Tim Sweeney named the reasons why Epic Games went to lay off 16% of employees
A letter from the founder and CEO of the company Tim Sweeney has appeared on the official website of Epic Games. In it, he talked about why the authors of Fortnite and Unreal Engine took up abbreviations.
The main points of the letter are as follows:
- Epic Games started spending much more than it earned;
- There are two main items of expenditure: preparing Epic Games itself for the next "evolution" (whatever that means) and trying to turn Fortnite into a UGC ecosystem resembling a metaverse;
- investments in Fortnite are bearing fruit, the project's indicators are growing again;
- the problem is that the growth is mainly provided by user-generated content, a significant percentage of sales from which goes to the authors;
- Previously, when the company sold combat passes, it earned more;
- Epic Games understands that the transition to UGC dictates the need to review the economics of the company's processes;
- initially, Sweeney believed that layoffs could be avoided, but now he also notes that he was overly optimistic, and the assessment of the situation was unrealistic;
- previously, in an attempt to prevent layoffs, the company tried to minimize the costs of marketing, events and hiring the necessary staff;
- it didn't help — Epic Games was losing money anyway;
- as a result, the management of Epic Games came to the conclusion that the only way to achieve financial stability is to reduce staff and sell/say goodbye to some assets;
- 16% of the team was cut (as Sweeney notes, this is somewhere in the region of 830 people). Two thirds of those fired were members of teams not related to the development of key projects;
- as for the abandonment of assets, the Bandcamp music store was transferred to the Songtradr platform; and the SuperAwesome advertising provider gained independence (250 people are leaving Epic Games just as part of the transfer of these startups);
- The cuts did not affect key aspects of the company's business;
- Epic Games plans to continue investing in the development of Fortnite, in its ecosystem, as well as in Rocket League, Fall Guys, Unreal Engine, Epic Games Store, Epic Games Publishing, Epic Online Services, Kids Web Services, MetaHuman, Twin Motion, Quixel Mega Scans, Capturing Reality, ArtStation, Sketchfab and Fab;
- The company assures that there will be no more layoffs, the only reason for the current ones is to "strengthen the cost structure";
- The company continues to hire staff for critical positions.
