Epic Games CEO Tim Sweeney announced today that the company is laying off more than 1,000 employees following a significant downturn in player engagement. The move comes as the Fortnite creator struggles to balance its spending against declining revenue, marking one of the most difficult periods in the company’s history.
In a memo sent to staff, Sweeney was candid about the financial state of the company, stating, “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.” He noted that these layoffs, combined with $500 million in other cost savings, are intended to put the developer in a more stable position.
Sweeney blamed the struggles to a mix of industry-wide issues and internal hurdles. He pointed to slower growth and the fact that current gaming consoles are selling less than the previous generation. Internally, Epic has faced difficulties keeping the Fortnite experience fresh, with Sweeney admitting, “we’ve had challenges delivering consistent Fortnite magic with every season.”
Despite the massive staff reduction, Sweeney clarified that the cuts were not driven by artificial intelligence. “Since it’s a thing now, I should note that the layoffs aren’t related to AI,” he wrote, adding that the company still wants as many talented developers as possible to improve productivity.
Looking forward, Epic plans to shift its focus toward Unreal Engine 6 and “huge launch plans” scheduled for the end of 2026. Sweeney compared the current crisis to past transitions the company survived in the 90s and 2000s. “Market conditions today are the most extreme we’ve seen since those early days,” Sweeney said, though he maintained that Epic aims to come out as a winner on the other side of the industry upheaval.
Impacted employees will receive a severance package including at least four months of base pay and extended healthcare coverage. For U.S. workers, Epic is providing six months of paid coverage and accelerating stock option vesting through early 2027.
We had a sign things were not good for Fortnite when Epic Games reduced the value of V-bucks, saying it was increasing the price to pay the bills. Now we’re seeing further action in the form of job cuts.
If you have kids in your household you know first thing what the latest gaming trends are. Right now, Fortnite has taken a back seat to Minecraft, which has risen again in popularity (go figure).
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