Epic Games lays off 1,000 employees amid Fortnite downturn

Epic Games is laying off 1,000 employees on Tuesday, according to a company memo posted on the company’s blog. Epic Games CEO Tim Sweeney attributed the decision to a downturn in engagement for Fortnite, the company’s popular online video game, which began in 2025. The decline in player engagement has forced the company to restructure its cost base to remain funded, as it is currently spending significantly more than it is making.

In the memo, Sweeney wrote: “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,” explaining that the layoffs are necessary to stabilize the business. To further address these financial pressures, Epic Games is implementing over $500 million in identified cost savings. Sweeney noted that these savings will be achieved by cutting expenses in contracting and marketing, alongside closing some open roles. He stated that this layoff, combined with these identified cost savings, puts the company in a more stable place.

These cost pressures also led Epic Games to increase the price of V-Bucks, Fortnite’s in-game currency, last week. In explaining the price hike, the company stated that the cost of running Fortnite has gone up a lot.

Sweeney also addressed the role of technology in the restructuring, clarifying that the layoffs were not caused by artificial intelligence making developers’ jobs redundant. However, the company may be facing indirect AI-related headwinds. Sweeney noted that a RAM shortage and demand for chips have had ripple effects across the industry, which have also impacted consumer spending.

To support departing staff, Epic Games is providing a transition package. The support details include:

• Four months of severance pay, with additional compensation for employees with longer tenures.
• Six months of healthcare coverage, which Epic Games will continue to pay for U.S. employees.

Why it matters

Epic Games’ restructuring highlights the volatility of live-service gaming models, where even massive titles like Fortnite are susceptible to engagement shifts and rising operational costs.