Epic Games has announced a sweeping reduction in workforce, cutting more than 1,000 employees. In a memo, CEO Tim Sweeney attributed the decision to a significant downturn in Fortnite engagement that began in 2025. This decline has resulted in the company spending substantially more than it earns, necessitating drastic measures to maintain financial stability.
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The layoffs represent a staggering portion of the company’s workforce. Following a 2023 reduction of 830 staff members (16% of the company at the time), this latest round suggests that Epic is culling approximately one-quarter of its remaining headcount. Sweeney noted that these cuts, combined with over $500 million in identified savings across marketing and contracting, are essential for the company’s long-term survival. Notably, he clarified that the layoffs are a response to economic realities and are not related to AI integration.
While the broader gaming industry is struggling with slowing growth and “tougher cost economics,” Epic faces unique hurdles. Sweeney admitted the company has struggled to deliver “consistent Fortnite magic” across every season. Furthermore, Epic’s role as an industry vanguard has been expensive; the CEO previously revealed that the company spent over $100 million in legal fees during its high-profile battle with Apple over App Store policies.
To “help pay the bills,” Epic recently increased the price of Fortnite’s V-Bucks currency. Additionally, the company is streamlining its offerings by shuttering three underperforming modes: Rocket Racing, Fortnite Ballistic, and Festival Battle Stage. Epic conceded on social media that these modes failed to attract a sufficiently large player base.
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The path forward focuses on recapturing the core Fortnite audience through fresh seasonal content and live events. Simultaneously, Epic is accelerating the development of its creator tools as the industry transitions to Unreal Engine 6. Despite the current turmoil, the Epic Games Store remains a bright spot; Vice President Steve Allison recently noted the storefront has reached marginal profitability, with PC players spending $1.16 billion on the platform in 2025.
Departing employees will receive a minimum of four months’ base pay, with additional compensation based on tenure. Epic is also providing extended healthcare coverage, up to six months for those in the US, and accelerating the vesting of stock options through January 2027.
