Epic Games makes cuts by laying off nearly 900 employees
According to people close to the matter, Epic Games Inc, the company behind the popular battle royale game Fortnite, is laying off 16% of its staff.
Epic Games also hit by a wave of layoffs
In the latest report by Bloomberg, 16% of Epic Games Inc.’s workforce was laid off through a memo to its staff by Chief Executive Officer Tim Sweeney, saying the company has “been spending way more money than we earn.”. Employees who were affected by the job cuts will receive six months of severance and health insurance, as well as accelerated stock vesting.
Sweeney added in the email that there are no more layoffs planned. He said an additional 250 people will leave Epic through two divestitures: the sale of music site Bandcamp and a spinoff of marketing company SuperAwesome, which joined Epic in 2020.
Sweeney explained that Epic’s recent growth has been driven mostly by the company’s Fortnite Creator program, which allows players to build and sell their own content within the game. Epic has a lower margin since it gives 40% of revenue to the creators, and while that allowed them to expand quickly, the lower profits are now impacting the company at its current size.
Based in Cary, North Carolina, Epic Games is a major video game developer, having released the game Fortnite which has more than 400 million users. It also produces the Unreal Engine, a popular suite of technology that is used to develop video games. Epic is one of the biggest privately held video game companies in the world. CEO Tim Sweeney owns the majority of shares while the Chinese conglomerate Tencent Holdings Ltd. currently has a 40% stake.
Epic Games is just the last among the many tech companies that ended up downsizing in the workforce due to economic recession fears. Other companies like Snap, Google, and Cisco have also been affected. In the gaming space, Pokemon Go maker Niantic Inc. announced in June that it’s closing its Los Angeles game studio and entered a restructuring process that eliminated 230 jobs, close to 25% of its entire workforce.