Epic Games, the well-known game developer, recently disclosed a substantial reduction in its workforce, impacting roughly 16% of its staff, totaling 830 individuals. This strategic move is a response to the company's shift towards the metaverse economy.
In a communication to its employees, CEO Tim Sweeney explained the necessity of these layoffs, emphasizing their role in controlling the company's escalating costs and expenditures. Notably, approximately one-third of the affected workforce held development roles, while another 250 employees were associated with the Bandcamp and SuperAwesome departments.
The core reason behind this downsizing is primarily rooted in the financial implications of Epic Games' transition to a metaverse-centric business model. The company's ambitious transformation of Fortnite into a metaverse ecosystem for creators has incurred substantial expenses, particularly due to profit-sharing arrangements.
Sweeney remarked, "Although Fortnite is experiencing a resurgence driven by user-generated content, extensive profit-sharing arrangements are required." Consequently, the company's profit margins have contracted, making it unsustainable to maintain its current workforce structure.
Despite these developments, Epic Games remains committed to its ongoing legal disputes with tech giants Apple and Google, which have persisted for several years and generated substantial expenses. The company recognizes the need for cost reduction efforts while simultaneously continuing these protracted legal battles.
