Epic Games has laid off more than 1,000 employees across its global workforce, citing declining engagement in its flagship title Fortnite and mounting financial pressure.
The layoffs were confirmed in an internal memo by CEO Tim Sweeney, where he acknowledged the company’s worsening cost structure and the need for immediate restructuring.
“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,” Sweeney said. “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.”
The global gaming sector has been facing slower growth, reduced consumer spending, and rising development costs following a pandemic-era boom.
Sweeney highlighted these pressures, noting, “Some of the challenges we’re facing are industry-wide challenges: 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.”
At the same time, Epic acknowledged that not all issues were external. Despite Fortnite remaining one of the world’s most successful games, the company has struggled to maintain consistent engagement.
“Despite Fortnite remaining one of the most successful games in the world, we’ve had challenges delivering consistent Fortnite magic with every season,” Sweeney said.
Addressing speculation around automation and artificial intelligence, the CEO clarified that the job cuts were not driven by AI adoption.
“Since it’s a thing now, I should note that the layoffs aren’t related to AI. To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can.”
The layoffs are part of a broader cost-cutting effort that includes over $500 million in savings across marketing, contracting, and unfilled roles.
Affected employees will receive severance packages that include at least four months of base pay, extended healthcare coverage, and accelerated stock vesting, according to the company.
Epic Games also signaled a strategic reset, with a renewed focus on improving Fortnite’s content pipeline and advancing its game development ecosystem.
