Epic Games Has Massive Layoffs

So, it looks like Unreal or Epic is doing massive layoffs. Um, so this is just now breaking here. So, this is a message from Tim Sweeney. And I find it really interesting that Epic decided to do these layoffs basically right when Unreal, right when Unity got killed uh on social media last week. It's almost like they're kind of hiding behind the fire of Unity, which, you know, I'm not saying they're doing anything wrong. They just chose the right time to do something they were probably planning on doing. Um, so let's go ahead and read uh Tim Sweeny's letter. So Tim, he's the CEO of Epic Games. And by the way, those you don't know Epic, uh they they they own Unreal Engine, right, which um is responsible for Fortnite. And Unreal is the competitor to Unity and well frankly it's what a lot of Unity developers including myself are considering right now. Um looking back and seeing Unity

and in their crazy pricing structure they proposed last week which they later walked back. Um people like me look at Unreal and we see a shiny object. We see something that's pure and um innocent. And I'm not saying that Tim Sweeny's doing anything wrong here necessarily. It is it is like sad though. And Unreal is is a company too. And in fact, [snorts] they're not 100% independent. And I know they are a private company, but uh they're actually owned um or owned in part by a massive massive um uh fund, and we'll talk about that in a second. So, here's what Tim Sweeney says. Hi everyone. As we shared earlier, we are laying off around 16% of Epic employees. We're devesting Band Camp and spinning off most of Super Awesome. For a while now, we've been spending way more money than we earn. And you know what? This is like a it's like a common theme. Um, Unity as well. They're just they're kind of they're looking for

profitability. Um, and it it's sad to see these these these companies that have these massive engines struggling financially because well, we all we all rely on these engines as game developers. Um, and so this is kind of spooky. Um, investing in the next evolution of Epic and growing Fortnite as a metaverse inspired ecosystem. Yay! Fun. Oh boy. Um, I had long been optimistic that we could power through the transition without layoffs, but in retrospect, I see that that was unrealistic. Oh my goodness. So, uh, not only is is Unity CEO, you know, kind of being retrospective here. Uh, 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. You know, I really appreciate Tim's being forthright about

Fortnite. Uh because well when we think about Unity and what they they did last week with their pricing structure, they were looking for profitability, but they didn't really clear up what everybody I guess knew. Everybody knew Unity needs to be profitable. Unity needs to make money. Um and they're just going to look for income and they don't really know where to find it. So, they're going to try and throw a business model at us um and and hope that we don't see it for what it is, which is it's a cash grab, right? Um Tim's not doing this secretly. He's being forthright here and saying, "Hey, we need money and this is a lower margin business here." What does Tim have to say? While Fortnite is starting to grow again, the growth is driven primarily by creator content like we are discussing and this this is a lower margin business. Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics. And this is a a constant theme with the game

industry as a whole. We've got new AI technology. We've got the metaverse, right? Everyone was talking about the metaverse last year. I thought it faded, but it looks like a lot of these companies are starting to make shifts. We've got new VR technology. Um, and that includes Apple's headset, which I'm really skeptical about, but it looks like this VR uh metaverse ecosystem is starting to to build traction. We've also got subscription services, right? We've also got uh companies like Unity trying to make money from installs as opposed to, you know, a one-time fee. It used to be software was a one-time fee, then it became a subscription service, and now they're trying to make it per install, right? So, it looks like these tech companies are I I don't know. Like, it's almost as if they were operating with a ton of debt, building a customer base, and now they're trying to to to get the cash grab on their the customer

base that they were losing money on. Right? That's just my my sneaky suspicion here. Epic folks around the world have been making ongoing efforts to reduce costs, including moving to net zero hiring and cutting operating spendings on things like marketing and events. But we still ended up far short of financial stability. We concluded that layoffs are the only way. And again, looks like they're uh sharing this with us behind the fire of the Unity. Well, I won't swear the Unity Storm. While it's true that Epic Games owned Media Tonic, was hit very hard by today's mass layoffs, reports, and rumors that the entire studio was shuttered are not true. Okay, so it looks like Fall Guys is good. Okay. Services for developers, including Unreal Engine for Games and Enterprises, Epic Games Store, Epic Games Publishing, Epic Online Services, Kids Web Services, Metahuman, Twin Motion, Quixle, Capturing Reality, those are all good. SketchFab and Fab, those are all good.

So these stay the same. Unreal Engine apparently is good, right? It's it's it's totally fine. Um, according to this, we'll see. We are devesting from band camping, spinning off most of Super Awesome. We'll have a long company meeting later in October to talk about all of our efforts and priorities. So, what was the scope of the layoff? Looks like the layoff was 830 employees, 16%. Guys, this doesn't h this doesn't happen randomly. I I think the way these company I could be wrong here but I think what that happens is they plan on doing this. They are talking behind closed doors about you know a 16% cut and it looks like they found the week to do it right and they just went for it immediately after the the the Unity firestorm last week. About twothirds of the layoffs were in teams outside of core development. Around 250 people are leaving Epic through our divevestatures from Band Camp and Super Awesome. We're cutting costs without sacrificing

development or lines of business. So that means business functions are disproportionately impacted compared to development functions. Okay, so it looks like those are the only layoffs. Uh but there's there's plenty of people who are actually actual Epic Games employees. Molly Shepard Bowden says, "Three magnificent years as part of this team, but unfortunately I've been impacted by the layoffs at Epic Games today. I'm actively looking for new roles." Okay. I was swept up in the wave of Epic, this is from Jerica. I I was swept up in the wave of Epic layoffs. If anyone has any leads on an influencer relation type of opportunities, please let please let me know. So, this this was a an influencer relations gig. And that confirms um what Tim is saying here um that they're outside of core development. So, this is uh definitely sad. Um Mary Kish um I've worked with Mary before. She's great. Um my thoughts are with the people at Epic Games today. Everyone is truly impacted when this happens. even if they weren't affected, they feel the enormous weight of losing co-workers and friends and the stress that comes without with knowing

there is no job security. And I think overall, this is going to be a theme in the tech industry and the game industry as well. Um, times are changing. Um, I think AI is a big part of why we're going to slowly start seeing layoffs. Um, but also a lot of these companies are looking for for cash. They're looking for profitability. Um because the g it's just times are times in the game industry are just changing very quickly and I think it's it's definitely it was definitely evident with with Unity as well. So anyways guys just wanted to share that with you. I'll talk to you later. Uh, cheers.