Epic Games has announced that it will lay off more than 1,000 employees, marking the second major round of job cuts at the company in the past three years.
The layoffs have been linked to declining engagement with Fortnite, which has put pressure on the company’s finances.
In an internal memo on Tuesday, March 24, CEO Tim Sweeney said that the drop in Fortnite engagement beginning in 2025 means the company is “spending significantly more than we’re making,” prompting the need for major cost-cutting measures. He added that, along with more than $500 million in savings from reduced contracting, marketing, and the closure of open roles, the move would place the company in a more stable position.
Sweeney also pointed to broader industry challenges, including slower growth, reduced consumer spending, and rising cost pressures. He noted that current game consoles are selling less than previous generations and that video games are competing for attention with other forms of increasingly engaging entertainment.
Epic Games, known for creating the global hit Fortnite and the Unreal Engine, is headquartered in Cary, North Carolina.
The company’s difficulties reflect both wider industry trends and challenges specific to its own business.
Tim Sweeney said the gaming industry’s growth has slowed, consumer spending has declined, and competition from other forms of entertainment has increased.
He noted that “current consoles are selling less than last generation’s,” while games are competing for players’ time with other increasingly engaging entertainment options.
Epic Games is also in the early stages of returning to mobile platforms after a prolonged legal dispute with Apple and Google over app store policies.
Sweeney clarified that the layoffs are not related to artificial intelligence, stating, “Since it’s a thing now, I should note that the layoffs aren’t related to AI. To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can.”
The company has pledged to provide severance packages to affected employees, including four months of base pay, along with additional compensation based on tenure.
The employees in the U.S. will also receive six months of paid healthcare coverage, accelerated stock option vesting, and extended equity exercise options.
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