Fortnite maker Epic Games, worth billions, cuts its staff by 16%

Epic Games, which makes Fortnite and Unreal Engine, is laying off a devastating 16% of its workforce, leaving roughly 830 workers without jobs, Management reportedly emailed staff Thursday to share the news. Bloomberg News first reported the layoffs before Epic Games published its internal memo online.

“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,” CEO Tim Sweeney wrote 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.”

Reached for comment, an Epic Games representative pointed Polygon to Sweeney’s memo.

Epic Games employees impacted by the layoffs will get six months of severance and health benefits, Sweeney wrote. The company is also expected to “divest” from two acquisitions, by selling recently unionized music site Bandcamp and “spinning off” most of its marketing company SuperAwesome. Roughly 250 people are leaving Epic Games due to the divestitures.

Epic Games is valued at $31.5 billion, according to the Wall Street Journal. Fortnite alone generates billions of revenue each year — and is growing again, Sweeney said. This makes the Cary, North Carolina-based company one of the largest privately owned video game companies. Chinese tech conglomerate Tencent has owned 40% of Epic since 2012, when it paid $330 million for its stake, according to Tencent’s financial reports. CEO Tim Sweeney owns the majority of Epic Games’ remaining shares, Bloomberg said.

“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 wrote. “Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.”

Sweeney noted that “two-thirds” of the cuts were “outside of core development.” He wrote that some projects will stay on schedule, while others may be delayed. In an FAQ published after the announcement, Epic Games said its priorities remain on its “must succeed initiatives,” like Fortnite’s upcoming season and chapter, as well as upcoming projects codenamed “Del Mar,” “Sparks,” and “Juno.” Epic Games will continue to hire, and no other layoffs are expected.

Epic Games also addressed its ongoing legal battle with Apple: “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.”

The news of Epic Games’ mass layoff comes shortly after Sega announced the cancellation of loot shooter Hyenas, with job cuts expected at developer Creative Assembly. Sega said other European subsidiaries would see the impact of cuts, too. Just this month, Immortals of Aveum developer Ascendant Studios laid off half its staff, while gaming mega-publisher Embracer continued to ax jobs after rapid expansion and a botched $2 billion deal. Thousands of jobs were cut this year alone.

Despite 2023 being a great year for video game releases, the people who make games continue to face challenging working conditions and job insecurity.