Epic Games, the company behind Fortnite, will lay off nearly 900 employees, citing overspending despite growing revenue, according to CEO Tim Sweeney.

Also read | Fortnite maker Epic Games fined $520 million by FTC: All charges explained

Epic Games, the developer of the popular battle royale game Fortnite, is set to lay off approximately 900 employees, which amounts to 16% of its workforce. The decision comes as the gaming industry faces challenges, leading the company’s CEO, Tim Sweeney, to take action.

In a memo to employees, Sweeney acknowledged the company’s financial situation, stating that they had been spending more money than they earned, investing in the evolution of Epic and expanding Fortnite as a metaverse-inspired platform for creators. While Sweeney had initially hoped to avoid layoffs, he conceded that it was an unrealistic expectation.

Sweeney clarified that the cost-cutting measures would not disrupt the development or core business lines of the company. Notably, around two-thirds of the job cuts would affect teams outside of core development.

Employees affected by the layoffs will receive a severance package that includes six months of base pay and, in the United States, Canada, and Brazil, six months of Epic-paid healthcare. The company is also accelerating stock option vesting schedules through the end of 2024 and granting an additional two years for exercising options. Unearned profit sharing from 401k plans will be vested in the U.S.

Epic Games intends to prioritize key initiatives, including the next Fortnite season and Fortnite Chapter 5, named Del Mar, Sparks, and Juno.

Also read | Optimus Prime in Fortnite? Alleged leaked Chapter 4 Season 3 key art has fans speculating

In addition to downsizing, Epic Games is divesting two of its business divisions. Bandcamp, an online audio platform acquired by the company in the previous year, will be joining Songtradr, a music marketplace company supporting artists. SuperAwesome, a kid-safe technology developer acquired in 2020, will spin off most of its advertising business as an independent company under the SuperAwesome brand.

These layoffs occur against the backdrop of a legal battle between Epic Games and Apple, which began in 2020. Epic alleges that Apple’s practice of charging up to 30% commissions on in-app payments on iPhones and other devices violates U.S. antitrust rules.