Epic Games announced layoffs of more than 1,000 employees, citing declining Fortnite engagement and financial strain. CEO Tim Sweeney stated the downturn began in 2025, forcing the company to cut costs to stay afloat. The layoffs, paired with $500 million in savings from contracts and marketing, aim to stabilize operations. Sweeney emphasized the cuts are unrelated to AI, focusing instead on industry-wide challenges like slower growth and competition from other media.

The move follows a 2023 layoff of 830 workers (16% of staff), leaving ~4,000 employees. Sweeney noted Fortnite remains a top game but struggles with seasonal consistency and mobile optimization. The company is also phasing out three Fortnite modes: Rocket Racing, Ballistic, and Festival Battle Stage, acknowledging some experiments failed to retain players. Meanwhile, the Epic Games Store saw a 4% rise in third-party gameplay hours but overall declines year-over-year.

Epic plans to refocus on Fortnite with fresh content and live events to recapture its “magic.” Development of Unreal Engine 6 tools is accelerating, and the company is preparing “huge launch plans” for late 2025. Despite profitability in its store division, Epic faces pressure to adapt amid shifting consumer habits and industry upheaval.

Laid-off workers will receive four months of base pay (extended for tenure), six months of healthcare in the U.S., accelerated stock vesting through 2027, and extended equity options. Sweeney acknowledged the pain of parting with talented staff but framed the layoffs as necessary to secure Epic’s future. The company’s history of rebounding from crises—like the shift to 3D gaming in the 1990s—suggests resilience, though the scale of this downturn tests its ability to pivot.

Primary keyword: Epic Games layoffs

Secondary keywords: Fortnite engagement, Tim Sweeney, Unreal Engine 6, V-bucks price hike

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