Engines of Woe | This Week in Business
This Week in Business is our weekly recap column, a collection of stats and quotes from recent stories presented with a dash of opinion (sometimes more than a dash) and intended to shed light on various trends. Check every Friday for a new entry.
Unreal and Unity are the two biggest game development engines on the market, and the companies behind them have a lot more in common than that. For example, they've both had very bad weeks. Let's start with the fresher of the two.
Yesterday Epic laid off 830 people, or roughly 16% of the company.
It also got rid of two of its pandemic-era acquisitions, selling Bandcamp and spinning off SuperAwesome in moves that took another 250 off the payroll, about another 5%.
Epic CEO Tim Sweeney explained the necessity of the cuts in an email to staff.
QUOTE | "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." – Sweeney offers a bit of a mea culpa in his email early on.
What's weird is that the company's cash cow Fortnite is growing, as Sweeney is quick to point out in his email. But because the growth is driven by user-created content and Epic needs to share revenues with those creators, Sweeney laments that the profit margins aren't as high. But if the fundamentals of the business are improving, surely there are less drastic ways to address the problem than jettisoning 20% of the company through layoffs and divestitures?
QUOTE | "Epic folks around the world have been making ongoing efforts to reduce costs, including
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