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Epic Games Inc, known worldwide for its smash hit Fortnite, is reducing its workforce. Sources reveal that the company is dismissing 16% of its staff. This decision was communicated to the employees through a memo by the CEO, Tim Sweeney.
Sweeney mentioned, “We’ve been spending way more money than we earn.” Despite the tough circumstances, Epic Games assures that the affected employees will be given six months of severance, health insurance benefits, and an acceleration in stock vesting.
However, the staff reduction doesn’t end there. Sweeney’s memo also highlighted that 250 employees will part ways with Epic due to two major divestitures: the sale of Bandcamp, the music site, and the separation of the marketing company, SuperAwesome. It’s noteworthy that SuperAwesome became a part of Epic just two years ago, in 2020.
At the heart of Epic’s rapid expansion is its Fortnite Creator program. This initiative allows players to create and monetize their content within Fortnite. Although this model aids fast growth, as Epic shares 40% of its revenue with creators, it now seems the reduced profit margins are impacting the firm’s financial health.
Headquartered in Cary, North Carolina, Epic Games isn’t just known for Fortnite and its 400 million users. The company is also the powerhouse behind the Unreal Engine, a leading technology suite in the gaming industry. As one of the global heavyweights in video game development, Epic Games remains predominantly under the ownership of CEO Tim Sweeney, with Chinese giant Tencent Holdings Ltd. holding a 40% stake.
Sadly, Epic Games isn’t the only tech giant facing workforce reductions. With looming economic downturn concerns, several tech titans, including Snap, Google, and Cisco, have had to make similar tough decisions. In the realm of gaming, a notable mention is Niantic Inc., the creator of Pokemon Go. Earlier in June, they shut down their Los Angeles game studio, resulting in the loss of 230 jobs, nearly a quarter of their total workforce.