Fortnite developer Epic Games is set to lay off approximately 16% of its workforce, according to a statement from the company’s CEO, Tim Sweeney. The cuts will affect around 870 employees.
This move comes as Epic Games grapples with financial challenges, acknowledging that the company has been spending more money than it earns.
“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,” Sweeney wrote. “I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see that this was unrealistic.”
Laid-off employees will be offered a severance package that includes six months base pay and six months of Epic-paid healthcare for affected employees in the US, Canada, and Brazil.
“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,” the CEO added.
Sweeney also announced plans to sell Bandcamp, an independent music storefront acquired by Epic Games just last year, to music licensing platform Songtradr. Additionally, the company will spin off SuperAwesome, a company specializing in creating safe online experiences for children.
These layoffs were anticipated, with rumors circulating about Epic Games’ financial struggles and a need to reduce expenses to facilitate potential investments. The video game industry as a whole has faced a challenging period, marked by high-profile acquisitions and layoffs at various companies.
Embracer Group canceled projects and shuttered a studio after a major investment deal fell through. Activision Blizzard and BioWare also laying off employees, impacting divisions responsible for popular titles. Sega also recently canceled a live-service shooter and announced forthcoming layoffs at Creative Assembly.
Information for this story was found via Epic Games, Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.