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The Fortnite developer has engaged major cost-cutting measures to steady the ship.
"Hello everyone and welcome back to another GRTV News, today we have a really big one to talk about as yesterday afternoon, late yesterday afternoon actually, the news broke that Epic was to lay off 1000 employees, that it's closing down a variety of modes in Fortnite and CEO Tim Sweeney has published a statement that basically talks and gives a bunch of reasons as to why it's happening, we'll talk more about thoughts on the situation in a moment, for the time being let's just unpack the news and see what's happening here."
"So here we go, Epic Games has laid off 1000 employees, plans to close down Fortnite's rocket racing, ballistic and festival battle stage modes, CEO Tim Sweeney credits several factors including extreme market conditions, lower Fortnite engagement, poorly selling current gen consoles, but noticed AI had no hand in the decision."
"So when Epic Games decided to increase the price of V-Bucks it started to become apparent that the unsinkable beast that was Fortnite was developing cracks in its hull, clearly these cracks are deeper and larger than expected. In a shocking turn of events Epic Games has just announced that it's laid off as many as 1000 employees, this was confirmed by CEO Tim Sweeney in a statement that was sent to Epic employees and published on the company's website, wherein Sweeney cites all kinds of reasons for the delays while outlining that the rise of AI in the video game sector played no part. For one, Sweeney expressed that the downturn in interest in Fortnite has played a part, as we're spending significantly more than we're making and we have to make major cuts to keep the company funded. To this point, on top of the 1000 lost jobs, around half a billion dollars in cost-cutting measures have been identified in a bid to survive. Beyond this, Sweeney notes that the industry-wide challenge is to play a factor too, as Epic has noticed slower growth, weaker spending and tougher cost economics, current consoles selling less than last generation, and games competing for time against other increasingly engaging forms of entertainment."
"Sweeney does also express that Epic has been struggling to live in Fortnite in ways that it has in the past, with this being part of the problems the game is seeing reduced engagement.
The hope is that the return to Google Store and mobile platforms will help steady the ship.
Sweeney then explains that the layoffs aren't related to AI as well it does enhance productivity, we want to have as many awesome developers developing great content and tech as we can."
"Those who have been affected will receive at least four months of paid salary, extended healthcare and accelerated stock options and extended equity exercise options for the next two years. As for what's next for Epic Games, we're told that the focus is moving on to building awesome Fortnite experiences with fresh seasonal content, gameplay, story and live events, while simultaneously delivering a major launch slate of announcements later this year when the evolution of Unreal Engine 5 and UEFN to Unreal Engine 6 takes place. Sweeney signs off with the following. Market conditions today are the most extreme we've seen since those early days, with massive upheaval in the industry accompanied by massive opportunity for the companies that come out as winners on the other side. That's what we're aiming to do for our players and we aim to bring other like-minded developers in the industry along on the journey to build an increasingly open and vibrant future of entertainment together. It should also be said that these cost-cutting measures seem to be aligned with the decision to sunset and eventually shut down Fortnite's Rocket Racing, Ballistic and Festival Battle Stage modes. In the accompanying article on X, Epic explains that on April 16th, the Ballistic and Festival Battle Stage and then in October for Rocket Racing, the modes will be closing down as we fail to build something awesome enough to attract and retain a larger player base. The question now is what else will be cut to keep Fortnite and Epic Games afloat? Now, Epic is obviously a behemoth, but I do find this information and this news story a little bit conflicting because Epic spent years and a huge amount of money fighting legal battles with Apple and Google in a bid to give itself a better position on the platforms that those massive tech companies own. Now, to me, the reason why that's a little bit, let's say, controversial at this point is because while it will no doubt benefit them in the long haul, the amount of money they would have spent battling these trillion-dollar corporations could have potentially been used to preserve some of the jobs that have been lost here and to set Epic Games up in a position where it didn't have to cut a thousand jobs and where it didn't have to do all these different things. Now, you can argue and you can say about how obviously the decisions they've made will benefit the industry as a whole, but it's not Epic's duty per se to do that and it's come at the cost of a thousand jobs at this point. You know, a thousand people are now facing a very uncertain April mainly because they have no idea what to do for employment because Epic Games hasn't managed itself correctly. And similarly, anyone who's anyone will know that while Fortnite is still incredibly big, this idea that it was going to maintain its immense size in perpetuity, it just it was never plausible. It never was in the first place. So, you have to say that Epic probably should have taken better precautions a few years ago, probably a couple of years or a year or so after the pandemic came to a close and started setting Fortnite up and the company up in a way that they'd be able to survive the change in consumption and spending and all that."
"So, it's a particularly tough one this because you look at it and you think if Epic Games and Fortnite is at risk to all these layoffs and changes, then who is safe? So, I don't know, it's a very strange one here. And again, Sweeney's reasoning is to me bizarre as well in certain places because on the one side of the idea that they're spending more money than they're making, yeah, but surely there's a surely there's a way to reduce the costs without just simply just axing a thousand jobs. You know, they have a lot of collaborations that surely aren't very cheap and they put so many collaborations out that you kind of forget about them. A lot of them get swept under the rug. Likewise, Fortnite is such a massive game, it encapsulates so many different things at this point. So, you have to wonder maybe if you just sort of consolidated your resources first and then looked at layoffs that maybe that would be a potentially other option. Otherwise, the whole like again talked about slower growth. Fortnite was arguably the biggest game ever for a while. So, to say that it's facing slower growth is madness because it was never going to retain that size. Weaker spending, you know, like well players are going to move on. They're not going to play Fortnite for the next 40 years. People are going to move on. So, you're going to see lower spending. You have to take that into account. Tough Acostica economics. I mean, saying that the current console selling less than last generation's is a factor for the layoffs is absolutely bizarre because Fortnite is available everywhere. So, why should PS5 and Xbox Series X are selling slower than last generation's consoles affect anything? Also, the PS5 has been selling like hotcakes. It's keeping pace. I think maybe if even outperforming the PS4 in sales. Meanwhile, the Switch 2 has come out the gates like an absolute freight train. So, it's only really Xbox that, to be honest, Xbox never does really sell well. So, that's a weird one for me as well. It's, you know, how can you attribute the current consoles supposedly selling less which all the data seems to suggest they're not really selling less. How can you go and attribute that to a game that is available on so many different platforms including last generation consoles which are still in operation? How can you attribute that to the downturn of economics for your game right now? It's a bizarre thing. So, and again, the game's competing for time against those increasingly engaging forms of entertainment."
"It's kind of a weird thing to say as well because these are all different kinds of entertainment are battling for one each other's time at this point.
So, you know, you look at what's happening with the movie business.
Everyone's facing this stuff. So, again, to go and attribute, to lay it all out, on one hand, I appreciate the transparency from Epic and Tim Sweeney but on the other hand, to me, to be the CEO of one of the biggest companies, the biggest video game companies in the world and to have such a market position and to be somebody who sort of champions all these major sort of industry changes and goes out there and, you know, takes it to the giants of technology to say, no, no, what you're doing is wrong. We want to do it better this way and then to go muff it up like this, it, to me, doesn't add up a little bit. So, I'm sure that these all played factors but to say that a thousand people lost their jobs because of these things, it just seems a little bit like, in a way, mismanagement but no doubt we'll see more in the future. There's a lot of people that have been affected. I think there's, or at least there's reports that the person who designed Jonesy, one of the most iconic Fortnite characters, has been laid off as well. So, it's a bizarre situation this and as more comes out, we're sure to keep you posted but, again, pretty much the biggest layoff round in the video game industry in probably a couple of years, I guess, has happened yesterday and it's affected Epic Games and Fortnite. That's all the time that I have. I'll be back now tomorrow for the next GRT News of the Week. So, thank you for joining me and I'll see you all then."
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