Epic Games Announces Layoffs of 1,000 Employees, Cites Decline in Fortnite Engagement as Primary Cause, CEO Clarifies “Layoffs Not Related to AI”

Company Identifies $500 Million in Cost Savings, Affected Employees to Receive at Least Four Months of Base Pay; Cary, North Carolina Headquarters Most Impacted with Approximately 210 Positions Cut

On March 24, Epic Games CEO Tim Sweeney announced on the company’s official website that the game developer will reduce its global workforce by approximately 1,000 employees, representing about 20% of its total staff. In an internal memo sent to all employees, the founder and chief executive confirmed the news, attributing the layoffs primarily to a continued decline in Fortnite player engagement.

Statement Link: https://www.epicgames.com/site/en-US/news/todays-layoffs

In the memo, Sweeney stated that a downward trend in Fortnite engagement beginning in 2025 had resulted in the company spending significantly more than it was earning, necessitating major cost-cutting measures to sustain operations. In addition to the layoffs, Epic has identified over $500 million in cost savings across contracting, marketing, and some unfilled roles, with the aim of returning the company to a more stable financial position.

Severance Package: At Least Four Months of Base Pay, Accelerated Stock Option Vesting

Sweeney outlined the compensation package for employees affected by the layoffs in his memo:

All impacted employees will receive a severance package including at least four months of base pay, with higher amounts based on tenure;

In the United States, the company will provide an additional six months of extended healthcare coverage;

Stock option vesting will be accelerated through January 2027;

The exercise window for stock options will be extended to up to two years.

According to documents Epic filed with the North Carolina Department of Commerce, at least 211 employees at the company’s Cary headquarters will be affected by the layoffs, spanning roles including artists, engineers, programmers, and designers. The company stated that it had complied with notification requirements for mass layoffs.

Sweeney: Industry-Wide Slowdown Combined with Company-Specific Challenges, AI Not a Factor

In his memo, Sweeney attributed the layoffs to a combination of industry-wide and company-specific challenges.

On the industry level, he cited slower growth, weaker consumer spending, tougher cost economics, current-generation console sales trailing the previous generation, and games competing for user time against other increasingly engaging forms of entertainment.

Regarding company-specific factors, Sweeney noted that while Fortnite remains one of the most successful games globally, Epic has faced challenges in delivering consistent “Fortnite magic” with every season. The company remains in the early stages of returning to mobile — following years of legal battles with Apple and Google, Fortnite returned to iOS platforms in 2025. Additionally, as an industry pioneer, Epic has “taken a lot of bullets” in its battles with tech giants, a fight that is still in the early days of paying off for both the company and all developers.

Notably, Sweeney explicitly stated in the memo: “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.”

A Difficult Decision: Lessons from the Past, Vision for the Future

In his memo, Sweeney reflected on several pivotal transformations in Epic’s history: the shift from 2D to 3D with Unreal Engine 1 in the 1990s; building console games with Gears of War in the 2000s; and the pivot to online gaming with Paragon and Fortnite in 2012. After each crisis, he noted, Epic rebuilt its foundations and reestablished a leadership position.

“Market conditions today are the most extreme we’ve seen since those early days, with massive upheaval in the industry accompanied by massive opportunity for the companies that come out as winners on the other side,” Sweeney wrote. “That’s what we’re aiming to do for our players.”

Looking ahead, Sweeney said Epic would focus on building exceptional Fortnite experiences with fresh seasonal content, gameplay, story, and live events, while accelerating developer tools with greater stability and capability as the company evolves from Unreal Engine 5 and UEFN toward Unreal Engine 6. A company-wide meeting is scheduled for Thursday to discuss the roadmap in greater detail.

Context: Ongoing Industry-Wide Layoff Trend

This marks the second large-scale workforce reduction for Epic Games in recent years. In September 2023, the company laid off approximately 830 employees, representing about 16% of its workforce at the time. In his memo, Sweeney expressed regret over “being here again.”

Notably, Epic recently raised the price of Fortnite’s in-game currency, V-Bucks, a move the company said was intended to “help pay the bills” amid rising operational costs. Concurrently, Epic has been gradually adjusting certain Fortnite modes to concentrate resources.

At the industry level, these layoffs continue a broader trend of workforce reductions across the gaming sector. Earlier this month, EA also announced adjustments to its Battlefield development teams. In Cary, another game developer, Red Storm Entertainment, announced plans last week to cut 105 positions, citing “economic pressures.”