The maker of Fortnite, Epic Games, recently announced laying off employees, and if this makes you curious to find out- Is Epic Games going out of business, then this guide is for you!
Because of the rising inflation, many big businesses, including GameStop and other retailers, are going out of business. As saddening as this is, there is only so much that a company can do to save itself.
So what happened with Epic Games? Why is it laying off employees, and is it going out of business? Keep reading to find out!
Epic Games Is laying Off More Than 800 People
Very recently, Epic Games, the maker of Fortnight and Unreal engine, announced that they will be laying off 16% of its workforce; that’s about 830 employees.
Out of the 830 employees, two-thirds form a team that is outside of core development, and as a part of the move, all of them will be provided with the following:
- Severance package that would include six months base pay. And in the US/Canada/Brazil, they are offering six months of Epic-paid healthcare.
- In the US, they are offering unearned profit sharing from their 401k along with benefits such as visa support and career transition services where they can.
- Apart from this, Epic is also offering to accelerate people’s stock option vesting schedule through the end of 2024.
Why Is Epic Games Laying Off People?
In a letter to their employees, Tim stated that they have been spending way more than their earnings for a while now. They have invested a lot of money in Epic and in growing Fortnite as a metaverse-inspired ecosystem. He said they were optimistic that they would power through the transition without laying off employees, but now it seems unrealistic.
Although Fortnight has started to grow, it is driven by content creators with significant revenue sharing.
Sweeney also mentioned that they have been trying to reduce costs by cutting costs on marketing and zero hiring, but in spite of this, they are unable to make ends meet. And as such, they are left with no option but to lay off employees.
“Epic folks around the world have been making ongoing efforts to reduce costs, including moving to net zero hiring and cutting operating spend on things like marketing and events. But we still ended up far short of financial sustainability. We concluded that layoffs are the only way and that doing them now and on this scale will stabilize our finances.” – Tim Sweeny.
Is Epic Games Going Out Of Business 2023?
Because of Epic Games’ shocking move to lay off employees, you might be wondering Is Epic Games going out of business.
Epic games made a gross profit of $1.19 billion in 2021, which shows a decline of -28.74% from the prior year. In the past few years, Epic’s gross profit has gone down considerably.
Additionally, Epic Games was ordered to pay $520 million as a penalty over allegations of violating the Children’s Online Privacy Protection Act (COPPA). All these reasons have severely affected the earnings of Epic Games.
However, Epic Games is not going out of business, and by laying off 16% of its workforce, it has subsided its financial woes as of now.
What Will Epic Games Do Next?
Now that Epic has laid off so many employees as a part of its cost-cutting strategy, you might be wondering what it will do next.
- Epic Games confirmed that they will be focusing on shipping their succeed initiatives: Fortnite Chapter 5, the next Fortnite Season, and Sparks, Del Mar, and Juno.
- They are not going to cut on any core business and will continue to invest in Fortnite’s first-party development, including economy, Rocket League, Fall Guys, and the Fortnite creator ecosystem. And services for developers such as enterprise, Epic Games Publishing, Epic Games store, Unreal Engine for games, Epic online services, Kids Web Services, Twin Motion, MetaHuman, Quixel Mega Scans, Sketchfab, Capturing Reality, ArtStation, and Fab.
- Lastly, they would be spinning off most of SuperAwesome and will divest from Bandcamp.
Will There Be More Lay Offs?
As per the information available on Epic Game’s website, they will not be laying off more people.
These changes were made to stabilize the business, and having laid off 830 people, Epic Games has achieved its goal of making the cost structure more sustainable.
Is Epic Games Going Out Of Business? The question was legit to ask, considering the massive layoff the company did recently.
As a result of rising prices of everything and massive profit sharing with creators, among other expenses, are some of the reasons why Epic Games had to take such a dire step.
Although the company is not going out of business, it is surely struggling.
Why is Fortnite increasing its prices?
A day before announcing that Epic Games will be laying off employees, the company also announced that it will be increasing the price of V-bucks, the in-game currency used by Fortnite players. Fortnite has now increased the price of V-bucks by 12.5%, and this is because of the rising prices of everything right from subscription services to battle passes.
How much percentage does Epic takes?
As per sources, Epic lets the developers keep 88% of the revenue, while it takes only 12%.
Will Epic continue hiring?
As per the company’s website, Epic will continue to hire for critical roles. However, it will keep net-zero at its new size.