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.
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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 Enginefees, 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.
Epic Games acquired Mediatonic in 2021 after its colorful battle royale, Fall Guys, became a multiplayer sensation early in the covid-19 pandemic. Now, it’s laying off tons of developers at the UK-based studio as part massive cost cutting at the Fortnite maker.
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In Epic CEO Tim Sweeney’s email to staff today about the more than 800 layoffs, which was subsquently shared on the company’s website, he said the company would continue to invest in its games. “We aren’t cutting any core businesses, and are continuing to invest in games with Fortnite first-party development, the Fortnite creator ecosystem and economy, Rocket League and Fall Guys,” he wrote.
But some developers impacted by the decision immediately started sharing the news they had been cut from the studio on social media. Staff in the office even apparently took the letters normally used to display the company’s name and rearranged them to spell “Decimation.” The image was tweeted out by Ed Fear, designer and writer on Mediatonic’s 2020 Ace Attorney-style visual novel, Murder By Numbers.
“Unfortunately, I am one of the people affected by the layoffs today at Epic,” he wrote. “I’m absolutely devastated to leave behind so many amazing Mediatonic colleagues who I loved.” Others impacted include game designers, level designers, and artists. It’s not clear how many people in total were laid off from Mediatonic, or how many developers are still working on Fall Guys. A spokesperson for Epic Games declined to share specifics, but called reports that the entire team had been let go “false.”
Mediatonic was cofounded in 2005 in Uxbridge, England by Dave Bailey and Paul Croft. The small indie startup was widely known for making flash games until it released the shooter Who’s That Flying?! for the PlayStation Portable in 2010. It then made a remake of the cult-hit Hatoful Boyfriend and worked on various mobile releases including Gear Pop! and Fable Fortunate. But it wasn’t until Fall Guys became a break-away hit in 2020 that Mediatonic’s profile blew up and it was subsequently bought by Epic.
The parent company transitioned the online multiplayer platformer where players maneuver clumsy beans through surreal obstacle courses from a paid model to a free-to-play one more in-line with Fortnite. This came with season passes and the expectations of constant updates and new costumes for fans to be able to purchase. Epic also pulled the game from Steam. Amid fears it’s been stagnating, some of the game’s hardcore fans routinely pine for a major overhaul and revival.
“Very hardworking, super-talented and genuinely nice colleagues got laid off at Epic/Mediatonic today,” tweeted Fall Guys game designer Beatriz Díaz Martín. “Many of them friends I have worked with for years.”
When big tech comapanies announced mass layoffs earlier this year, Sweeney responded with a meme about how Epic Games banded together when things got tough unlike Google, Meta, and other Sillicon Valley giants. It’s not clear yet whether Sweeney is taking any pay cuts as part of the latest cost-saving measures.
Mediatonic is best known for the colorful battle royale Fall Guys. Long before it was purchased by Epic Games, however, the UK-based studio created the international HD remaster of the cult-hit dating sim about pigeons that go to high school, Hatoful Boyfriend. The game’s original creator, manga artist Hato Moa, now says she hasn’t received a paycheck for sales of the remaster in two years.
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“I’ve got no royalty payment for Hatoful Boyfriend from Epic since they acquired Mediatonic back in spring 2021,” Moa tweeted last week after Epic Games announced over 800 layoffs, with Mediatonic particularly hard-hit. “I don’t think the sales have been zero for two years?” She also said she had previously reached out to Epic but it had never responded. The company did respond to her tweets, however, promising to look into the matter.
A spokesperson for the company directed Kotaku to that tweet when asked to elaborate on the situation.
Released in 2011 on PC, Hatoful Boyfriend sees players navigate romantic relationships as a human student at a school where all of their classmates are birds. Branching storylines reveal secrets about the characters, as well as a horror twist. It quickly became a cult sensation, getting translated into English by fans. When then-Mediatonic creative designer Ed Fear played it, he lobbied the studio to work with Moa on an international remake for a wider release. Fear was one of those laid off by Epic last week.
After Mediatonic was acquired by Epic, its remaster was removed from iOS, Android, and PlayStation stores, leaving Steam as the last place to buy the game. Moa speculated that ongoing sales for the game are probably not much, although recent user reviews which give the game a rating of 97 percent positive indicate that new players are still buying it there.
“Don’t worry, I’m totally fine,” Moa tweeted. “I just wish I had been strong and influential enough to support all of [the] nice people from Mediatonic. They’ve been always nice to me and Hatoful.”
“Music is healing,” the late musician Prince once said. Bandcamp co-founder Ethan Diamond told NPR in 2020 that the point of the independent digital music platform he was building was to bring that power of healing to everyone. Many current Bandcamp employees are going to need it. Epic Games, which acquired Bandcamp just a year ago, laid off roughly half its staff today after finalizing its sale to music licensing company Songtradr amid wide-scale cuts at the Fortnite maker. One former employee told Kotaku that nobody’s heard from Diamond since the sale was announced.
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“Over the past few years the operating costs of Bandcamp have significantly increased,” Songtradr wrote in a statement. “It required some adjustments to ensure a sustainable and healthy company that can serve its community of artists and fans. After a comprehensive evaluation, including the importance of roles for smooth business operations and pre existing functions at Songtradr, 50% of Bandcamp employees have accepted offers to join Songtradr.”
The rest of the roughly 120 employees will be laid off by Epic and receive six months of severance, even as Bandcamp’s union continues to bargain with the billion-dollar company over better terms. Epic Games bought Bandcamp in March 2022 for $273 million, according to internal documents viewed by Kotaku. According to two former employees, who wished to remain anonymous because they did not want to jeopardize their severance packages, even Diamond was not aware of Epic’s plan to sell Bandcamp to Songtradr until as soon as the night before the deal was announced.
Diamond did not respond to a request for comment sent to his Bandcamp email address over a week ago (it has since been disconnected). Epic declined to comment on whether Diamond was aware of the deal to sell Bandcamp before it happened.
Epic Games announced it would divest itself of Bandcamp in a September 28 blog post that revealed roughly 830 layoffs across the wider company. Employees of the independent music platform, which has been an especially popular place for fans to buy from and support video game composers directly, were left in limbo in the weeks that followed as to whether they would have a job at Songtradr once the sale was complete.
Two former employees said they were immediately logged out of Epic’s company-wide Slack channel once the deal was announced on September 28, despite still being on the company’s payrolls until it officially closed. They also claimed that a majority of the staff had lost access and permissions to the tools needed to perform their regular duties in that time, grinding everything but critical functions within Bandcamp to a halt as staff waited to see who would be laid off.
During the weeks that followed, Bandcamp’s union, which represented about half of the company at the time, called on Songtradr to voluntarily recognize the union while it also negotiated with Epic over how the layoffs to union members would be handled. For example, the game publisher said that no employee who received an offer from Songtradr would remain eligible for Epic’s severance package. They would effectively be forced to take the job at the new company, despite the massive changes to conditions on the ground with Bandcamp being cut roughly in half.
“There’s no way Bandcamp will continue as Songtradr has promised,” one former employee told Kotaku earlier this month. “It’s just completely fucked up.”
The chaotic transfer of ownership and the confusion among staff was due in large part to the nature of the deal between Epic and Songtradr. The two companies agreed to an “asset sale” of Bandcamp rather than a “stock sale.” This meant that Songtradr was only acquiring the technology and platform, rather than the company as a whole, including its staff. As employees waited for the deal to close, many were left in the dark about what was going on and who would ultimately still have a job when the dust eventually settled. According to two former employees, neither Epic CEO Tim Sweeney, nor anyone else on Epic’s senior leadership team, ever held an all-hands meeting with Bandcamp staff where they could ask questions.
The sudden, unexpected purchase of Bandcamp in 2022 and its messy sell-off this month have drawn criticism from many supporters of the platform. “We share a vision of building the most open, artist-friendly ecosystem in the world,” Epic Games wrote at the time of the original acquisition. “The fact that Epic sold bandcamp a year after they bought it shows that they had no plan and no real interest in bandcamp’s mission,” tweetedFTL: Faster Than Light composer Ben Prunty.
It’s not clear what will happen to Bandcamp going forward. ”We are committed to keeping the existing Bandcamp services that fans and artists love, including its artist-first revenue share, Bandcamp Fridays and Bandcamp Daily,” it said in a statement to Kotaku today. Epic will continue to work with Bandcamp on Fortnite Radio and remains an investor in Songtradr.
According to two former Bandcamp employees, those who were laid off were disproportionately from the union. “Songtradr had no access to union membership information and we executed our employment offer process with full-consideration of all legal requirements,” a spokesperson for Songtradr told Kotaku. They said final offers were sent out after a careful evaluation and examination of “several factors.”
Update 10/17/2023 12:12 p.m. ET: Bandcamp’s Union called the layoffs “heartbreaking” and said it would continue negotiating with Epic Games over better severance terms.
“Today, Epic Games’ sale of Bandcamp to Songtradr was closed and at least half of Bandcamp’s staff was alid off,” Bandcamp United wrote in a statement. “This is heartbreaking. We love our jobs, the platform we’ve built, and the Bandcamp community. We’re glad we have our union—coworkers who have each other’s backs. We’ll be moving together to decide what our next steps are. On Wenesday we return to the bargaining table with Epic Games, and we’ll keep you updated. Love and solidarity to the whole Bandcamp community. Thank you for your support.”
Songtradr, meanwhile, has still refused to recognize the union. “At this moment we don’t have an update on that, however, we will update you when new information becomes available,” a spokesperson told Kotaku.
Update 10/17/2023 5:46 p.m. ET: A new statement from the Bandcamp United confirms that union members were an overwhelming portion of the layoffs. “Of those laid off, 40 were in the union bargaining unit out of a total 67 members,” it wrote. “None of the eight (8) democratically elected bargaining team members received a job offer. We are heartbroken to see our community shattered so callously, and are very upset to see that no one in our collective bargaining committee was offered a position at Songtradr’s Bandcamp. There was no transparency on how these job offers were distributed.”
A former support team employee, Ed Blair, said, “We continue to fight for the future of Bandcamp but it is tremendously disappointing to see Epic and Songtradr discard that work, and our unit’s democratically elected leaders.”