Video game publisher Epic Games is laying off 1,000 workers, citing a drop in engagement with its signature title, Fortnite.
In a memo to employees (read it in full below), CEO Tim Sweeney noted that the cuts are “unrelated to AI.” He said the layoffs will be paired with $500 million in cost savings from contracting marketing and “closing some open roles.”
Sweeney said the moves are being prompted by simple mathematics. “We’re spending more than we’re making, and we have to make major cuts to keep the company funded,” he wrote.
Epic, which is privately held, became the envy of the media landscape when Fortnite launched in 2017. The game was popular unto itself but also relied on a newer revenue model, with “skins,” weapons and other add-ons paid for by players as they accessed the game itself for free, the opposite of the traditional console gaming strategy of charging a premium price up front.
As Fortnite became a cultural phenomenon, drawing more than 125 million players, a range of artists, movie studios and others began to use the vast canvas of the game as a venue to amplify their creative work. Disney formalized its relationship with Epic in 2024, paying $1.5 billion for an equity stake in the company and establishing a partnership based in Fortnite that would feature the company’s IP.
Here is Sweeney’s full memo:
Today we’re laying off over 1000 Epic employees. 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. 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.
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.
And some of our challenges 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; 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.
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.
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. And we’ll be kicking off the next generation of Epic with huge launch plans towards the end of the year.This isn’t our first time being here. Epic survived upheavals in 1990’s with the move from 2D to 3D with Unreal 1; in the 2000’s building console games with Gears of War; and in 2012 moving to online gaming with Paragon and Fortnite. Each time, we rebuilt our foundations and earned a renewed leadership position.
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.
At Epic, we pride ourselves in only hiring the industry’s best, so it is very painful to part with so many talented people. The folks impacted by the layoffs will receive a severance package that includes at least four months of base pay, with more based on tenure. We’re also extending Epic-paid healthcare coverage.
For example, in the U.S., they’ll receive paid coverage for 6 months. We’ll also accelerate their stock options vesting through January 2027 and extend equity exercise options for up to two years.
We’ll have a company meeting Thursday to talk about the roadmap in more detail.
-Tim
