Epic Games Cuts 16% of Workforce Amid Unrealistic Revenue Expectations
Epic Games, the company behind Fortnite, has made the difficult decision to lay off approximately 830 employees, which accounts for 16% of its workforce. The layoffs were prompted by the company’s unrealistic expectations of revenue from the metaverse, leading to excessive spending.
In a memo sent to Epic Games staff, CEO Tim Sweeney acknowledged that he had been optimistic about avoiding layoffs but recognized that it was an unrealistic goal. Sweeney stated that the layoffs were necessary to stabilize the company’s finances.
Shifting Economics and Structural Changes
Sweeney attributed the company’s recent growth to the Fortnite Creator program, which allows players to create and sell their own in-game content for a 40% share of the profits. However, this shift towards user-generated content has resulted in lower profit margins for Epic Games.
“Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.”
Additional Changes and Support for Employees
In addition to the layoffs, Epic Games also announced that it would be selling its recently acquired music website Bandcamp and spinning off its marketing company SuperAwesome. These changes will lead to another 250 employees leaving the company.
Former employees of Epic Games will receive six months of severance pay. Those residing in the United States, Canada, and Brazil will also receive six months of paid healthcare.
Epic Games Beyond Fortnite
Besides Fortnite, which boasts an impressive 400 million registered users, Epic Games is also known for its Unreal Engine. This video game development suite powers popular titles like God of War and PlayerUnknown’s Battlegrounds.
Hot Take: Epic Games Faces Reality Check with Layoffs
Epic Games’ decision to lay off a significant portion of its workforce reflects the challenges the company has faced due to unrealistic revenue expectations. While the Fortnite Creator program has contributed to growth, it has also brought about major changes to the company’s economics. The layoffs are an effort to stabilize finances and adapt to the shifting landscape of user-generated content. However, Epic Games remains a powerhouse in the gaming industry, with its popular games and technology driving its success.
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