Epic Games Shakes Up Industry with Massive Workforce Changes
Epic Games, the renowned creator of Fortnite and Unreal Engine, has made the painful decision to downsize its workforce, resulting in significant layoffs
Highlights
Epic Games is joining the trend of gaming and tech companies by cutting a significant number of staff, with 870 employees being laid off.
Prominent companies like CD Projekt Red and Ascendant Studios have also experienced layoffs, suggesting financial challenges and job insecurity within the gaming industry. In light of this, Epic Games' extensive severance package, which includes extended health insurance coverage, may not only benefit its reputation but also be essential for its future expansion, especially during a period when major gaming corporations are under scrutiny.
Epic Games is following a growing trend in the gaming and tech worlds by significantly reducing its workforce. The company is well-known for its popular free-to-play game Fortnite, as well as its exclusive digital store and the Unreal Engine.
The video game industry has been experiencing waves of layoffs. CD Projekt Red, a renowned Polish developer, recently announced significant layoffs before the release of the Cyberpunk 2077: Phantom Liberty DLC. Additionally, Ascendant Studios, which is owned by EA, downsized its staff after launching Immortals of Aveum. These are just a couple of recent examples; however, the trend is widespread, with notable companies like BioWare, 343 Industries, and Team17 also announcing layoffs this year. Furthermore, some studios, including Volition, the developer of Saints Row, have permanently closed their doors in 2023.
According to a recent report from Bloomberg, it has been revealed that Epic Games is planning to reduce its workforce by 16%, resulting in approximately 870 employees being let go. The news of these layoffs has come from undisclosed sources who are associated with the company, as Epic Games has not yet made an official announcement or provided any comments regarding this matter. Just like Ascendent Studios and other companies, Epic Games will be granting its laid-off employees a severance package of six months' pay along with accelerated stock vesting.
The severance package offered by Epic Games is extensive, including extended health insurance coverage. This stands out as one of the top-tier packages of its kind, especially when compared to major companies such as EA, Activision, and 2K, which have faced criticism for their more conservative or sometimes nonexistent severance packages for laid-off employees. Given the increased scrutiny on major gaming corporations, Epic's seemingly generous compensation package is likely to be viewed positively. This positive public relations can be a critical factor for Epic Games as they continue to expand Fortnite, the Epic Games Store, and the already popular Unreal Engine 5.
The recent significant layoffs at major gaming and tech companies have raised concerns. These layoffs not only raise questions about job security in the industry but also indicate a potentially deteriorating financial situation for video game companies. As economic analysts predict an impending global recession and consumers reduce their discretionary spending, coupled with a more pessimistic investor sentiment, it is possible that more layoffs and budget cuts will occur in the future. The video games industry appears to be undergoing significant changes, as evidenced by this news and other major events like the resignation of Jim Ryan as CEO of Sony Interactive Entertainment. Hopefully, companies like Epic Games can successfully navigate through these changes as they move into 2024 and beyond.
Source: Bloomberg
