Epic Games is laying off more than 800 people: 'We've been spending way more money than we earn'

Fortnite and Unreal Engine maker Epic Games has confirmed that it is laying off approximately 830 employees, representing roughly 16% of Epic's total workforce.

The layoffs were initially reported by Bloomberg, which said employees were informed of the layoffs via an internal memo, followed by an all-hands meeting. Staff being let go will be given six months of severance pay and health insurance, and accelerated stock vesting, meaning they'll take ownership of shares in the company they've earned through their employment more quickly than normal.

The memo sent to employees by Epic CEO Tim Sweeney was later posted on the Epic Games website.

"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," 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.

"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."

Epic is also spinning off some of its businesses as a result of its financial struggles. Bandcamp is going to music marketplace Songtradr, while "most of Superawesome" including its advertising company is going independent. Those spinoffs will reduce Epic's employee count by another 250.

Sweeney said that roughly two-thirds of the cuts took place "in teams outside of core development," and its "core lines of businesses," including Fortnite, Rocket League, Fall Guys, Unreal Engine, the Epic Games Store, and its publishing and online services, will not be impacted. "Some of our products and initiatives will land on schedule, and some may not ship when planned because they are under-resourced for the time being," he wrote. "We’re ok with the schedule tradeoff if it means holding on to our ability to achieve our goals, get to the other side of profitability and become a leading metaverse company."

In an FAQ following Sweeney's statement, Epic said there will be no further layoffs, as this round of cuts will "financially stabilize the business," and that it will continue hiring for "critical roles" while maintaining the company's size at its current reduced level. The FAQ also touched on the question of Epic's ongoing legal dispute with Apple and Google, which have undoubtedly been extremely expensive.

"We've been taking steps to reduce our legal expenses, but are continuing the fight against Apple and Google distribution monopolies and taxes, so the metaverse can thrive and bring opportunity to Epic and all other developers," Epic said.

The day before the layoffs were announced, Epic formally filed an appeal in its case against Apple with the US Supreme Court.

The layoffs also come one day after Epic announced an increase in the price of V-bucks, the in-game currency used by Fortnite. The cost of V-bucks packs in Czech Republic, Denmark, Eurozone countries, Hungary, Japan, Norway, Poland, Romania, Sweden, Turkey, and the United States will be going up on October 27 due to "economic factors such as inflation and currency fluctuations." The cost of a 1,000 V-bucks bundle will rise from $7.99 to $8.99, for instance, while the high-end 13,500 V-bucks bundle will rise from $79.99 to $89.99.

The cuts at Epic follow numerous other game industry layoffs that have occurred in 2023. Earlier today Creative Assembly announced that layoffs "may" happen following the cancellation of the multiplayer shooter Hyenas, and yesterday Activision let go a "small number" of employees from its Hearthstone team, and last week Baldur's Gate: Enhanced Edition studio Beamdog cut 26 employees. Electronic Arts, Take-Two, CD Projekt, Meta, BioWare, Firaxis, and Unity have also all imposed significant employee cuts this year.