Epic Games Lays Off Over 1,000 Employees Amid Fortnite's Declining Engagement

Epic Games has announced layoffs affecting more than 1,000 employees, citing a significant drop in Fortnite's player engagement as the primary reason behind the decision.

CEO Tim Sweeney shared the news in a blog post addressed to both employees and the public.

"Today we’re laying off over 1000 Epic employees. I'm sorry we're here again. The downturn in Fortnite engagement that started in 2025 means we're spending significantly more than we're making, and we have to make major cuts to keep the company funded. This layoff, together with over $500 million of identified cost savings in contracting, marketing, and closing some open roles puts us in a more stable place."

It is worth noting that this is not the first time Epic has found itself in this position. Back in 2023, the company cut 830 jobs under strikingly similar circumstances. Sweeney's messaging then was almost identical, pointing to Fortnite's struggles and overspending as the key drivers. That round of layoffs notably hit Fall Guys developer Mediatonic hard, a studio Epic had acquired just two years prior.

So what went wrong this time? Sweeney points to a mix of industry-wide headwinds and challenges specific to Epic. On the broader side, the gaming industry has been dealing with "slower growth, weaker spending, and tougher cost economics; current consoles selling less than last generation's; and games competing for time against other increasingly-engaging forms of entertainment".

As for Epic's internal struggles, Sweeney says: "Despite Fortnite remaining one of the most successful games in the world, we’ve had challenges delivering consistent Fortnite magic with every season; we're only in the early stages of returning to mobile and optimizing Fortnite for the world's billions of smartphones; and in being the industry's vanguard we have taken a lot of bullets in a battle which is only in the early days of paying off for ourselves and all developers".

One thing Sweeney was quick to clarify is that AI has nothing to do with these cuts.

Affected staff will receive a minimum of four months of base pay, with additional compensation depending on how long they have been with the company. In the United States, Epic-paid healthcare coverage will continue for six months. On top of that, stock option vesting will be accelerated through January 2027, and employees will have up to two years to exercise their equity options.

Sweeney also took a moment to put things in historical perspective. He reminded employees that Epic has weathered major transitions before, from the shift to 3D in the 1990s with Unreal, to building console games in the 2000s with Gears of War, and then moving into online gaming with Paragon and Fortnite. Each time, the company rebuilt and came out stronger.

Looking ahead, Epic plans to focus on delivering stronger Fortnite seasonal content, live events, and story-driven experiences. There is also a push to evolve its development tools, moving from Unreal Engine 5 toward Unreal Engine 6. Sweeney hinted at big launch plans towards the end of the year, describing it as the start of the "next generation of Epic."