Epic Games gets hit with a massive layoff

He adds, "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. Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics."

Sweeney notes that the job cuts come from teams outside of "core development." He continues, "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."

Epic Games made a concerted effort to reduce costs which included a "net zero hiring" freeze and cutting spending on marketing and events. However, these measures weren't enough, necessitating the job cuts. "We still ended up far short of financial sustainability. We concluded that layoffs are the only way, and that doing them now and on this scale will stabilize our finances," Sweeney explained.

Mediatonic, the developer of the hit multiplayer game Fall Guys, has reportedly been severely hit by the job cuts. While the studio remains open, employees have shared that they have been affected by the layoffs. Ed Fear, creator of the visual novel puzzle game Murder by Numbers, shared a photo on X where the letters of Mediatonics's logo have been rearranged to spell "decimation", suggesting that the studio has been hit hard by the job cuts.

Despite the grim picture painted by staff, Epic says it remains committed to Mediatonic and Fall Guys. "Mediatonic's work on Fall Guys continues to be a company priority," a company spokesperson said.

Early this year, Microsoft initiated job cuts that affected several of its biggest studios including Bethesda, 343 Industries, and Xbox. The Embracer Group also had a series of job cuts as a result of its failed $2 billion deal with Savvy Games Group. EA, Activision Blizzard, CD Projekt Red, Ubisoft, Take-Two, and BioWare are just some of the companies that have cut jobs this year.