Epic Games axes 1,000 employees — Is Fortnite losing its magic?

In a note to staff, CEO Tim Sweeney apologised for the decision, saying the company had been spending significantly more than it earns due to a downturn in Fortnite engagement that began in 2025.

“Today we’re laying off over 1,000 Epic employees. I’m sorry we’re here again,” Sweeney said, adding that the cuts, along with over $500 million in savings from reduced contracting, marketing, and unfilled roles, are aimed at stabilising the company’s finances.

He noted that some challenges are industry-wide, including slower growth, weaker consumer spending, tougher cost structures, declining console sales compared to previous generations, and increased competition from other forms of entertainment.

Sweeney also acknowledged company-specific hurdles. Despite Fortnite remaining one of the world’s most successful games, Epic has struggled to consistently deliver engaging seasonal content. He added that the company is still in the early stages of expanding on mobile platforms and continues to face challenges as an industry pioneer.

He clarified that the layoffs are not related to artificial intelligence.

Looking ahead, Sweeney said Epic will focus on enhancing Fortnite with new seasonal content, gameplay, storytelling, and live events, while also advancing developer tools as it transitions from Unreal Engine 5 and UEFN to Unreal Engine 6. He added that major launch plans are expected later this year.

Reflecting on past challenges, Sweeney said Epic has successfully navigated major industry shifts before—from the transition to 3D gaming in the 1990s, to console gaming in the 2000s, and the move to online gaming in the 2010s.

He described current market conditions as “extreme” but emphasised the opportunities ahead for companies that adapt successfully.

Employees affected by the layoffs will receive severance packages, including at least four months of base pay and extended healthcare coverage, the company said.