‘Fortnite’ Studio Epic Video games Cuts 830 Jobs, Plans to Divest Bandcamp

Epic Video games — the studio behind the Unreal Engine and the online game Fortnite — is shedding about 830 staff, 16 p.c of its workforce, in a pivot of its enterprise technique.

In a word to staff Thursday, Epic CEO Tim Sweeney outlined the plan, which incorporates shifting Fortnite to being a creator-driven platform.

“For some time now, we’ve been spending far more cash than we earn, investing within the subsequent evolution of Epic and rising Fortnite as a metaverse-inspired ecosystem for creators,” Sweeney wrote. “I had lengthy been optimistic that we might energy by way of this transition with out layoffs, however on reflection I see that this was unrealistic.”

As well as, Epic Video games will divest its Bandcamp audio distribution platform (will probably be acquired by Songtradr, a music market), and its SuperAwesome promoting enterprise might be spun out as its personal firm as its founders have reacquired the agency.

“Epic of us around the globe have been making ongoing efforts to scale back prices, together with shifting to internet zero hiring and chopping working spend on issues like advertising and occasions,” Sweeney wrote. “However we nonetheless ended up far wanting monetary sustainability. We concluded that layoffs are the one manner, and that doing them now and on this scale will stabilize our funds.”

As for Fortnite, Sweeney writes that whereas it “is beginning to develop once more, the expansion is pushed primarily by creator content material with important income sharing, and it is a decrease margin enterprise than we had when Fortnite Battle Royale took off and commenced funding our enlargement. Success with the creator ecosystem is a superb achievement, however it means a significant structural change to our economics.”

Learn Sweeney’s word, under.

Hello everybody,

As we shared earlier, we’re shedding round 16% of Epic staff. We’re divesting Bandcamp and spinning off most of SuperAwesome.

For some time now, we’ve been spending far more cash than we earn, investing within the subsequent evolution of Epic and rising Fortnite as a metaverse-inspired ecosystem for creators. I had lengthy been optimistic that we might energy by way of this transition with out layoffs, however on reflection I see that this was unrealistic.

Whereas Fortnite is beginning to develop once more, the expansion is pushed primarily by creator content material with important income sharing, and it is a decrease margin enterprise than we had when Fortnite Battle Royale took off and commenced funding our enlargement. Success with the creator ecosystem is a superb achievement, however it means a significant structural change to our economics.

Epic of us around the globe have been making ongoing efforts to scale back prices, together with shifting to internet zero hiring and chopping working spend on issues like advertising and occasions. However we nonetheless ended up far wanting monetary sustainability. We concluded that layoffs are the one manner, and that doing them now and on this scale will stabilize our funds.

We’re additionally making some divestitures. Bandcamp is becoming a member of Songtradr, a music market firm supporting artists. SuperAwesome’s promoting enterprise will turn out to be an unbiased firm below the SuperAwesome model, led by their present CEO Kate O’Loughlin. Children Net Companies (KWS), the father or mother verification and consent administration toolset, will stay a part of Epic. 

Saying goodbye to individuals who have helped construct Epic is a horrible expertise for all. The comfort is that we’re adequately funded to assist laid off staff: we’re providing a severance bundle that features six months base pay and within the US/Canada/Brazil six months of Epic-paid healthcare. We’re providing to speed up individuals’s inventory choice vesting schedule by way of the top of 2024 and are giving two further years from right this moment to train the choices. Within the US we’re additionally providing to vest any unearned revenue sharing from their 401k. And we’ll present advantages together with profession transition companies and visa assist the place we will.

For these nonetheless at Epic, you’ll hear extra from senior leaders in regards to the path ahead in your crew. Epic’s prospects for the long run are sturdy. Now we have wonderful recreation experiences throughout a number of platforms. We’ve constructed the perfect engine on the earth, and might be internet hosting Unreal Fest subsequent week to deliver the group collectively and highlight the issues they’re constructing with Unreal Engine and UEFN. Creators are making a dwelling constructing for the Fortnite ecosystem, with time in third-party video games now exceeding first-party. 

We’re chopping prices with out breaking improvement or our core traces of companies so we will proceed to deal with our formidable plans. About two-thirds of the layoffs had been in groups exterior of core improvement. A few of our merchandise and initiatives will land on schedule, and a few might not ship when deliberate as a result of they’re under-resourced in the interim. We’re pleased with the schedule tradeoff if it means holding on to our capability to realize our objectives, get to the opposite aspect of profitability and turn out to be a number one metaverse firm. 

-Tim