Epic only realized it had a ‘financial problem’ that led to layoffs 10 weeks ago

During Unreal Fest 2023, Epic’s CEO Tim Sweeney announced: “We realized we were running into a financial problem that we had to solve quickly about 10 weeks ago”.

Sweeney also announced that Epic would be introducing a new pricing structure for Unreal Engine, making it more expensive to use — but not for game developers. He also restated Epic’s commitment to the Epic Games Store, its crusade against platform “overlords” like Apple and Google, and its mission to “build the metaverse.”

In his email to staff explaining the layoffs, Sweeney had confessed that Epic had 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.”

And he made a couple of references to how the company had been funded “heavily” by Fortnite revenue in recent years, a setup that appeared no longer to be sustainable.

Following the pricing controversy in Unity, more and more developers are becoming acutely aware of the high maintenance costs associated with game engines. Striking a balance between these increasing expenses and pricing will be a key determinant of whether the next generation of engines can garner greater favor among developers.