Epic Games Inc., the company behind global megahit Fortnite, the Epic Games Store, and the wildly popular Unreal Engine, is laying off 16 percent of its current workforce. This report, first coming from Bloomberg’s Jason Schreier, sees almost 900 employees losing their jobs.

A memo was shared this morning at the North Carolina company, seen by Kotaku, informing staff of the bad news. It explains that alongside 16 percent of staff being laid off, the company is also selling Bandcamp, and “spinning off” most of marketing company SuperAwesome. Earlier today on X, Schreier wrote, “rumors were flying as Epic disabled Slack for employees ahead of the news.”

“For a while now, we’ve been spending way more money than we earn,” says the memo, sent to staff by CEO Tim Sweeney. “I have long been optimistic we could power through this transition without layoffs, but in retrospect I see that this was unrealistic.”

It seems that Fortnite’s failure to continue growing was part of the problem. Sweeney reports that it’s “starting to grow again,” but this is driven by creator content “with significant revenue sharing.”

Despite efforts to reduce spending, Sweeney says “we still ended up far short of financial sustainability.” These layoffs, he hopes, will “stabilize our finances.”

“Laid-off Epic employees will receive six months severance and health benefits,” Schreier said on X, adding that an “all-hands meeting [is] happening shortly.”

This news would be shocking under any circumstances, but it’s especially surprising given Epic’s apparently incredibly solvent state. Fortnite alone has over 230 million players, with 2022 seeing daily user peaks of 34.3 million people. According to Epic accounts, Fortnite was bringing in around $5-6 billion a year.

Those are already massive figures, before you even consider Unreal Engine fees, and revenue from the Epic Games Store, which last year was $355 million. That much money coming in, to an outsider, makes the decision to lose so many staff seem hard to comprehend. However, according to Sweeney, they were still outspending even these amounts.

At the same time, Epic is divesting itself of Bandcamp, a deeply strange acquisition in the first place. It’s being sold to Songtradr. Also, SuperAwesome, Epic’s marketing arm, is being spun off into an independent company under the same branding.

Epic Games Inc. is privately owned, with the majority of the company’s shares belonging to CEO Tim Sweeney. However, the all-consuming Tencent Holdings Ltd. own a 40 percent stake.

We’ve reached out to Epic to ask for comment regarding the situation. In the meantime, Sweeney said to staff in a memo,

Saying goodbye to people who have helped build Epic is a terrible experience for all. 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.

All the best to everyone affected in finding new work as soon as possible.