Epic Games founder and primary stakeholder Tim Sweeney penned a lengthy blog post to explain yesterday's massive layoffs.
To start with, Sweeney said Epic has been spending more than it earned for a long time. He believed this phase could have been overcome without layoffs, but that proved to be wishful thinking.
Firstly, while the golden goose (Fortnite) is growing again, it is doing so primarily through the creator content enabled by the full Unreal Editor released late last year by Epic, with time spent in third-party games now exceeding that spent in the official modes crafted by the developer. A significant (40%) revenue split of the content made by Fortnite creators goes to them rather than Epic, which means reduced revenues for the Unreal Engine company.
According to Sweeney, attempts were made to reduce spending by cutting down on marketing initiatives and events, but that wasn't enough. As such, Epic decided to lay off 830 employees, around 16% of the total. They will receive a six-month severance of base pay, and employees located in the United States, Canada, and Brazil are also getting six months of healthcare paid by Epic.
However, two-thirds of the cuts were made in positions outside core development. This is where Sweeney gets optimistic again, talking about a bright future for the company since all the development and main initiatives remain in place. Of primary importance are the next Fortnite season, Fortnite Chapter 5, and expansions to the game like Del Mar (rumored to be a racing mode), Juno (a crossover with LEGO), and Sparks. All of these remain on schedule.
Epic will also continue to invest in Rocket League, Fall Guys (despite layoffs hitting Mediatonic, too), Unreal Engine, Epic Games Store, Epic Games Publishing (which is about to launch Remedy's Alan Wake 2), Quixel, MetaHuman, ArtStation, Sketchfab, and more. On the other hand, Bandcamp is being sold to Songtradr, while most of SuperAwesome is being acquired by that company's leadership.
Sweeney's legal fight against the Apple and Google monopolies is also set to continue, even though the Epic executive admitted that steps have been taken to reduce legal expenses. Still, Epic has just petitioned the US Supreme Court to hear its case against Apple.
Finally, Sweeney promises there won't be any more layoffs at Epic. However, we're seeing similar scenarios elsewhere: just yesterday, Creative Assembly was also affected.
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