Fortnite maker Epic Games is laying off 16% of its workforce, impacting 870 people

Epic Games is laying off 16% of its employees, impacting about 870 people, the Fortnite maker announced on Thursday. The company also announced that it’s divesting Bandcamp, an online audio distribution platform it acquired last year, and spinning off most of SuperAwesome, a kid-safe technology developer that it acquired in 2020. The layoffs news was first reported by Bloomberg.

“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,” Epic Games CEO Tim Sweeney wrote in a memo to employees. “I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see that this was unrealistic.”

Sweeney went on to note that the company had been “making ongoing efforts to reduce costs, including moving to net zero hiring and cutting operating spend on things like marketing and events.” Despite these efforts, the company ended up “far short of financial sustainability” and Epic concluded that layoffs were the next logical step. Sweeney says that conducting the 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 now be spun out as an independent company under the SuperAwesome brand, led by its current CEO Kate O’Loughlin.

“We’re cutting costs without breaking development or our core lines of businesses so we can continue to focus 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 land on schedule, and some may not ship when planned because they are under-resourced for the time being. We’re ok with the schedule tradeoff if it means holding on 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 its most successful initiatives, which includes the next Fortnite Season and Fortnite Chapter 5, Del Mar, Sparks and Juno. Epic says its release schedules for these projects remain unchanged.

The news comes as Epic announced today that Fortnite V-Bucks will increase in price in the United States and several other countries on October 27. In the blog post, the company explained that the price increase of around 12% to 15% per bundle is due to “economic factors such as inflation and currency fluctuations.”

The layoffs also come as Epic filed a cert petition with the Supreme Court on Wednesday, asking the court to reexamine a 2021 ruling over Apple’s App Store policies. If the Supreme Court decides to hear the case, it would reopen a legal battle between Epic and Apple that began back in August 2020.

In today’s newsroom post, Epic notes that it’s “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.”