Epic Games layoffs: 1,000 jobs cut amid Fortnite slump

Epic Games is laying off over 1,000 employees, representing approximately 23% of its workforce, according to CEO Tim Sweeney's note to staff. The layoffs come as the company faces a downturn in Fortnite engagement that began in 2025, with Sweeney stating Epic is "spending significantly more than we're making."

Why Epic Games announced massive layoffs

According to Sweeney's internal memo, Epic Games faces multiple challenges despite Fortnite remaining "one of the most successful games in the world." The primary issue is inconsistent player engagement between seasons and declining revenue that has left the company spending more than it earns.

"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 the note.

The layoffs will be accompanied by over $500 million in identified cost savings from contracting, marketing, and closing open roles to stabilise company funding. Affected employees will receive severance packages including at least four months of base pay, with additional compensation based on tenure.

Fortnite engagement data shows declining playtime

Data from Circana reveals the extent of Fortnite's engagement decline, despite maintaining its position as the most popular console game. According to Mat Piscatella, senior director at Circana, PlayStation players engaged with Fortnite for an average of 16 hours in February 2026, down from 21 hours the previous year.

Xbox players showed similar patterns, averaging 15 hours monthly compared to 19 hours in February 2025. However, Fortnite still led in US Monthly Active Users across both PlayStation (35% of active players) and Xbox (31% of active players).

As part of the restructuring, Epic will shut down Fortnite's Rocket Racing, Ballistic, and Festival Battle Stage modes. The company also raised V-Bucks prices earlier this month, stating "the cost of running Fortnite has gone up a lot and we're raising prices to help pay the bills."

Industry challenges and Epic's unique position

Sweeney attributed the layoffs to both industry-wide challenges and Epic's specific circumstances. The broader gaming industry faces slower growth, weaker consumer spending, and increased competition from other forms of entertainment.

"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," he explained.

Epic's role as "the industry's vanguard" – likely referring to its ongoing legal battles against Apple and Google over app store fees – has created additional financial pressures. Sweeney noted the company has "taken a lot of bullets in a battle which is only in the early days of paying off for ourselves and all developers."

This marks the second major round of layoffs at Epic, following 830 job cuts in 2023 that represented 16% of the workforce at the time. The South Park Fortnite collaboration and other high-profile crossovers haven't been enough to maintain consistent engagement levels.

What this means for Epic Games' future

Despite the cuts, Sweeney outlined ambitious plans for Epic's recovery and growth. The company will focus on building "awesome Fortnite experiences with fresh seasonal content, gameplay, story, and live events" while accelerating developer tools as it transitions from Unreal Engine 5 to Unreal Engine 6.

"We'll be kicking off the next generation of Epic with huge launch plans towards the end of the year," Sweeney stated, though specific details weren't provided. The CEO emphasised that layoffs "aren't related to AI," noting the company wants "as many awesome developers developing great content and tech as we can" to improve productivity.

Epic Games Store showed mixed financial performance, with PC players spending $1.16 billion last year while the platform remains only "marginally profitable" according to general manager Steve Allison. The low profit margins stem from fees paid to developers and publishers, particularly for the weekly free game programme.

Frequently Asked Questions

Why did Epic Games announce layoffs?

Epic Games announced layoffs due to a downturn in Fortnite engagement starting in 2025, causing the company to spend significantly more than it earns. CEO Tim Sweeney cited both industry-wide challenges and Epic's unique position as factors.

How many employees did Epic Games lay off?

Epic Games is laying off over 1,000 employees, representing approximately 23% of its workforce. This follows a previous round of 830 layoffs in 2023 that affected 16% of staff.

Is Fortnite's popularity declining?

Data shows Fortnite engagement dropping year-over-year, with PlayStation players averaging 16 hours monthly versus 21 hours previously. However, it remains the most popular game on consoles with 35% of PlayStation and 31% of Xbox active users playing.

Are these layoffs related to AI?

No, CEO Tim Sweeney explicitly stated the layoffs aren't related to AI. He emphasised Epic wants "as many awesome developers as possible" to improve productivity with AI technology.

What is the future strategy for Epic Games?

Epic plans to focus on fresh Fortnite seasonal content, accelerate developer tools transitioning to Unreal Engine 6, and launch major projects by year-end. The company aims to rebuild its foundations despite current challenges.

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