Epic Games Announces Lay-Offs and Sega Cancels Projects

Bad news hit the games industry job market today as Epic Games and Sega both revealed significant cutbacks. Epic Games, known for its popular title Fortnite, announced that it will be laying off over 800 employees, or around 16% of its workforce. This move comes as a financial necessity for the privately owned company in response to changing business models and challenging market conditions.

Epic Games’ Financial Struggles

In a letter to staff, Epic CEO Tim Sweeney addressed the situation candidly, acknowledging that the company has been spending more money than it earns. Sweeney stated, “For a while now, we’ve been spending way more money than we earn…I had long been optimistic that we could power through this transition without layoffs, but in retrospect I see this was unrealistic.”

While the lay-offs are unfortunate, the core games developed by Epic Games, including Fortnite, Rocket League, and Fall Guys, will not be directly affected. Additionally, the company’s services for developers and creators, such as Unreal Engine, Epic Games Store, and various other tools, will continue to be supported and invested in. Epic Games also affirmed its commitment to “Project Liberty,” the battle against distribution monopolies and taxes imposed by Apple and Google.

Divestitures and Severance Packages

Epic Games will also be divesting Bandcamp and spinning off most of SuperAwesome, while retaining Kids Web Services as part of its operations. The company has offered generous severance packages to laid-off employees, including six months of base pay, six months of Epic-paid healthcare, accelerated stock option vesting, and additional benefits and support for career transitions.

Sega’s Profit Warning and Project Cancellations

Sega, a prominent gaming company, also made cuts due to a profit warning and underperformance in Europe. The multiplayer shooter game Hyenas and several undisclosed titles in development at UK-based Creative Assembly were cancelled, resulting in layoffs for the respective teams.

Precise numbers regarding the layoffs at Creative Assembly have not been confirmed, but given its size with approximately 900 staff members, the departures could reach triple digits. These job cuts follow a trend in the industry, with other companies like Embracer also making substantial reductions.