Epic Games Cuts 16% of its Workforce

Credit: Epic Games

In an email on Thursday Epic Games Founder and CEO Tim Sweeney told staff that the company is laying off around 830 employees, or 16% of its workforce. About two-thirds of the layoffs were in teams outside of core development, Sweeney said.

A number of those layoffs hit the Rocket League esports and Psyonix teams, as evidenced in numerous social media posts from affected employees on Thursday. A Bloomberg report claims that the number of affected employees is eight around 870, but was written prior to the publication of Sweeney’s email by Epic Games.

Epic Games owns Fortnite, Rocket League and developer Psyonix, associated competitive/esports scenes for both games, as well as Fall Guys and game engine development platform Unreal Engine.

The company also announced that it would divest some of its non-essential operations including Bandcamp, which will become part of Songtradr, a music marketplace company supporting artists; and SuperAwesome’s advertising business, which “will become an independent company under the SuperAwesome brand, and will be led by current CEO Kate O’Loughlin. Kids Web Services (KWS), the parent verification and consent management toolset, will remain part of Epic, Sweeney said.  

Around 250 employees are also exit the company via these divestitures, Sweeney said in his email.

Epic is providing severance packages for employees in the United States, Canada, and Brazil including six months of base pay, six months of Epic-paid healthcare, and offering to accelerate people’s stock option vesting through the end of 2024 (it is also giving two additional years from today to exercise the options). U.S. employees affected by the layoffs will be allowed to vest any unearned profit sharing from their 401K as well. Finally, Sweeney said that the company will provide job placement assistant and visa support where the company can.

As for why the layoffs occurred, Sweeney said the following:

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. I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see that this was unrealistic.

While Fortnite is starting to grow again, the growth is driven primarily by creator content with significant revenue sharing, and this is a lower margin business than we had when Fortnite Battle Royale took off and began funding our expansion. Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.

Epic folks around the world have been making ongoing efforts to reduce costs, including moving to net zero hiring and cutting operating spend on things like marketing and events. But we still ended up far short of financial sustainability. We concluded that layoffs are the only way, and that doing them now and on this scale will stabilize our finances.