Epic Games today confirmed it is laying off about 830 people, or roughly 16% of the company.
It is also parting ways with another 250 employees through the sale of music storefront Bandcamp and the spinoff of “most of” the youth marketing company SuperAwesome into its own separate business.
“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,” Epic CEO Tim Sweeney said in an email to staff. “I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see that this was unrealistic.”
Bandcamp is being sold to music licensing platform Songtradr, which will continue to run the storefront as before. Songtradr will also work with Epic to let artists opt-in to have their music licensed in Epic’s ecosystem.
Meanwhile, SuperAwesome’s management team is acquiring the division from Epic, with the former parent acting as an investor in the spun-off company.
Epic acquired SuperAwesome almost exactly three years ago, while Bandcamp has only been part of the organization since March of last year.
“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,” Sweeney said. “Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.”
The company has moved to net-zero hiring and dialed back spending on marketing and events, but “still ended up far short of financial sustainability,” according to Sweeney.
He added that Epic will pay six-months severance to all employees (and six months of healthcare benefits for those in the US, Canada, and Brazil), as well as moving up stock option and 401k profit-sharing vesting.
Sweeney said two-thirds of the layoffs were in teams “outside core development,” and noted this will leave some products and initiatives short-handed and at risk of being delayed.
As for how the pivot to a metaverse-inspired ecosystem is going, Sweeney said users now spend more time in third-party Fortnite games than first-party ones.
