After an increase in V-Bucks pricing to fund Fortnite, Epic Games CEO Tim Sweeney has announced that over 1,000 employees are being laid off today.
Apparently, the “downturn in Fortnite engagement,” which seemingly began last year, has led to the company “spending significantly more than we’re making, and we have to make major cuts to keep the company funded. This layoff, together with over $500 million of identified cost savings in contracting, marketing, and closing some open roles, puts us in a more stable place.”
Sweeney also cited other “industry-wide challenges,” including the weaker sales of current-gen consoles compared to the previous generation, “tougher cost economics,” and overall lower spending. Of course, it also doesn’t help that Fortnite has “other increasingly engaging forms of entertainment” to compete with.
Then there are all the other problems that the free-to-play title has faced, such as consistently delivering “magic with every season” and only recently returning to mobiles. “We have taken a lot of bullets in a battle, which is only in the early days of paying off for ourselves and all developers.” So what’s the plan going forward?
“What we now need to do is clear: build awesome Fortnite experiences with fresh seasonal content, gameplay, story, and live events; accelerate developer tools with greater stability and capability as we evolve from Unreal Engine 5 and UEFN to Unreal Engine 6. And we’ll be kicking off the next generation of Epic with huge launch plans towards the end of the year,” said Sweeney.
Of course, this isn’t the first time that the company has seen mass layoffs. In 2023, 830 employees, roughly 16 percent of the total workforce, were let go due to Epic “spending way more money than we earn.” It echoes the same sentiment as today, only with Fortnite having lower engagement.
Recently laid-off employees will benefit from a severance package with four months’ pay (with further amounts “based on tenure”) and six months of health care coverage in the US. “We’ll also accelerate their stock options vesting through January 2027 and extend equity exercise options for up to two years.” More details will be revealed in an upcoming meeting on March 26th.
Interestingly, Sweeney said that the layoffs were unrelated to AI. “To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can.” Of course, you can’t fault players for being skeptical, especially since AI-generated art was discovered in-game with Season 7.
