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Epic Games, the creator of the massively popular Fortnite, has made headlines for layoffs.
Last Thursday, the company announced the layoff of around 900 employees, which is 16% of their workforce. We found ourselves in conversations beyond gaming strategies and developments.
Many people say the reasons behind these layoffs are tied to the company’s unfulfilled metaverse dreams.
Behind the Scenes
Economic instability has resulted in large companies laying off many employees. The gaming industry is no different, causing many layoffs, studio closures, and games canceled and put on dusty shelves.
However, there is another reason that separates Epic Games from this situation: the company CEO, Tim Sweeney, as it appears, is responsible for all decisions himself, and he has become obsessive about chasing the metaverse dream.
Almost every plan for the metaverse has resulted in financial losses for the company.
Even though Fortnite was a huge success, Sweeney’s metaverse vision led the company down a precarious path.
His ambitious goal to create a virtual, shared-world metaverse led to a significant transition. The company ventured into Fortnite Creative and encouraged community contributions to the metaverse dream. Although this initiative brought more users into the fold, the revenue-sharing mechanism with these new users saw the company’s profits dwindle, aggravating the financial burden.
As a result, even though the company lost money for a while, Sweeney might think that he could make it without a layoff, but look at where we are.
In the email announcing the layoffs, he mentioned the mistake of his metaverse dream as follows:
For a while now, we’ve been spending way more money than we earn, investing in the next evolution of Epic and growing Fortnite as a metaverse-inspired ecosystem for creators. I had long been optimistic that we could power through this transition without layoffs, but in retrospect, I see that this was unrealistic.
Expensive War Between Tech Giants
As we know, Epic’s financial problems do not just end there. Since 2020, the company has been in the middle of a legal fight with Apple, adding fuel to the financial fire.
The legal tug-of-war, born out of Epic Games’ deliberate attempt to undermine Apple’s App Store payment guidelines, led to the ban of Fortnite from the App Store.
This appears to be a costly and ongoing legal battle.
With all these expenses and the costly lawsuit process, Epic lost the case, which has been a significant drain on the company’s already depleted resources.
As a result of all this, Epic Games has needed to make large-scale workforce layoffs. The decision impacts diverse sectors within the company, from the user experience teams for Fortnite to recruitment and employee engagement units.
Employees affected by these layoffs will receive a severance package, which will include six months of base pay and other benefits, which I hope will serve as a buffer against this unexpected blow.
Now, hundreds of employees bear the brunt of these corporate missteps, suddenly finding themselves without a job.
Remember, these layoffs aren’t just numbers; they are livelihoods snapped away in a blink, a direct result of the company’s unwieldy direction and unclear vision.
Project Liberty and Other Litigations
Despite all the layoffs, Epic is still striving to protect Project Liberty, an ongoing legal battle against Apple and Google.
The company says:
“it has been taking steps to reduce its legal expenses but is continuing the fight against Apple and Google’s distribution monopolies and taxes, so the metaverse can thrive and bring opportunity to Epic and all other developers.”
All of this is casting a shadow over Epic’s financial future, filling it with uncertainty.
When looking at the ongoing issues, Epic Games is sadly a good example of a company with too much pride and bad management.
Tim Sweeney is too focused on the metaverse and legal fights with big companies, showing a company lost in its own dreams. The road ahead is unclear, with more legal issues and a hasty attempt to make up for losses, while gamers and former employees are the most affected by the company’s problems.
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