Expensive Metaverse venture forces Epic Games to lay off 16% of its staff.
Epic Games, the powerhouse behind the video game Fortnite, announced a significant downsizing of its staff.
The company is letting go of approximately 830 employees, which accounts for 16% of its total workforce. The layoffs come in the wake of financial constraints, largely due to overestimated earnings from ventures into the Metaverse.
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Epic Games CEO Tim Sweeney issued a memo on September 28th, addressing the layoffs as a regrettable but necessary action.
I had long been optimistic that we could power through this transition without layoffs, but in retrospect, I see that this was unrealistic. We concluded that layoffs are the only way and that doing them now and on this scale will stabilize our finances.
Despite the growth driven by the Fortnite Creator program, allowing gamers to craft and market their own in-game merchandise, the financial structure of Epic Games has been adversely affected.
This workforce reduction is not the only significant change at Epic Games. An additional 250 jobs are set to disappear as the company revealed plans to divest its recently acquired music platform, Bandcamp, and to separate its marketing firm, SuperAwesome.
Epic Games is offering a generous severance package to those who are being laid off, including six months of salary and extended healthcare benefits for employees in the United States, Canada, and Brazil.
Epic Games' overly optimistic expectations regarding revenue from Metaverse-related initiatives have led to financial imbalance, prompting staff reductions and other organizational changes. The move reveals the risks associated with companies over-committing resources in emerging digital landscapes.
