Epic Games announced layoffs of over 1,000 employees due to continuing declines in engagement with its flagship game, Fortnite. CEO Tim Sweeney cited a downturn in player activity that began in 2025, contributing to substantial financial pressure on the company.
Fortnite Engagement and Market Challenges
In a memo to staff, Sweeney acknowledged difficulties in maintaining consistent player engagement with Fortnite’s seasonal content. He noted the company is spending significantly more than it earns, prompting major workforce reductions to stabilize finances. The memo also highlighted broader challenges across the video-game industry, including slower growth, weaker consumer spending, and increased competition from alternative entertainment forms.
Epic Games is still in the initial phases of expanding Fortnite on mobile platforms to reach billions of smartphone users, which Sweeney described as a critical, ongoing effort. He emphasized that current market conditions are the most severe the company has faced since its founding in 1991 and clarified that these layoffs are unrelated to developments in artificial intelligence.
Cost-Cutting Measures and Industry Context
Alongside staff reductions, Epic plans to achieve over $500 million in savings by cutting contracting, marketing expenses, and leaving some positions unfilled. This marks the company’s second significant round of layoffs in three years, following cuts of approximately 830 jobs in September 2023.
The video-game sector has experienced similar workforce and project cutbacks recently, with companies like Electronic Arts and Amazon also reducing gaming division staff amid economic uncertainty and shifts in consumer behavior. Epic aims to use the cost savings to place the company on firmer financial footing amid these industry-wide pressures.
Laid-off employees will receive at least four months of base pay and extended healthcare coverage funded by Epic Games, according to the company memo.
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