Epic Games CEO Tim Sweeney announced on Tuesday that the company is laying off approximately 23% of its workforce, totaling over 1,000 employees. In a memo sent to staff, Sweeney apologized for the decision, attributing the drastic measures to a financial imbalance where the company is "spending significantly more than we're making."
The sweeping changes come alongside a reported downturn in Fortnite engagement starting in 2025. While Fortnite remains one of the world's most popular titles, Sweeney noted that player involvement has been inconsistent between seasons. To stabilize finances, Epic is implementing over $500 million in cost savings, which includes cutting contractors, reducing marketing budgets, and closing open roles.
Operational Shifts and Severance
Beyond the personnel cuts, Epic is shutting down specific Fortnite modes, including Rocket Racing, Ballistic, and the Festival Battle Stage. The company recently raised the price of in-game currency, V-Bucks, citing increased operational costs.
Affected employees will receive a severance package providing a minimum of four months of base pay, with additional compensation based on tenure. Sweeney clarified that the layoffs are not driven by Artificial Intelligence replacing developers but rather by broader economic pressures.
Industry Context
Sweeney highlighted that Epic has been acting as the industry's "vanguard," particularly regarding legal battles against Apple and Google over store fees. He described this role as taking "a lot of bullets," adding that the payoff is only in its early stages. This round of layoffs follows a previous reduction in 2023, where 830 employees were let go.
Despite the downturn, third-party data indicates that Fortnite still leads console engagement in the US. However, average play hours have dipped year-over-year. Looking forward, Sweeney stated that Epic aims to rebuild its foundations, focusing on fresh content for Fortnite and evolving its technology towards Unreal Engine 6.
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