Epic Games has confirmed a major round of layoffs, with more than 1,000 employees set to lose their jobs as the company responds to declining Fortnite engagement and wider industry challenges.
In a message sent to staff and later shared publicly, CEO Tim Sweeney said the decision comes after a financial imbalance that began in 2025, with Epic “spending significantly more than we’re making.” The cuts are part of a broader effort to stabilise the company’s finances, alongside more than US$500 million in cost reductions across contracting, marketing, and unfilled roles.
Fortnite Engagement Decline Triggers Major Cuts
According to Sweeney, the downturn in Fortnite engagement that started in 2025 has been a key driver behind the layoffs. While Fortnite remains one of the most successful games globally, Epic has struggled to consistently deliver the kind of seasonal updates that keep players returning long-term.
Sweeney acknowledged that maintaining “Fortnite magic” every season has proven difficult, which has directly impacted player retention and, ultimately, revenue. That gap between spending and earnings is what forced Epic into making large-scale cuts.
The layoffs affect over 1,000 employees, making this one of the biggest job reductions in the gaming industry in recent years.
Industry Pressures And Epic’s Own Challenges
Epic pointed to a mix of broader industry trends and internal hurdles behind the decision. On the wider side, the company cited slower growth across gaming, weaker consumer spending, and tougher cost structures.
There are also shifting player habits to contend with. Games are now competing not just with each other, but with other forms of entertainment that are becoming increasingly engaging and time-consuming.
At the same time, some of Epic’s challenges are more specific. The company is still in the early stages of bringing Fortnite back to mobile platforms at scale, and is working to optimise the game for a global smartphone audience.
Sweeney also referenced Epic’s long-term strategy of pushing industry change, which has involved taking risks that have not yet fully paid off.
Layoffs Not Related To AI, Says Sweeney
Sweeney made a point of addressing a common assumption around job cuts in tech, stating clearly that the layoffs are not tied to artificial intelligence.
He explained that, if anything, improvements in productivity through technology would ideally allow Epic to support more developers creating games and tools, not fewer. The current cuts are instead tied directly to financial pressures and restructuring.
What Affected Employees Will Receive
Epic says impacted staff will receive severance packages that include at least four months of base pay, with additional compensation based on tenure.
For employees in the United States, the company will also provide six months of paid healthcare coverage. Stock options will be accelerated through January 2027, and workers will have up to two years to exercise their equity.
Sweeney described the layoffs as “very painful,” emphasising that Epic prides itself on hiring top talent and that the decision was not taken lightly.
Not The First Major Layoff At Epic
This isn’t the first time Epic Games has made large-scale cuts. Back in 2023, the company laid off around 830 employees, showing that the current situation is part of a longer period of restructuring.
Sweeney compared the current moment to previous turning points in Epic’s history, including the transition to 3D gaming in the 1990s, the move into console development with Gears of War, and the shift to online gaming with Fortnite.
However, he noted that current market conditions are among the most extreme the company has faced, combining both significant risk and potential opportunity.
What Comes Next For Epic Games
Looking ahead, Epic plans to focus heavily on improving Fortnite’s seasonal content, including gameplay, story, and live events, in an effort to rebuild engagement.
The company is also working on evolving its development ecosystem, moving from Unreal Engine 5 and Unreal Editor for Fortnite towards Unreal Engine 6, with a stronger emphasis on stability and capability for creators.
Sweeney hinted at “huge launch plans” later in the year, suggesting that Epic is aiming for a major reset moment as it tries to position itself for the next phase of the gaming industry.