Epic Games Slashes Workforce by 16% Due to Unrealistic Metaverse Revenue Expectations
Epic Games, the company behind the popular game Fortnite, has recently made the decision to lay off 16% of its workforce, which amounts to approximately 830 staff members. The reason behind this drastic move was the company’s unrealistic expectations of revenue from the metaverse, causing them to spend more money than they were earning.
CEO Tim Sweeney addressed the situation in a memo sent to Epic Games staff on September 29, stating that layoffs were necessary to stabilize the company’s finances. He admitted that he had been optimistic about powering through this transition without layoffs, but now realizes that it was not feasible.
Epic Games’ recent growth can be attributed to the Fortnite Creator program, where players can build and sell their own in-game content. However, this shift in focus has resulted in lower margins for the company. Sweeney acknowledged the success of the creator ecosystem but emphasized that it has brought about a major change in their economics.
Layoffs and Other Changes at Epic Games
In addition to the 16% workforce reduction, Sweeney announced that another 250 employees would be leaving Epic Games. The company has decided to sell the recently acquired music website Bandcamp and spin off its marketing company SuperAwesome, which specializes in child-safety technology and joined Epic in 2020.
As a gesture of support for the affected employees, Epic Games will provide six months of pay for those being laid off. Furthermore, employees residing in the United States, Canada, and Brazil will receive six months of paid healthcare.
About Epic Games and its Impact
Epic Games is not only known for Fortnite, but also for running the Unreal Engine, a video game development suite used in popular titles such as God of War and PlayerUnknown’s Battlegrounds. With approximately 400 million registered users, Fortnite has become a cultural phenomenon in the gaming world.
Overall, the decision to downsize was a necessary step for Epic Games to regain stability and align its expenses with the actual revenue being generated. While the company may have faced setbacks due to unrealistic expectations, it remains a significant player in the gaming industry.
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Editor’s Notes: VR Game News
It’s unfortunate to see Epic Games going through this challenging period with layoffs and workforce reductions. The gaming industry is highly competitive, and companies often face shifts and challenges as they navigate new opportunities, such as the metaverse. However, it’s essential to remember that setbacks can lead to new strategies and innovations.
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