Epic Games to Lay Off 16% of its Workforce

Epic Games, the renowned creator of Fortnite and other gaming titles, has revealed plans to cut approximately 830 jobs, accounting for 16% of its workforce, in a strategic move aimed at curbing what CEO Tim Sweeney termed “unrealistic” expenditures.

In a letter addressed to its employees, Sweeney acknowledged the company’s excessive spending, stating that Epic had been investing substantially more capital than it generated, particularly in endeavours focused on the future evolution of Epic Games.

While Sweeney initially held optimistic hopes of navigating this transition without resorting to layoffs, he conceded that this aspiration was not attainable. As part of its restructuring strategy, Epic Games intends to divest from the online independent music platform Bandcamp, which it acquired last year. The platform is set to be acquired by Songtradr, a prominent music marketplace firm. Additionally, the majority of Epic’s marketing division, SuperAwesome, will be spun off into a separate entity.

Epic Games’ decision to downsize its workforce reflects broader adjustments across the tech industry. Many companies, following remarkable growth during the peak of the COVID-19 pandemic, have found it necessary to recalibrate their operations as growth rates plateau. Earlier this year, tech giants such as Meta, Microsoft, T-Mobile, Lyft, and others also implemented workforce reductions. Alphabet, the parent company of Google, initiated its second round of layoffs in September, eliminating several hundred recruiting positions after having cut 12,000 jobs in January.

Tim Sweeney disclosed that roughly two-thirds of the job cuts at Epic Games would impact employees outside the company’s “core development” teams. Several affected employees, including those working in user experience for Fortnite, production, employee engagement, and recruitment, shared news of their layoffs on LinkedIn.

Laid-off workers will be offered a severance package that encompasses six months of base pay, accelerated stock vesting, and additional benefits.

Sweeney stressed that Epic Games’ cost-cutting measures were designed to preserve the company’s development efforts and core business activities, allowing it to focus on its ambitious goals. Some projects and initiatives may experience delays due to resource limitations, but the company is willing to make this tradeoff to maintain its ability to achieve its objectives.

Epic Games’ decision to downsize comes amidst an ongoing legal battle with tech giant Apple. Following a protracted antitrust lawsuit initiated by Epic Games over Apple’s App Store payment practices, both companies have sought the review of a lower court ruling by the US Supreme Court, further escalating their legal dispute.