Fortnite creator Epic Games laid off 16%, affecting 870 workers

On Thursday, Fortnite maker Epic Games laid off 16% of its workforce, affecting 870 people. The company also divested Bandcamp, an online audio distribution platform it acquired last year, and spun off most of SuperAwesome, a kid-safe technology developer it acquired in 2020. Layoffs were first reported by Bloomberg.

Epic Games CEO Tim Sweeney wrote in a memo to employees, “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 this was unrealistic.”

Sweeney said the company was “making ongoing efforts to reduce costs, including moving to net zero hiring and cutting operating spend on things like marketing and events.” Despite these efforts, Epic found itself “far short of financial sustainability” and decided to lay off workers. Sweeney believes mass layoffs now will stabilize the company’s finances.

SuperAwesome’s advertising business will be spun off as an independent company under the SuperAwesome brand, led by CEO Kate O’Loughlin. Bandcamp will join Songtradr, a music marketplace.

Sweeney wrote, “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 layoffs were in non-core development teams. Some products and initiatives will ship on time, but others may not due to underresourcing. We’ll accept the schedule tradeoff if it means achieving our goals, becoming profitable, and becoming a leading metaverse company.

The company is focusing on shipping its most successful projects, including Fortnite Season 5, Chapter 5, Del Mar, Sparks, and Juno. Epic says these projects’ release schedules are unchanged.

Epic announced today that Fortnite V-Bucks will cost more in the US and other countries on October 27. In the blog post, the company attributed the 12% to 15% bundle price increase to “economic factors such as inflation and currency fluctuations.”

Epic filed a cert petition with the Supreme Court on Wednesday to reexamine a 2021 ruling on Apple’s App Store policies concurrently with the layoffs. If the Supreme Court hears the case, Epic and Apple will resume their August 2020 lawsuit.

Epic states in its newsroom post that it has “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.”