From Unpaid Invoices To Massive Layoffs, Epic Games Is in Shambles
Between legal woes, pricing increases, mass layoffs, resignations, and unpaid invoices, Epic Games appears to be in the shambles. Epic Games is the game developer behind the hugely popular Fortnite. Since its launch in 2017, Fortnite has risen as one of the most popular games in the world and has become a cultural phenomenon, spurning massive brand collaborations, celebrity endorsements, TikTok songs, and social media trends. The online game is available in three versions, with Fortnite Battle Royale garnering the most popularity and financial success for Epic Games.
Reports found that Epic Games generated $9 billion in revenue from Fortnite alone between 2018 and 2019. It might be surprising to learn that the company behind such a massive success is deteriorating fast, but despite its success, it seems Epic Games hasn’t been careful with its spending. Its shady business practices led to it having to pay a massive $520 million settlement to 37 million players last month. Not only that, but CEO Tim Sweeney made the questionable choice to go after tech giants Apple and Google in a lawsuit. The lawsuit arose because Sweeney found a way to bypass a typical 30% commission fee to Apple and Google for in-app purchases, causing them to remove the Fortnite app from their platforms.
Considering that the legal battle has been ongoing for three years, it’s likely Epic Games has lost way more in legal fees than that 30% commission ever cost them. Additionally, Sweeney, similar to Facebook’s CEO, has gotten caught up in the hypothetical metaverse, pouring billions into an idea that many believe may never become a reality. Unfortunately, the company’s employees have had to take the hit for Epic Games’ reckless practices and spending.
What’s happening at Epic Games?
Epic Games’ first move to make up for some of its reckless spending was to up the price of V-Bucks, Fortnite‘s in-game currency. Effective October 27, 1,000 V-Bucks will be pushed from $7.99 to $8.99, while 13,500 V-Bucks will be bumped from $79.99 to $89.99. For 2,800 V-Bucks, the price is shifting from $19.99 to $22.99, while 5,000 V-Bucks will go from $31.99 to $36.99. It may not seem like a lot on the surface, but every V-Bucks bracket faces a 12% to 15% price increase. The company attributed the price changes to inflation. However, most gamers likely aren’t going to be thrilled at the thought of virtual currency, which shouldn’t be subject to inflation, facing a pretty significant price hike from a company already earning billions.
The day after announcing its price changes, Epic Games announced it was laying off 16% of its entire workforce. About 830 people lost their jobs, as Sweeney admitted that the company was “spending way more money” than it earned because of its investment in the metaverse and hefty legal expenses. While he was willing to lay off over 800 employees, though, he reiterated that he’s not going to stop his legal battle with Apple and Google and will continue with his metaverse vision. Soon after the layoffs were announced, head of publishing strategy, Sergiy Galyonkin, announced he was leaving the company, explaining that he wasn’t a “good fit” for the new metaverse-focused era Epic Games is entering.
In addition to the mass layoffs, Epic Games handed off its subsidiary Bandcamp to Songtradr. Unfortunately, the transition appears to have been handled very poorly. Bandcamp employees suddenly found themselves locked out of their systems after Epic Games announced it was selling to Songtradr. Additionally, they were told only that some, but not all, employees might be offered positions at Songtradr, leaving many uncertain if they were laid off or not. Bandcamp’s labor union, Bandcamp United, reached out to Songtradr, which responded that it might be some time before offers went out to certain employees and that those laid off would receive severance from Epic Games. However, the union is still fighting for recognition from Songtradr and better prospects for Bandcamp’s employees.
While employees were scrambling to deal with their sudden terminations or to learn whether they had a job at Bandcamp anymore, one game developer accused Epic Games of unpaid royalties. Hato Moa, the creator of the popular Hatoful Boyfriend game that came under Epic Games when it acquired Mediatonic, claimed that she hadn’t been paid royalties for her game in two years. It seems unlikely that the game would have no sales for two years. However, Moa alleged that Epic Games ignored her when she tried to reach out to them. Epic Games later responded to her post outlining the allegations and stated it was looking into the matter, though it’s unclear if it has been resolved.
Epic Games has admitted that its spending is out of control on questionable endeavors, even though its own executives don’t even seem to support the direction it’s going in. Meanwhile, it callously allowed its customers, game developers, and employees to pay the price of its poor choices with price hikes, layoffs, and unpaid royalties. Epic Games and its CEO have often touted themselves as better than other companies, criticizing tech layoffs earlier in the year and trying to pretend they’re suing Google and Apple on principle and are champions of fair business practices. Alas, though, Epic Games is just as bad, if not worse, than the companies it is fighting against in court.
(featured image: Justin Sullivan / Getty)
Have a tip we should know? tips@themarysue.com
