Epic Games Announces Over 1,000 Job Cuts Amid Falling Fortnite Engagement
Epic Games will eliminate more than 1,000 jobs, a decision following a decline in engagement for "Fortnite." These cuts represent the latest layoffs within the video game industry, which has seen stalled growth due to current economic uncertainty.
The organisation anticipates saving USD 500 million by reducing contracting and marketing expenditure, and by eliminating several open roles. Chief Executive Officer Tim Sweeney stated in a note to employees that the company is "spending significantly more than we're making, and we have to make major cuts to keep the company funded."
Blockbuster titles, including the first-person shooter "Fortnite," had previously shown resilience after the pandemic. They maintained performance even as a slowdown eroded demand for games beyond the largest franchises.
However, engagement for these titles is now also declining. This trend particularly affects live-service games, which depend on a continuous flow of expensive new content to retain their player base.
Sweeney acknowledged, "We've had challenges delivering consistent Fortnite magic," adding that "market conditions today are the most extreme" since the organisation's founding in 1991. Sweeney also clarified that "the layoffs aren't related to AI," addressing industry concerns about technology replacing developers. Epic had previously increased prices for Fortnite's in-game currency, citing rising operational costs.
This marks Epic's second significant round of job reductions in three years. Previously, in September 2023, the company eliminated approximately 830 jobs, representing about 16% of its workforce, with the aim of enhancing profitability. The exact percentage of staff affected by this new announcement was not immediately clear.
"Fortnite" previously led U.S. monthly active players across PlayStation and Xbox platforms. However, despite this reach, the average playtime experienced a sharp decrease, according to Senior Director Mat Piscatella of Circana.
Other gaming organisations have also implemented job cuts. Electronic Arts laid off hundreds of workers and cancelled a "Titanfall" game that was under development. Amazon's broader job reductions late last year also impacted its gaming division.
The industry faces additional challenges from rising memory chip prices. Surging demand from artificial intelligence data centres is absorbing supply, which drives up semiconductor costs and compels console manufacturers to increase their prices.
Epic Games plans to cut over 1,000 jobs due to declining engagement in "Fortnite" and wider economic uncertainty.
The organisation aims to save USD 500 million through reduced spending and eliminating roles.
Chief Executive Officer Tim Sweeney stated the company is "spending significantly more than we're making."
Source: REUTERS
