Highlights
- Epic Games is laying off over 1,000 staff due to low Fortnite engagement.
- CEO Tim Sweeney aims to save $500 million through massive cost-reduction.
- Cuts stem from slower industry growth and ongoing legal battles
Epic Games, the gaming powerhouse behind Fortnite and the Unreal Engine, is laying off more than 1,000 employees, impacting roughly 20% of its global workforce. The massive cuts come as the Cary, North Carolina-based studio faces a sharp downturn in Fortnite player engagement, forcing the company into a harsh reality check after a period of spending significantly more money than it was bringing in.
In a note sent to staff, Epic CEO Tim Sweeney explained that the company needed to make major cuts to keep its operations funded. He noted that the decline in Fortnite playtime began in 2025. To stabilize its finances, Epic is executing a massive internal cost-reduction plan that the company expects will generate over $500 million in savings.
These savings will come from slashing marketing budgets, reducing third-party contracting, and permanently closing several open roles. Sweeney said that, “these job cuts are not tied to artificial intelligence, adding that to the extent AI improves productivity, the company still wants to have as many awesome developers making great content and tech as possible,” as per gamedeveloper.
The sheer scale of these layoffs leaves a massive footprint on the studio, shrinking Epic's global headcount to approximately 4,000 employees. Calling it very painful to part with so many talented people, Sweeney detailed the support the company is providing to departing developers. The severance package includes a baseline of at least four months of regular base pay, with additional compensation based on tenure.
Epic is also extending its paid healthcare coverage, offering six months of paid coverage to its United States-based employees. Additionally, the company is accelerating the vesting of stock options through January 2027 and extending equity exercise options for up to two years. Epic plans to hold a company-wide meeting on Thursday to talk about its roadmap in detail.
Fortnite
Navigating Extreme Market Conditions
Sweeney pointed to a perfect storm of industry challenges as the catalyst for these tougher market conditions. He cited slower industry-wide growth, weaker consumer spending, the financial toll of legal battles against Apple and Google, and the reality that current consoles are selling fewer units than the last generation.
He described today's market conditions as the most extreme the company has seen since its early days, noting that the massive upheaval in the industry is accompanied by a massive opportunity for the companies that manage to come out as winners on the other side.
Unfortunately, this is just the latest in a series of major restructuring moves for the publisher. Epic last issued major cuts to its workforce in September 2023, laying off more than 800 people, which amounted to 16% of the company at the time. Two-thirds of those affected were on teams outside of core development, catching up Fall Guys developer Mediatonic and 250 employees tied to the sale of the music storefront Bandcamp, as per Gameindustry.biz.
At the time, Epic Games moved to net-zero hiring and scaled back its event and marketing spending, but still ended up far short of financial sustainability. The pressure has been mounting visibly; just last week, Epic announced it would increase the price of its in-game currency to help pay the bills, citing that the cost of running Fortnite has simply gone up a lot.
