Epic Games lays off 900, partially due to Fortnite's "creator-driven" shift

[Update: In a leaked email sent to staff, Epic Games CEO Tim Sweeney provided additional context for the decision and noted that "for a while now, we've been spending way more money than we earn." The story below has been updated to reflect this information.]

Fortnite creator Epic Games has laid off a significant number of staff across the entire company, and has made further reductions across the business impacting Bandcamp and other subsidiaries. Per Bloomberg, the cuts are said to have affected around 900 (or 16 percent) of employees.

The news was revealed to staff via an all-hands staff meeting at the North Carolina developer, with a source confirming to Game Developer that Epic Games locked down its company slack prior to the meeting to ensure "verified, relevant updates from leadership."

In an internal email sent to staff, Epic Games CEO Tim Sweeney confirmed the scale of the layoffs to be 16 percent, and explained that it had become too difficult to "power through" a transitional period as costs had long outweighed income due to investment into "the next evolution of Epic" and Fortnite's future "as a metaverse-inspired ecosystem for creators."

That shift for Fortnite, and the difference in monetization gains within a community creator-powered ecosystem, seem to be a driving factor behind the decision.

"[Fortnite's] growth is driven primarily by creator content with significant revenue sharing, and this is a lower margin business than we had when Fortnite Battle Royale took off and began funding our expansion," explained Sweeney. "Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics."

In addition to the layoffs, sources and an internal email confirm that Epic plans to divest Bandcamp, selling the music platform to Songtradr. SuperAwesome, a company focused on building tools to make games safer for children that Epic acquired in 2020, will remain partially under Epic Games while SuperAwesome's advertising business will become an independent company.

"We're cutting costs without breaking development on our core business so we can continue to focus on our ambitious plans," added Sweeney. He goes on to note that two-thirds of the layoffs were "in teams outside of core development," and earlier in the email mentions that those impacted will be given severance agreements totaling six months of base pay, and six months of Epic-paid healthcare in the US, Canada, and Brazil.

Epic Continues a Trend of Major Layoffs in the Game Industry

Epic's layoffs continue a massive series of job cuts across the entire game industry throughout 2023. Earlier in the week, Activision Blizzard laid off 10 staff from its Hearthstone team; last week, Crystal Dynamics made reductions as part of the layoffs made across various subsidiaries owned by parent company Embracer.

Its reductions are on the larger end of cuts this year: Microsoft has laid off over 10,000 workers throughout the year, and Meta similarly cut thousands of jobs months later. Most other studios have let go of dozens of employees.