Epic Games, the $31.5Bn valued game developer behind popular titles like Fortnite and Unreal Engine, announced that it will be laying off around 16% of its workforce, which will impact roughly 830 employees. Alongside these layoffs, the company also shared plans to divest its music platform, Bandcamp, and spin off most of its SuperAwesome services.
In a memo posted on the Epic Games website, CEO Tim Sweeney explained that approximately two-thirds of the job cuts would be “outside of core development” to ensure that major projects and plans remain unaffected. Sweeney acknowledged that the company had been grappling with financial imbalances due to its aggressive investments in Fortnite’s growth and its evolution as a metaverse-inspired ecosystem for creators.
“As we shared earlier, we are laying off around 16% of Epic employees. We’re divesting Bandcamp and spinning off most of SuperAwesome. 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,” read the official memo by Sweeney. “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,” he added.
In addition to the layoffs, Epic Games is divesting Bandcamp, an independent music storefront it acquired just last year. Bandcamp will be sold to Songtradr, a music licensing platform. Songtradr has assured that it will continue to operate Bandcamp as a marketplace and music community with a focus on an artist-first revenue-sharing model.
SuperAwesome, known for its kid-friendly services, will undergo a transformation as well. Its advertising business will become an independent company under the SuperAwesome brand, led by the current CEO, Kate O’Loughlin. However, Kids Web Services (KWS), the parent verification and consent management toolset, will remain a part of Epic Games.
To support the employees impacted by these changes, Epic Games has announced a severance package that includes six months of base pay and six months of Epic-paid healthcare in the US, Canada, and Brazil. Additionally, they are offering accelerated stock option vesting schedules through the end of 2024 and granting an additional two years from the date of the announcement to exercise stock options. In the US, they are offering to vest any unearned profit-sharing from employees’ 401(k) plans and provide benefits such as career transition services and visa support where applicable. Furthermore, the company assured that it will continue hiring for critical roles while maintaining a net-zero hiring policy at its new size.