Epic Games, the creators of the survival battle royale game Fortnite, are laying off 16% of their employees. The move is part of the company’s efforts to improve its financial situation. The current round of layoffs will affect 870 people, primarily from teams that are not directly involved in core development.
Tim Sweeney, CEO of Epic Games, revealed in an official memo to employees that the company has been spending more money than it has been earning, directing its investments towards Epic’s future development and the expansion of Fortnite into a metaverse-inspired ecosystem for creators. The memo stated that the company acknowledged that it attempted to navigate this transition without having to lay off employees, but in retrospect, this belief appears to have been unrealistic.
The company will provide comprehensive severance packages to all departing employees, including six months’ base salary and ongoing healthcare benefits. Furthermore, the company is extending the vesting period for stock options until 2024 and allowing an additional two years for their exercise.
To strengthen its financial position even further, it will sell Bandcamp, an online audio distribution platform purchased last year, to Songtradr, a music marketplace. Furthermore, it intends to separate SuperAwesome, a child-safe technology developer acquired in 2020, under the leadership of Kate O’Loughlin, the current CEO. This strategic decision will result in an additional 250 employees leaving the company.
Epic Games had implemented cost-cutting measures such as halting hiring and lowering marketing and event spending. However, the company is still committed to constructing the necessary infrastructure for its games to succeed in the metaverse.