Epic Games, the maker of the survival battle royale game, Fortnite, is laying off 16 per cent of its workforce. The move is part of the company’s efforts to stabilise its financial position. The current layoffs will affect 870 employees, primarily the teams that are not directly involved in core development.
In an official memo to employees, Tim Sweeney, CEO, Epic Games, revealed that the company has been spending more money than it has been earning, directing its investments towards the future development of Epic and the expansion of Fortnite into a metaverse-inspired ecosystem for creators. The memo highlighted that the company has accepted that it tried to navigate this transition without having to lay off employees, but in hindsight, it appears that this belief was not realistic.
The company will be supporting all the departing employees with comprehensive severance packages, including six months of their base salary and ongoing healthcare benefits. Moreover, the company is extending the timeline for stock options vesting until 2024 and allowing an extra two years for their exercise.
To further strengthen its financial health, it will sell off Bandcamp, an online audio- distribution platform it purchased last year, to Songtradr, a music marketplace. Furthermore, it plans to establish SuperAwesome, a kid-safe technology developer acquired in 2020, as a separate entity under the leadership of Kate O’Loughlin, the current CEO. This strategic decision will result in the departure of an additional 250 employees from the company.
Epic Games had implemented cost-cutting measures such as halting hiring and reducing spending on marketing and events. However, the company remains dedicated to building the essential infrastructure for its games to succeed in the metaverse.