making some divestitures. Bandcamp is joining Songtradr, a music marketplace company supporting artists. SuperAwesome’s advertising business will become an independent company under the SuperAwesome brand, led by their current CEO Kate O’Loughlin. Kids Web Services (KWS), the parent verification and consent management toolset, will remain part of Epic.
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.
For those still at Epic, you’ll hear more from senior leaders about the path forward for your team. Epic’s prospects for the future are strong. We have amazing game experiences across multiple platforms. We’ve built the best engine in the world, and will be hosting Unreal Fest next week to bring the community together and spotlight the things they are building with Unreal Engine and UEFN. Creators are making a living building for the Fortnite ecosystem, with time in third-party games now exceeding first-party.
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.
-Tim
ORIGINAL: Epic Games, the company behind Unreal Engine and Fortnite, is laying off nearly 1,000 employees, according to a new report from Bloomberg’s Jason Schreier.
The news of the layoffs comes on the same day that Epic Games announced price increases for Fortnite V-Bucks purchases starting in October.
According to the report, 16% of the company’s workforce — or 900 people — are being let go from the company. The cuts were announced in a company-wide memo to staff. Those let go from the company will receive six months of severance and health benefits.
With 16% of the staff being let go, that puts the total staff count at about 4,700 employees. As of writing, it’s unknown what positions were specifically impacted by the layoffs. Based on the number of job cuts, it could be assumed that it spans multiple departments within the company.
Insider Gaming has reached out to Epic Games for comments on the layoffs. Should a response be received or a statement made, this story will be updated accordingly.
For more Insider Gaming, check out what game was delayed to spring 2024 on PlayStation 5 and Xbox Series X|S.
Editor’s Note: We originally reported that 870 employees were being let go. The actual number is 830 as per Epic’s updated announcement on its website. The article has been updated to reflect this.
Tencent should offer to buy out the remaining 60% of the company.
Sweeney has no idea what he’s doing he should sell his shares to Tencent while he can. They own 40% he owns maybe 50% of the company that is worth $32 billion. They would pay him off well and other minority owners. Tim could live well.