Epic Games, the maker of popular video game “Fortnite,” has announced that it will be laying off around 830 employees, which accounts for approximately 16% of its workforce. In addition to the job cuts, the company also plans to divest its online music platform Bandcamp.
The decision to reduce staff comes as Epic Games looks to optimize its operations and focus on its core business. The company will also be spinning off most of SuperAwesome, a platform it acquired in 2020. SuperAwesome provides tools to developers for ensuring the safety of children using their products.
In an email to employees, CEO Tim Sweeney explained that while “Fortnite” is experiencing growth again, the revenue is primarily driven by creator content with significant revenue sharing. This type of business generates lower margins compared to when “Fortnite Battle Royale” first took off.
Sweeney clarified that the majority of the job cuts will be outside of the core development teams. The layoffs are intended to help the company achieve profitability in the long run.
The video game industry as a whole is currently facing challenges due to a slowdown in consumer spending. Gamers, wary of inflation, are becoming more selective in their purchases, favoring only the most popular titles. Legacy video game publishers are also facing increased competition from new market entrants, such as Warner Bros Discovery, whose “Hogwarts Legacy” game, based on the “Harry Potter” franchise, has been a major hit.
Epic Games has been embroiled in a legal battle with Apple since 2020. Epic Games filed a lawsuit against Apple, alleging that the tech giant’s practice of charging high commissions on in-app payments violated U.S. antitrust rules. Apple has recently asked the U.S. Supreme Court to strike down an order requiring changes to its App Store rules, which stemmed from the antitrust case.
As Epic Games navigates these challenges, the company is making strategic decisions to ensure its future success. By reducing staff and divesting non-core businesses, the company aims to streamline its operations and improve profitability. The layoffs, though difficult, are a necessary step for Epic Games to remain competitive in a rapidly evolving industry.
Ultimately, their goal is to continue providing quality gaming experiences to their dedicated player base, while adapting to changes in the market and overcoming legal challenges.