Epic Games founder, CEO, and primary stakeholder Tim Sweeney took the stage at this year’s Unreal Fest, hosted this week in New Orleans, to provide more context and details on the recent mass layoffs that affected the company. In a video grabbed by Fortnite creator and shared on Twitter (X), Sweeney admitted that even if the engineering teams were barely affected, there might be a degradation of quality in some of the future work. He also revealed when exactly Epic became aware that it had significant financial problems.
I think we were the right size and I loved our original plans, but this is a survival moment that was necessary. One of the principles we decided on early on ten weeks ago, when we realized we were running into a financial problem that we had to solve quickly, is that we wouldn’t spread the pain around equally. Rather, we went through and identified all the parts of our business and exactly what we absolutely needed in order to accomplish our mission. So, it affected different parts of the company in different ways. The Unreal Engine engineering team was only impacted by 3% of the layoffs. Many of the business sales and marketing teams suffered more than 30% of layoffs.
This is going to have implications for everything we do, and it’s going to result in a degradation of quality in some of our work. I’m sorry for that. Right now, everybody in Epic is working to figure out how we’re going to rebalance our priorities and retest the teams in new ways in order to serve all of your needs. We’ll get through that.
Why did Epic even get into financial issues, given its substantial revenue from Fortnite? Sweeney candidly says that different parts of the company’s business became ‘disconnected’ from their own revenue streams, spending more than what they were earning while Fortnite covered everything up – until it couldn’t anymore.
Epic is also looking into increasing its Unreal Engine revenue, though not from game developers (on that note, Sweeney briefly referred to other engine royalties being ‘discussed’ in the industry only to add that there would be no changes in the foreseeable future). Unreal Engine users in the automotive industry, film industry, et cetera, will start paying a seat-based license in 2024. That means they’ll pay based on how many users they have interacting with the engine, similar to software like Autodesk Maya or Adobe Photoshop.
One of the things we are going to change next year is for industries other than gaming, such as the automotive industry and so on. We’re going to move to a seat-based enterprise software licensing model. We don’t have terms to announce yet, but I want to get this out in front of everybody for transparency. If we’re going to build a model like that, it’s not going to be unusually expensive or unusually inexpensive.
But if you’re going to be building a product outside of the game industry and not paying a royalty on it, then yeah, it will be a licensed piece of software like Maya or Photoshop.
Sweeney ended his speech by doubling down on the Epic Games Store efforts. He said it’s the key solution to a disease plaguing the industry, mainly due to mobile platform ‘overlords’ (Google and Apple) demanding ‘vastly higher payment processing fees than any same process in North America’. Sweeney hopes the Epic Games Store might one day be available on iOS and Android to offer mobile developers a 12% fee store and to serve customers at a global scale.
In other Unreal Fest news, Ascendant Studios announced it will upgrade Immortals of Aveum to Unreal Engine 5.2 to obtain visual and performance enhancements.
