Epic Games announced today that it is laying off 16% of its staff, or 830 people. It’s also divesting recent purchase Bandcamp and spinning out SuperAwesome, which will result in 250 more people leaving the company. Allegedly these layoffs are fueled by an excess of spending and Fortnite’s growth slowing down. Bandcamp joins Songtradr, while SuperAwesome will be its own company headed by current CEO Kate O’Loughlin.
Bloomberg’s Jason Schreier initially reported on rumors about the layoffs, and shortly afterwards Epic CEO Tim Sweeney shared a memo about the layoffs. In the memo, Sweeney mentions that the company has been spending more money than it earns. Sweeney said: “I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see that this was unrealistic.”
Sweeney said the company had tried other cost-cutting measures, but that these were unsuccessful. “We concluded that layoffs are the only way, and that doing them now and on this scale will stabilize our finances.” He said that laid-off employees can expect to get six months’ salary and healthcare as severance. The company is apparently still hiring for “critical roles.”
What happened at Epic?
With regards to how Epic’s fortunes declined to this point, Sweeney pointed to a shift in the paradigm at Fortnite, the company’s big ticket game. “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.”
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There’s no word on exactly which division of Epic is the most affected by the layoffs, but several former employees of Mediatonic, the developer of Fall Guys, have mentioned being effected on social media. Epic acquired Mediatonic in 2021, after which Fall Guys went free-to-play on the Epic Game Store. It’s unclear at this time how many Mediatonic employees have been affected by the layoffs.
Epic acquired Bandcamp in 2022, saying it intended to offer its resources to the music company to expand and that it supported a fair and open platform for artists. Songtradr acquired Bandcamp from Epic, saying in a statement, “Songtradr will continue to operate Bandcamp as a marketplace and music community with an artist-first revenue share.”
The company also acquired SuperAwesome as a kid tech platform in 2020. According to Sweeney’s memo, SuperAwesome’s advertising business is spinning off under O’Loughlin. The Kids Web Service age verification tools will remain under Epic’s control.
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