It seems that the period of tech layoffs has finally slowed down, but it's still not over. The industry is still trying to survive the current economy and sometimes needs to resort to reducing the workforce to stay afloat. Epic Games is among the latest to join the club of conducting layoffs.
The Layoff Will Impact 870 Employees
The company announced the layoffs on Thursday, which will affect about 870 of its employees who make up 16% of the workforce. It's part of the cost-cutting efforts that the Fortnite-maker is implementing to remain profitable.
CEO Tim Sweeney says that Epic Games has been spending more money than they earn as they invest in the next evolution of the company and growing Fortnite as a "metaverse-inspired ecosystem for creators," as per Tech Crunch.
Due to the circumstances, the video game developer had to resort to conducting layoffs. Sweeney stated that he had "long been optimistic" that they could power through the transition without reducing the workforce, but in retrospect, it was unrealistic.
Before Epic Games decided to take away the staff's jobs, they went with other measures such as moving to net zero hiring, as well as cutting operating spend on marketing and events. Still, the company was "far short of financial sustainability."
In the end, the company believed that the next logical step would be reducing the staff and that it would put Epic Games back on the line of financial stability. Sweeney did assure that the layoffs would not affect the development of the core lines of businesses.
"About two-thirds of the layoffs were in teams outside of core development. Some of our products and initiatives will land on schedule, and some may not ship when planned because they are under-resourced for the time being," says the Epic Games CEO.
They will be focusing on the most successful products, namely Fortnite. That means that the schedule for the release of the upcoming Fortnite season and Fortnite Chapter 5, Del Mar, Sparks, and Juno will go as planned.
Take-Two Interactive Also Took a Hit
Epic Games is not the only one that's conducted employee reductions this year. In early March 2023, Take-Two Interactive, the parent company of Rockstar Games, has also done the same. Mostly, the reduction affected the Private Division.
The majorly affected publisher is responsible for the game The Outer Worlds and Kerbal Space Program 2. Luckily, the company said that the impact on development teams is "minimal," and is unlikely to affect the development within the Grand Theft Auto franchise.
According to Game Rant, Take-Two Interactive spokesperson Alan Lewis says that the cuts will better align their organization with their long-term priorities. It was not disclosed how many employees were affected by the change.
It's also not clear if the layoffs were a product of financial instability. The company, after all, is behind several successful game franchises like Red Dead Redemption, Grand Theft Auto, Borderlands, and Bioshock. It could just be a way for the company to reallocate funds to other projects.
