Epic Games, the renowned American video game company known for creating Fortnite, has made headlines once more, but this time for a distinct reason – a workforce reduction involving 830 employees, equivalent to 16% of its workforce. Employees impacted by these layoffs have been promised a severance package that will cover a period of six months. CEO Tim Sweeney conveyed this message to the company’s staff in a memo.
“We concluded that layoffs are the only way and that doing them now and on this scale will stabilize our finances.”
Several factors have influenced this choice. Established video game companies are encountering heightened competition from emerging rivals, exemplified by Warner Bros. Discovery and their hit game “Hogwarts Legacy,” based on the “Harry Potter” franchise, which has garnered considerable acclaim. Additionally, the ongoing legal battle between Epic Games and Apple has had an impact on these developments. Nevertheless, one of the primary drivers behind these staff reductions can be attributed to excessively optimistic revenue projections stemming from metaverse-related ventures. This, in turn, led to Epic Games outspending its earnings. Sweeney added,
“I had long been optimistic that we could power through this transition without layoffs, but in retrospect, I see that this was unrealistic.”
Regrettably, there are more workforce cuts on the horizon. In addition to the previously mentioned layoffs, Sweeney disclosed that an additional 250 employees would be departing from the company that oversees Fortnite. This move coincides with the company’s decision to divest itself of the recently acquired music platform, Bandcamp. Furthermore, there are plans to separate the marketing division, SuperAwesome, which is a child safety technology firm that had been integrated into Epic in 2020.
Metaverse Fatigue: Is it Over?
The enthusiasm for the metaverse was undeniable, with numerous technology companies, mainstream corporations, and even governments adopting this technology. However, this coincided with the emergence of artificial intelligence (AI), which captured the global spotlight. Consequently, the enthusiasm for the metaverse began to diminish. This change became evident when Disney decided to shut down its metaverse division.
Nevertheless, Mark Zuckerberg, the founder of Meta, garnered significant attention from the online community with his metaverse advancements. His recent demonstration of photorealistic avatars suggested that the metaverse might still have a promising future, despite previous concerns about its decline. The hype surrounding the metaverse may have waned, but the technology itself remains very much alive.