Epic Games, renowned for its creation of the immensely popular Fortnite and the Unreal Engine development platform, is navigating a significant restructuring, as confirmed by CEO Tim Sweeney in an email that has been subsequently published as a blog post.
This move entails a reduction of approximately 16% of its workforce, affecting roughly 830 employees.
Notably, two-thirds of those impacted occupy roles beyond the core development teams at Epic.
Tim shed light on the company’s rationale behind this decision, revealing that Epic had been channelling resources into fostering Fortnite’s growth within the creator economy sphere.
However, the revenue-sharing model associated with creator content has posed challenges in maintaining the existing staffing levels.
In response, Epic has implemented measures to curtail spending, including a halt to headcount expansion and reductions in marketing and event budgets, as articulated in the memo.
“For a while now, we’ve been spending way more money than we earn. I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see that this was unrealistic. Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics. We concluded that layoffs are the only way.”
Despite these adjustments, Epic Games emphasises its continued commitment to recruitment efforts, albeit with a goal of maintaining a staff size consistent with post-restructuring levels.
Furthermore, the company has recently undertaken divestment initiatives, such as the sale of music platform Bandcamp and the impending spin-off of “most of” creator marketing firm SuperAwesome.
Consequently, approximately 250 employees from these entities will no longer be part of the Epic Games workforce.
It is worth noting that the company’s statement suggests that these 250 positions are distinct from the layoffs, although specific clarifications were not provided when requested.
This restructuring at Epic Games serves as a noteworthy indication that even in an industry that has often been debated as “recession-proof,” the broader fluctuations in the gaming sector can indeed affect entities of significant stature, including a gaming giant with a valuation of $31.5 billion like Epic Games.