Epic Games cuts 16% of staff, admits: Developing a virtual universe in Fortnite is not feasible.

Epic Games released a statement a few days ago, announcing a 16% reduction in workforce, which is approximately 830 employees. They also mentioned plans to sell the recently acquired music platform Bandcamp and to split their advertising business SuperAwesome. The company stated that they have been spending more money than they have been earning during this period.

Epic Games: Company Expenses Exceed Revenue

Epic Games recently announced the layoff of 16% of its workforce, around 830 employees, citing the need to stabilize the company's financial situation.

CEO Tim Sweeney stated in a letter addressed to internal staff:

Epic has been trying to develop Fortnite into a creator ecosystem inspired by the virtual world, resulting in expenses surpassing revenue during this time.

He added, "I was optimistic that we could accomplish this transition without layoffs, but I've come to realize that's not realistic."

Tim Sweeney: Shift in Business Model

Sweeney insists that the creator ecosystem has been a successful initiative, allowing creators to generate and sell content to earn revenue share, providing Fortnite with a stable but lower-margin business:

The significant shift from the business model of revenue from in-game items to creator revenue share will require us to make structural adjustments.

In addition, Sweeney mentioned the sale of music company Bandcamp, and the separation of most of the marketing business of SuperAwesome from Epic Games to become an independent company under that brand.

A silver lining in the unfortunate situation is that departing Epic Games employees will receive 6 months' salary as severance pay; employees residing in the US, Canada, and Brazil will also receive an additional 6 months of paid healthcare services.

Epic Games also mentioned in the press release that they will provide services such as career transition and visa support as much as possible to their employees.

Where is Epic Games, the Advocate of the Metaverse, Heading?

Previously reported, Epic Games, which has been collaborating with top luxury conglomerate LVMH and sports goods giant Nike in recent months, seems to still be dedicated to building and optimizing consumer experiences related to the metaverse and digital technology.

The former utilizes Epic Games' unique game development engine Unreal Engine to provide LVMH consumers with exclusive and immersive experiences such as 360-degree virtual fitting rooms and fashion shows.

As for the latter, Epic Games has managed to introduce Nike Air Max series sneakers into Fortnite through NFTs, incorporating personal avatars and wearable accessories.

Meanwhile, Tim Sweeney previously welcomed blockchain games and sarcastically responded to foreign media's criticism of the death of the metaverse, a stark contrast to the current layoff situation.