Epic Games Trims Workforce by 16% Due to Unrealistic Metaverse Revenue Projections

cryptonews.com:

Epic Games, the creator of Battle Royale Smash, Fortnite, is cutting off approximately 830 staff, or 16% of its workforce, as it looks to reduce its costs and create a viable financial ecosystem for the company.

On Thursday, CEO Tim Sweeney confirmed this in a memo later in a blog post. He attributed the cause to be due to overspending “ way more than they earn” and their unrealistic expectations from metaverse-inspired revenue. 

“For a while now, we’ve been spending way more money than we earn, investing in the next evolution of Epic and growing Fortnite as a metaverse-inspired ecosystem for creators.” 

Tim Sweeney stated that Epic, the Unreal Engine development platform, has been actively implementing cost-saving measures in areas such as marketing and events. However, he emphasized that despite these efforts, layoffs were deemed necessary to achieve financial stability.

“I had long been optimistic that we could power through this transition without layoffs, but in retrospect, I see that this was unrealistic.”

Sweeney also pointed out that Epic has ventured into the creator economy sector, enabling players to create and sell their own in-game content while retaining a 40% share of the revenue. This move has contributed significantly to the company's recent expansion. Nevertheless, it has also led to narrower profit margins, impacting Epic's capacity to sustain its workforce due to the comparatively lower earnings from the creator content revenue-sharing model.

“Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics,” Sweeney said. “We concluded that layoffs are the only way."

The video game industry has faced a challenging year, with several major developers and