Epic Games Cutting 900 Jobs, 16 Percent Of Its Workforce

Epic Games Inc., the company behind global megahit Fortnite, the Epic Games Store, and the wildly popular Unreal Engine, is laying off 16 percent of its current workforce. This report, first coming from Bloomberg’s Jason Schreier, sees almost 900 employees losing their jobs.

A memo was shared this morning at the North Carolina company, seen by Kotaku, informing staff of the bad news. It explains that alongside 16 percent of staff being laid off, the company is also selling Bandcamp, and “spinning off” most of marketing company SuperAwesome. Earlier today on X, Schreier wrote, “rumors were flying as Epic disabled Slack for employees ahead of the news.”

“For a while now, we’ve been spending way more money than we earn,” says the memo, sent to staff by CEO Tim Sweeney. “I have long been optimistic we could power through this transition without layoffs, but in retrospect I see that this was unrealistic.”

It seems that Fortnite’s failure to continue growing was part of the problem. Sweeney reports that it’s “starting to grow again,” but this is driven by creator content “with significant revenue sharing.”

Despite efforts to reduce spending, Sweeney says “we still ended up far short of financial sustainability.” These layoffs, he hopes, will “stabilize our finances.”

“Laid-off Epic employees will receive six months severance and health benefits,” Schreier said on X, adding that an “all-hands meeting [is] happening shortly.”

This news would be shocking under any circumstances, but it’s especially surprising given Epic’s apparently incredibly solvent state. Fortnite alone has over 230 million players, with 2022 seeing daily user peaks of 34.3 million people. According to Epic accounts, Fortnite was bringing in around $5-6 billion a year.

Those are already massive figures, before you even consider Unreal Engine fees, and revenue from the Epic Games Store, which last year was $355 million. That much money coming in, to an outsider, makes the decision to lose so many staff seem hard to comprehend. However, according to Sweeney, they were still outspending even these amounts.

At the same time, Epic is divesting itself of Bandcamp, a deeply strange acquisition in the first place. It’s being sold to Songtradr. Also, SuperAwesome, Epic’s marketing arm, is being spun off into an independent company under the same branding.

Epic Games Inc. is privately owned, with the majority of the company’s shares belonging to CEO Tim Sweeney. However, the all-consuming Tencent Holdings Ltd. own a 40 percent stake.

We’ve reached out to Epic to ask for comment regarding the situation. In the meantime, Sweeney said to staff in a memo,

Saying goodbye to people who have helped build Epic is a terrible experience for all. The consolation is that we’re adequately funded to support laid off employees: we’re offering a severance package that includes six months base pay and in the US/Canada/Brazil six months of Epic-paid healthcare.

All the best to everyone affected in finding new work as soon as possible.

Even The PS5 Studio Behind The Last Of Us Is Cutting Costs

The video game industry is currently facing a big wave of layoffs, and even contract developers at PlayStation first-party studio Naughty Dog aren’t immune. Kotaku has learned that the maker of hits like Uncharted 4: A Thief’s End and The Last of Us Part II has begun cutting contracts short for dozens of workers.

Layoffs were communicated internally at the Santa Monica, California-based studio last week, according to two sources familiar with the situation. Departments ranging from art to production were impacted, but the majority of those laid off worked in quality assurance testing. The sources said at least 25 developers were part of the downsizing. Full-time staff do not appear to have been part of the cuts. Naughty Dog’s headcount was over 400 as of July.

Sources tell Kotaku that no severance is being offered for those currently laid off, and that impacted developers as well as remaining employees are being pressured to keep the news quiet. Their contracts won’t be officially terminated until the end of October and they’ll be expected to work through the rest of the month. Sony did not immediately respond to a request for comment.

Despite hit ratings for the recent HBO adaptation of The Last Of Us, a multiplayer spin-off for the zombie shooter based on the first game’s Factions mode has struggled in development. Bloomberg reported in June that Sony had diverted resources away from the project following a negative internal review by Bungie, the recently acquired live-service powerhouse behind Destiny 2. One source now tells Kotaku that the multiplayer game, while not completely canceled, is basically on ice at this point.

The layoffs also come just a few months after studio co-president Evan Wells announced his retirement at the end of 2023 after working at Naughty Dog for 19 years. Neil Druckmann, creative director and lead co-writer on both the most recent Uncharted and The Last of Us games, as well as a contributor to the HBO show, revealed a restructuring of the studio leadership around the same time.

Naughty Dog isn’t the only major first-party studio to face layoffs this year. The Xbox studio currently in charge of Halo, 343 Industries, was hit hard by mass layoffs at Microsoft back in January. Major gaming companies like Electronic Arts, Ubisoft, Epic Games, and Embracer have all added to the tally in recent weeks and months, with many developers increasingly unnerved by the constant influx of more bad news from colleagues and peers.

Back in April, Sony announced that it plans to sell a record-breaking 25 million PS5s in the current fiscal year.


Ubisoft Using AI Assassin’s Creed Art Amid Cost Cutting

Happy Halloween! Ubisoft Netherlands invites you to celebrate the spooky festivities with AI-generated Assassin’s Creed art. Terrifying indeed!

People first began to notice some of Ubisoft’s social media channels posting what appeared to be AI-generated versions of Assassin’s Creed art last night. A smoothed over, off-brand Ezio emerged on the French publisher’s X (formerly known as Twitter) account for Latin America. “In other amazing industry news here’s an official Ubisoft account with 300K followers posting AI art,” tweeted Forbes contributor Paul Tassi. The publisher’s post was mocked for making Ezio look like a Fortnite character and for one character in the background wielding gun grips like knives. The tweet was deleted soon after.

Not to be outdone, however, the Ubisoft Netherlands account followed up with its own AI-looking Ezio art complete with Jack-o’-lanterns. “Which Ubisoft game is perfect for this horrible evening?” the account asked in Dutch. Clearly the one the Assassin’s Creed maker was playing with fans’ hearts.

Read More: AI Creating ‘Art’ Is An Ethical And Copyright Nightmare

Ubisoft recently revealed that over 1,000 people have left the company in the last year as part of its “cost reduction” program. Some of those departures were voluntary, but others included layoffs across customer support, marketing, and other departments in Europe, the U.S., and elsewhere. “Ubisoft literally conducting layoffs this year and last month, and they’re posting AI art,” tweeted film concept artist Reid Southen. “Unbelievable. What the hell is the game industry doing right now.”

Still, over 19,000 people continue to work at Ubisoft, including many devoted just to the Assassin’s Creed franchise and all of its sequels, spin-offs, and other incarnations currently in the pipeline. Surely one of them could have made some art for the social media accounts. Or the company could have just used one of its many existing Ezio images. Anything would have been preferable to posting ugly AI-generated crap as thousands are laid off across the video game industry this year.

Fans have had to become increasingly vigilant in 2023 about companies trying to pass off AI-generated images in their marketing, as DALL-E 2, Midjourney, and other AI text-to-image models make it easier than ever to cobble together fake art. Amazon did it to promote its upcoming Fallout TV show. It sure seemed like Niantic did it to promote upcoming content in Pokémon Go. Legendary Studio Ghibli director Hayao Miyazaki calling AI art tools “an insult to life itself” back in 2016 has never felt so prophetic.