Bad news continues in the video game sector and, after a few layoffs on theEmbraceit is now Epic Games which makes the headlines for the same reason, but on a much larger scale… Following information circulating on Twittersome of which were erroneous, things were clarified via a communicated official press release.
To begin with, these are no less than 870 layoffs what is the giant planning behind Fortnite and theUnreal Enginein order to reduce operating costs, which represents approximately 16% of the workforce. Among those affected by this dismissal, two thirds of the jobs do not concern main development teams. As for Mediatonic (Fall Guys), the studio was severely impacted as reported Jason Schreier, but not to the point that he lowers the curtain. So, getting bought out in 2021 wasn’t such a good idea… Here’s a telling photo taken by the game director and screenwriter at MediatonicEd Fear:
Apparently, the recent growth ofEpic Games mainly took place thanks to the program Fortnite Creator, which pays 40% of revenues to content creators, therefore keeping a good share of the pie. And yet, Tim Sweeney describes this as “a low-margin business” unlike other sources of gaming revenue, which have allowed for rapid expansion. Except that profits can no longer support the company in its current size…
Please note, however, that all staff affected by these departures will receive six months of severance pay, as well as just as much health insurance and accelerated share acquisitions for some depending on the country. Even if they aren’t doing so badly, they would probably have preferred to keep their jobs. No other wave of departures is planned. However, always with the aim of reducing costs, Epic Games will also separate from two companies that it had acquired in recent years by selling the music site Bandcampsold to Songtradrand by making SuperAwesome an independent subsidiary, which will represent 250 fewer jobs to cover.
Here is what the CEO Tim Sweeney wrote to employees in an internal email:
Hello everybody,
As we shared earlier, we are laying off approximately 16% of Epic employees. We are divesting Bandcamp and splitting off most of SuperAwesome.
For some time now we have been spending way more money than we make, let’s invest in the next evolution of Epic and grow 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 in retrospect I see that was unrealistic.
Although Fortnite is starting to grow again, that growth is primarily driven by creator content with significant revenue sharing, and it’s a lower margin business than we had when Fortnite Battle Royale took off and started to finance our expansion. The success of the creator ecosystem is a great achievement, but it means a major structural change in our economy.
Epic staff around the world have made ongoing efforts to reduce costs, including moving to net-zero hiring and reducing operating expenses for things like marketing and events. But we found ourselves still far from financial sustainability. We have concluded that layoffs are the only solution and that doing them now and on this scale will stabilize our finances.
We are also carrying out some disposals. Bandcamp joins Songtradr, a music marketplace company supporting artists. SuperAwesome’s advertising business will become an independent company under the SuperAwesome brand, led by its current CEO Kate O’Loughlin. Kids Web Services (KWS), the parent verification and consent management toolset, will remain an integral part of Epic.
Saying goodbye to the people who helped build Epic is a terrible experience for everyone. The consolation is that we are adequately funded to support laid-off employees : We offer a severance package that includes six months of base salary and, in the United States, Canada and Brazil, six months of healthcare paid by Epic. We are proposing to accelerate the vesting schedule for the stock options to the end of 2024 and allowing two additional years from today to exercise the options. In the United States, we also offer to transfer any unearned profit sharing to their 401(k) (a retirement savings plan, Editor’s note). And we will offer benefits, including career transition services and visa assistance, where we can.
For those still at Epic, senior leadership will tell you more about the path forward for your team. Epic’s future prospects are strong. We deliver incredible gaming experiences across multiple platforms. We’ve built the best engine in the world and will be hosting Unreal Fest next week to bring the community together and highlight the things they’re building with Unreal Engine and UEFN. Creators are creating a living building for the Fortnite ecosystem, with time spent in third-party games now exceeding that of first-party games.
We reduce costs without interrupting development or our core business areas so that we can continue to focus on our ambitious projects. About two-thirds of the layoffs involved teams outside of core development. Some of our products and initiatives will arrive on schedule, and others may not ship on schedule due to a lack of resources at this time. We’re OK with the schedule trade-off if it means retaining our ability to achieve our goals, moving to the other side of profitability, and becoming a leading metaverse company.
-Tim
At the same time, Epic Games continues to offer games every week on theEGS, which inevitably costs him money. The price of V-Bucks of Fortnite will increase in several European Union countries due to inflation. It is also possible to obtain at the house of Micromaniaon Amazon or to the Fnac.
Read also: SAG-AFTRA UPDATE: after Hollywood, a strike in the video game industry on the horizon?
| Alexandre SAMSON (Omega Law) Responsible Proofreader – Editor | ||
| Addicted to Assassin’s Creed and Destiny, big fan of RPGs and passionate about video game experiences in general. Reader of comics (DC) and various mangas (One Piece!). Chemist by training and Whovian at heart. | ||
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