Epic Games is laying off 16% of its employees, affecting about 870 people, the maker of Fortnite. Announce Thursday. The company also announced that it is divesting from Bandcamp, the online audio distribution platform it acquired last year, and spinning off most of SuperAwesome, a kid-safe technology developer it acquired in 2020. News of the layoffs was first reported by Bloomberg.
“For some time now, we have been spending more money than we make, investing in the next evolution of Epic and the growth of Fortnite as a Metaverse-inspired ecosystem for creators,” wrote Tim Sweeney, CEO of Epic Games. In a note For employees. “I have long been optimistic that we could get through this transition without layoffs, but in retrospect that was unrealistic.”
Sweeney went on to note that the company has been making ongoing efforts to reduce costs, including moving to net zero hiring and reducing operational spending on things like marketing and events. Despite these efforts, the company ended up “very far from financial sustainability” and Epic concluded that layoffs were the next logical step. Sweeney says making layoffs now and on this scale will stabilize the company’s finances.
As for Bandcamp and SuperAwesome, Bandcamp is joining Songtradr, a music marketplace company, while SuperAwesome’s advertising business will become an independent company under the SuperAwesome brand, led by its current CEO Kate O’Loughlin.
“We are cutting costs without disrupting development or our core business lines so we can remain focused on our ambitious plans,” Sweeney wrote. “About two-thirds of the layoffs were in teams outside of core development. Some of our products and initiatives will be delivered on schedule, and others may not ship as planned due to limited resources at the moment. We are OK with trading the schedule if it means Adhering to our ability to achieve our goals, get to the other side of profitability and become a leading Metaverse company.
The company says it’s focused on shipping initiatives that should succeed, which includes the upcoming Fortnite Season, Fortnite Chapter 5, Del Mar, Sparks, and Juno. Epic says its release schedules for these projects remain unchanged.
The news comes as an epic Announce Today Fortnite V-Bucks prices will go up in the US and many other countries on October 27th. In a blog post, the company explained that the price increase of about 12% to 15% per package is due to “economic factors such as inflation and currency fluctuations.”
The layoffs also come as Epic filed a petition with the Supreme Court on Wednesday, asking the court to reconsider a 2021 ruling on Apple’s App Store policies. If the Supreme Court decides to hear the case, it will reopen the legal battle between Epic and Apple that began in August 2020.
In today’s newsroom post, Epic notes that it is “taking steps to reduce our legal expenses, but continues to fight against the distribution and tax monopolies of Apple and Google, so that the Metaverse can thrive and provide opportunity for Epic and all other developers.”
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