Epic Games, creator of battle royale shooter smash Fortnite and the Unreal Engine development platform, is laying off roughly 16% of its staff, CEO Tim Sweeney confirmed in an email republished as a blog post Thursday.
Approximately 830 employees are affected, with two-thirds of that number being in departments outside of Epic’s core development teams. Bloomberg first reported the news Thursday ahead of the posting.
“For a while now, we’ve been spending way more money than we earn,” Sweeney wrote. “I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see that this was unrealistic.”
Sweeney shared that Epic had been funding Fortnite’s growth in the creator economy sector, but said that its creator content revenue-sharing model has led to less income to keep Epic staff onboard.
“Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics,” Sweeney said. “We concluded that layoffs are the only way.”
The publisher has also stopped growing its headcount and reduced the amount it spent on marketing and events, according to the memo. It appears that next week’s Unreal Fest 2023 event in New Orleans will continue as planned, however. The firm says it is also still hiring, but will keep the total number of staff at post-layoff levels.
Epic Games has also divested from music platform Bandcamp through a sale and will spin off “most of” creator marketing firm SuperAwesome, which means that about 250 staff from those firms won’t be working under the Epic Games umbrella anymore. Epic’s post suggests that those 250 employees are separate from the layoffs, but a representative did not clarify when asked by Decrypt.
It has been a difficult year for many game developers and publishers. Industry giants like Riot Games, Ubisoft, and Activision Blizzard have laid off staff this year, while Romino Games and Volition shut down due to financial issues last month.
Sega has canceled multiple planned games due to economic losses, Sony studio Final Strike reportedly canceled a shooter game and laid off staff, and Unity has added a new controversial fee set to take effect next year—a move that raised further financial concerns among developers.
After online debate as to whether the video games industry might be “recession-proof,” it appears that no one—not even a $31.5 billion-dollar studio like Epic Games—is immune to the impact of a broader industry downturn.
