CARY, N.C. (WTVD) -- Saying "We've been spending way more money than we earn," Epic Games CEO Tim Sweeney announced that the video-gaming giant would undergo layoffs.
In an email to employees, Sweeney revealed that the company would lay off an estimated 16% of Epic employees -- about 830 workers.
Epic will also sell off Bandcamp, an online audio distribution platform, and spin-off most of SuperAwesome, a technology that "enables the youth digital media ecosystem." Those moves will shed about 250 workers from Epic.
In his email, Sweeney said he had long hoped that Epic could get through a transitional stage without layoffs, but in retrospect, he saw "that this was unrealistic."
He added that though Fortnite is starting to grow again, the growth is driven primarily by creator content with "significant revenue sharing," and that means a lower-margin business than previously.
It wasn't immediately clear what effect the layoffs would have on the Cary headquarters.
Epic Games has 40 offices worldwide.
Epic has made efforts to cut operating costs but still fell far short of financial sustainability, leading the company to resort to layoffs. The majority of the layoffs are in teams outside of core development.
"Saying goodbye to people who have helped build Epic is a terrible experience for all." Sweeney wrote. "The consolation is that we're adequately funded to support laid-off employees: we're offering a severance package that includes six months base pay and in the US/Canada/Brazil six months of Epic-paid healthcare. We're offering to accelerate people's stock option vesting schedule through the end of 2024 and are giving two additional years from today to exercise the options. In the US, we're also offering to vest any unearned profit sharing from their 401k. And we'll provide benefits including career transition services and visa support where we can."
Sweeney added that additional layoffs are not planned.
UNC Chief Economist Gerald Cohen said that has been a familiar pattern in the tech industry.
"Tech companies were over-exuberant. They hired a lot," said Cohen. "They've been rethinking some of their hires. And unfortunately, that's meant layoffs in the tech industry," he said.
It wasn't known how the layoffs could affect the plans for the company to build its campus at the old Cary Towne Center. Epic was supposed to open its new headquarters in 2025.
Economist Mike Walden said the cuts by Epic Games are not a direct reflection of the current state of the tech industry.
"The layoffs that were announced today, I think are specific to the legal actions that the company has been engaged in with respect to some disputes about charging customers without their knowledge," he said.
Cohen and Walden agree the cuts won't have a significant impact on the Triangle's economy
"People are coming and companies are coming in. The Triangle growth is going to slow but I don't think it's actually going to contract," said Cohen.
"We're such a vibrant economy here in the Triangle, and particularly in regarding tech, that's not going to cause any kind of long-run disaster for the area," said Walden.
Cary Mayor Harold Weinbrecht told ABC11 that the layoffs were disappointing, but he was proud to have Epic in Cary and looked forward to helping the company with its plans.