Fortnite developer – Epic Games – has confirmed reports about laying off around 16% of its employees, affecting nearly 830 staff members.

Epic CEO Tim Sweeney said the company has been working towards reducing costs across the globe, including its transition to “net zero hiring and cutting operating spend on things like marketing and events.” However, Epic has been significantly short of financial sustainability, forcing the company to resort to layoffs in a bid to “stabilize” the finances.

‘Unrealistic’ Metaverse Goals

In a staff email shared on the company’s website, Sweeney admitted to spending “way more” money than the firm earned despite initially being optimistic about its ability to power through the transition without trimming the workforce.

The exec added that the move of growing Fortnite as a metaverse-inspired ecosystem for creators was “unrealistic” in retrospect.

“While Fortnite is starting to grow again, the growth is driven primarily by creator content with significant revenue sharing, and this is a lower margin business than we had when Fortnite Battle Royale took off and began funding our expansion. Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.”

All employees impacted by the job cuts will receive a severance package that includes six months of their base pay. They will also be provided with six months of healthcare coverage paid for by Epic Games in the United States, Canada, and Brazil.

In addition to the layoffs, Sweeney revealed the sale of Bandcamp for an undisclosed amount a mere 18 months after acquiring the platform. Music marketing company Songtradr is the new owner of Bandcamp.

Delving into Metaverse

The North Carolina-based video game development company secured $2 billion in funding for metaverse-related development led by Sony Group Corporation as well as KIRKBI in April 2022. The round pushed its valuation to a whopping $32 billion.

Later that year, Epic announced the launch of its first-ever NFT game, dubbed Blankos Block Party, on its Game Store.