Epic Games CEO Tim Sweeney says that the company will lay off over 1,000 employees and cut $500 million in costs as it faces a downturn in engagement with “Fortnite.”
“I’m sorry we’re here again. 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 wrote in a memo to staff. “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.”
He noted that some challenges are being faced industry-wide, such as slower growth, weaker spending, tougher cost economics, current consoles selling less than last generation’s and games competing for time against other increasingly-engaging forms of entertainment. However, he acknowledged that others are unique to Epic.
“Despite Fortnite remaining one of the most successful games in the world, we’ve had challenges delivering consistent Fortnite magic with every season,” he said. “We’re only in the early stages of returning to mobile and optimizing Fortnite for the world’s billions of smartphones; and in being the industry’s vanguard we have taken a lot of bullets in a battle which is only in the early days of paying off for ourselves and all developers.”
He also emphasized that the layoffs aren’t related to AI and that Epic wants “as many awesome developers developing great content and tech as we can” to the extent that it improves productivity.
“What we now need to do is clear: build awesome Fortnite experiences with fresh seasonal content, gameplay, story and live events; accelerate developer tools with greater stability and capability as we evolve from Unreal Engine 5 and UEFN to Unreal Engine 6,” he added. “And we’ll be kicking off the next generation of Epic with huge launch plans towards the end of the year.”
The latest upheaval for Epic comes after it moved from 2D to 3D with Unreal 1 in the 1990s, built console games with Gears of War in the 2000s and moved to online gaming in 2012 with Paragon and Fortnite.
“Each time, we rebuilt our foundations and earned a renewed leadership position,” Sweeney said. “Market conditions today are the most extreme we’ve seen since those early days, with massive upheaval in the industry accompanied by massive opportunity for the companies that come out as winners on the other side. That’s what we’re aiming to do for our players, and we aim to bring other like-minded developers in the industry along on the journey to build an increasingly open and vibrant future of entertainment together.”
Impacted employees will receive a severance package that includes at least four months of base pay, with more based on tenure. It is also extending Epic-paid healthcare coverage for six months in the U.S. and equity exercise options for up to two years, as well as accelerating the vesting of stock options through January 2027.
Sweeney said the company would talk about its roadmap going forward in more detail during a company meeting on Thursday.
