Is Epic Games in Trouble? Fortnite Maker to Lay Off Over 800 Employees After Spending “Way More Money” Than Earning Profit

It seems like the problem of job cuts is also affecting the gaming industry at the moment and at a rapid pace. Following major companies laying off their employees, a shocking piece of information, this update was just recently shared on the internet. Fortnite maker Epic Games is reportedly set to remove hundreds of employees.

It looks like Epic’s team has been failing to make profits consistently for a long time now. Hence, they will be parting ways with 16% of their employees to cut costs.

Epic Games crisis brewing?

Tim Sweeney is the founder and CEO of Epic Games, and also the creator of Unreal Engine. The latter is one of the most used game-development platforms in the world. Speaking of Tim, he recently reached out to his team through a memo in order to share an unfortunate update.

Going by the report from media outlet Bloomberg, Tim wrote in his memo that “we’ve been spending way more money than we earn”. He mentioned that he was hoping to “power through this transition without layoffs,” but it’s not possible anymore.

The job cuts will end up resulting in the removal of 870 employees, to be precise. This is according to sources familiar with the entire situation who shared the information with Bloomberg.

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Epic’s recent growth has been due to the Fortnite Creator program, according to Tim. It enables the players to create and sell their own content inside Fortnite itself. The publisher gives 40 percent of profit to the creators. Per Sweeney, it’s “a lower margin business” compared to the other revenue streams inside the battle royale.

What’s the actual cause of Epic missing out on profits?

Previously established revenue streams like purchasing skins in order to customize characters enabled a rapid expansion for Epic. However, it’s not the case anymore, according to the CEO. That’s because the lower profits can’t help the company at its current size in terms of having a larger workforce.

Fortnite has over 400 million players across the globe. So for a game of this size, the fact that the company is facing a crisis that will require employee lay off is definitely cause for concern.

Those affected will receive six months of health insurance alongside increased stock vesting. That aside, it will be crucial to see how Epic’s team handles the ongoing crisis going forward.

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