Epic Games Lays Off 1,000 Amid Fortnite Popularity Decline
Epic Games, the creator of Fortnite and the Unreal Engine, is laying off over 1,000 employees, representing approximately 23% of its workforce, effective immediately. The cuts arrive as the company grapples with a significant downturn in Fortnite engagement that began in 2025 and faces broader economic headwinds impacting the gaming industry.
The news was delivered to staff by CEO Tim Sweeney in a memo on Tuesday, with details subsequently confirmed by multiple sources. Sweeney stated that the layoffs were necessary to address a situation where Epic is “spending significantly more than we’re making” and to ensure the company’s financial stability. “I’m sorry we’re here again,” Sweeney wrote, referencing previous layoffs in 2023 which impacted 830 employees, or 16% of the workforce at that time.
Alongside the workforce reduction, Epic has identified over $500 million in cost savings through reductions in contracting, marketing expenditures, and the closure of open positions. The company is also discontinuing development on several projects, including the Rocket Racing, Ballistic, and Festival Battle Stage modes.
Sweeney attributed the decline in Fortnite’s performance to several factors, including challenges in maintaining consistent quality across seasons, slow progress in re-establishing a strong mobile presence, and the financial burden of ongoing legal battles. Epic previously reported spending over $100 million on legal fees related to its dispute with Apple over App Store policies.
The CEO explicitly stated that the layoffs were not related to the development or implementation of artificial intelligence, despite recent industry anxieties surrounding the technology’s impact on employment. “Since it’s a thing now, I should note that the layoffs aren’t related to AI,” Sweeney said in the memo.
Epic acknowledged broader challenges facing the gaming industry, including slower growth, reduced consumer spending, increased competition from other forms of entertainment, and declining console sales. Sweeney noted that current console sales are lower than those of the previous generation.
Affected employees will receive a severance package including at least four months of base pay, with additional compensation based on tenure. Epic will also extend healthcare coverage for six months. A company-wide meeting is scheduled for Thursday to discuss the company’s future direction.
Despite the challenges, Sweeney emphasized that Fortnite remains “one of the most successful games in the world.” However, the company recognizes the demand for significant adjustments to navigate the current economic climate and maintain its long-term viability.