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.
- Other prominent companies, such as CD Projekt Red and Ascendant Studios, have also undergone layoffs, indicating potential financial difficulties and a lack of job security in the gaming industry.
- Epic Games' comprehensive severance package, including extended health insurance coverage, may help its reputation in a time when major gaming corporations face scrutiny and could be crucial for its future growth.
Epic Games will be cutting a sizable portion of its staff, following a broader trend in the worlds of gaming and tech. Epic Games is best known for the free-to-play game Fortnite, as well as its proprietary digital storefront and the Unreal Engine.
Layoffs have been hitting the video game industry in waves. Famous polish developer CD Projekt Red recently announced major layoffs ahead of the release of the Cyberpunk 2077: Phantom Liberty DLC, and the EA-owned Ascendant Studios also downsized its staff after launching Immortals of Aveum. These are two recent examples, but the trend is even more ubiquitous, with notable companies like BioWare, 343 Industries, and Team17 also announcing layoffs this year. Other studios, such as Saints Row developer Volition, have shuttered their doors completely in 2023.
According to a recent report from Bloomberg, Epic Games will be cutting 16% of its staff, which amounts to 870 employees. News of the layoffs came from anonymous sources associated with the company, as Epic has yet to make a formal announcement or comment on the matter. Similar to companies like Ascendent Studios, Epic will be offering six months of severance to its laid-off employees, in addition to accelerated stock vesting.
The severance package is quite comprehensive and includes extended health insurance coverage, making it one of the better packages of its kind. Major companies like EA, Activision, and 2K have been criticized for their relatively conservative, or at times nonexistent, severance packages for employees affected by layoffs. At a time when major gaming corporations are under more scrutiny than ever, such an ostensibly generous compensation package will likely reflect positively on Epic Games. This positive PR could be crucial for Epic as it continues to expand Fortnite and the Epic Games Store, while expanding the already-popular Unreal Engine 5.
Major layoffs at large gaming and tech companies could be seen as troubling. These layoffs suggest a lack of job security for those working in the industry, but they also hint at a worsening financial situation for video game companies. As economic analysts predict a coming global recession, consumers cut back on discretionary spending, and investors become more bearish, it's possible that even more layoffs and budget cuts will be on the way. Whatever the future holds, it seems like the video games industry is in a period of great change, as evidenced by this news and other major headlines like Jim Ryan stepping down as CEO of Sony Interactive Entertainment. Hopefully, companies like Epic Games can manage to stabilize moving into 2024.
Source: Bloomberg