Epic Games announces a 16% reduction in its workforce and a separation with the companies Bandcamp and SuperAwesome. The Fortnite Battle Royale game no longer brings in as much as hoped.
Going to war with Apple and Google clearly has a price to pay. The successful publisher of Fortnite Battle Royale, Rocket League And Fall Guys, Epic Games is in crisis. The company has just announced a 16% reduction in its workforce, which represents 870 layoffs. That’s not all, it is also separating from the company Bandcamp acquired in 2022. This online music platform well known to artists hosts thousands of original soundtracks for independent games. The SuperAwesome company will also be separated from Epic Games for the most part.
“We spent more than we earned”
In his press release, the president and founder of Epic Games Tim Sweeney explains the reasons for this crisis.
For some time now, we’ve been spending far more money than we make, investing in Epic’s next evolution and growing Fortnite as a metaverse-inspired ecosystem for creators. I have long been optimistic that we would be able to get through this transition without layoffs, but looking back, I realize that was not realistic.
It is more precisely this question of the growth of Fortnite and its ability to attract content creators that would pose a problem.
Although Fortnite is starting to grow again, that growth is primarily fueled by creator content with significant revenue share, and it’s a lower margin business than we had when Fortnite Battle Royale took off and started financing our expansion. The success of the creator ecosystem is a great achievement, but it involves a major structural change in our economy.
Fortnite increases its prices
A day before announcing this wave of layoffs, Epic Games adjusted the prices of microtransactions in most countries where Fortnite is present. In Europe, the price of 1000 V-bucks increases from 7.99 euros to 8.99 euros. Other options like the Battle Pass and other V-bucks packs are also increasing with the same trend.
It seems clear that Fortnite Battle Royale no longer generates as much money as during the pandemic. Since 2020, the game is no longer offered natively on iPhone. It is necessary to go through a solution of cloud gaming to play the game at Apple. On Android, the game is missing from the Google Play Store, but it is possible to install it from the Epic Games website. The publisher intentionally violated the conditions of the Apple App Store to demonstrate its limits, which earned it a ban from the platform.
There is no doubt that these obstacles have slowed down the company’s plans. Not to mention the costs invested in Tim Sweeney’s legal fight against Apple, which the employees had not necessarily requested.
Tim Sweeney keeps smiling
In his press release, Tim Sweeney wishes to reassure the reader, and undoubtedly investors, Epic Games is 40% owned by the Chinese giant Tencent Games. He is therefore optimistic.
Epic’s future prospects are strong. We deliver extraordinary gaming experiences across multiple platforms. We’ve built the best engine in the world and we’re hosting Unreal Fest next week to bring the community together and highlight the things they’re building with the Unreal Engine and UEFN. Creators make their living building for the Fortnite ecosystem, with time spent in third-party games now exceeding time spent in first-party games.
Solid future prospects, which will take place with a team reduced by 16%.