Epic Games, the creator of the popular Fortnite online gaming platform, is set to undergo significant organizational changes, including layoffs affecting approximately 16 percent of its workforce, amounting to about 830 employees.
The US-based Epic Games is also divesting the online music platform Bandcamp and planning a spin-off for most of SuperAwesome, a child-safety tool platform acquired by Epic Games in 2020.
Epic Games said Bandcamp is joining Songtradr, a music marketplace company supporting artists. SuperAwesome’s advertising business will become an independent company under the SuperAwesome brand, led by their current CEO Kate O’Loughlin. Kids Web Services (KWS), the parent verification and consent management toolset, will remain part of Epic.
Epic Games CEO Tim Sweeney conveyed the news to employees, attributing the need for these changes to the evolving dynamics of their flagship game, Fortnite. While Fortnite’s growth is rebounding, Tim Sweeney explained that the growth is primarily propelled by creator content with substantial revenue sharing, a business model with lower profit margins compared to the initial success of “Fortnite Battle Royale.”
Sweeney clarified that a majority of the layoffs were targeted outside of the core development teams, aiming to optimize operations and steer the company towards sustained profitability.
What does this mean for Epic’s priorities?
Epic Games said it is still focused on shipping must succeed initiatives: the next Fortnite Season and Fortnite Chapter 5, Del Mar, Sparks, and Juno. Their schedules remain in place.
Epic Games said it will be continuing to invest in online games with Fortnite first-party development, the Fortnite creator ecosystem and economy, Rocket League and Fall Guys; and services for developers including Unreal Engine for games and enterprise, Epic Games Store, Epic Games Publishing, Epic Online Services, Kids Web Services, MetaHuman, Twin Motion, Quixel Mega Scans, Capturing Reality, ArtStation, Sketchfab and Fab.
Epic Games said it will be continuing to hire for critical roles.
The online gaming industry is facing challenges due to a slowdown in spending, as cost-conscious gamers become more discerning in their selection of popular titles. Established video game publishers are contending for market share against newer players like Warner Bros Discovery, whose game “Hogwarts Legacy” based on the “Harry Potter” universe has seen considerable success, Reuters news report said.
Epic Games has also been embroiled in a protracted legal battle with Apple since 2020. The dispute centers on Epic Games’ allegations that Apple’s practice of imposing commissions of up to 30 percent on in-app payments across iPhones and other devices violates U.S. antitrust rules. Recently, Apple petitioned the U.S. Supreme Court to nullify an order mandating changes to its App Store rules arising from the antitrust case.
These strategic adjustments by Epic Games come at a crucial juncture for the gaming industry, signaling a concerted effort to adapt to market shifts and sustain growth in the face of evolving consumer preferences and competitive dynamics.