Epic Games has announced its second major round of layoffs in recent years, letting go of more than 1,000 employees. In a note sent to staff today and later published on the company’s website, chief executive Tim Sweeney expressed regret over the decision while outlining the financial pressures that made the cuts necessary.
The layoffs stem primarily from a downturn in Fortnite engagement that started in 2025. Sweeney wrote that the company is now spending significantly more than it is making and must take major steps to remain funded. He paired the job reductions with more than $500 million in identified cost savings across contracting, marketing, and unfilled roles, saying the combined measures should put Epic in a more stable position moving forward.
Sweeney was candid about the challenges. Some are industry-wide, including slower overall growth, weaker consumer spending, tougher cost economics, and lower console sales compared with the previous generation. Games are also competing for player time against other forms of entertainment that have become increasingly engaging. But he also pointed to issues unique to Epic. Despite Fortnite remaining one of the most successful games in the world, the studio has struggled to deliver consistent seasonal content that keeps players hooked. The company is still in the early stages of fully returning to mobile after years of legal battles with Apple and Google, and it has taken on the role of industry vanguard in pushing for open platforms, which has come with its own costs.
Fortnite only returned to the US App Store on iOS in 2025, nearly five years after Apple removed it over Epic’s in-app payment system. Sweeney noted that being at the forefront of those fights has meant absorbing significant pressure, but he believes the long-term payoff for developers across the industry is still ahead.
He also directly addressed speculation about generative AI playing a role in the cuts. “Since it’s a thing now, I should note that the layoffs aren’t related to AI,” Sweeney wrote. “To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can.”
This is not the first time Epic has had to reduce its workforce. In September 2023 the company cut around 830 roles, roughly 16 percent of its staff at the time, citing similar financial strains. Sweeney acknowledged the repeat nature of the situation, telling employees, “I’m sorry we’re here again.”
The note also outlined support for those affected. Laid-off staff will receive a severance package that includes at least four months of base pay, with additional amounts based on tenure. Epic will extend paid healthcare coverage, for example six months in the US, accelerate stock option vesting through January 2027, and allow equity exercise options for up to two years.
Sweeney closed the message on a forward-looking note. He said the company’s immediate priorities are to deliver stronger Fortnite experiences with fresh seasonal content, gameplay, story, and live events, while accelerating development of Unreal Engine tools as it moves toward Unreal Engine 6. Epic also plans major launch initiatives toward the end of the year to kick off the next phase of the company’s growth.
The layoffs arrive amid a broader wave of job reductions across the gaming industry. Just last month Electronic Arts made targeted cuts to its Battlefield teams, citing the need to better align resources with community priorities. Similar moves have hit studios of all sizes in recent years as companies adjust to shifting player habits, rising development costs, and increased competition from non-gaming entertainment.
Epic has a history of resilience through industry upheavals. Sweeney reminded staff that the company has navigated major transitions before, from the shift to 3D with Unreal Engine 1 in the 1990s, to building console games with Gears of War in the 2000s, and then pivoting to online-focused titles like Paragon and Fortnite in 2012. Each time, he said, Epic rebuilt its foundations and emerged stronger.
The current environment, however, feels more extreme than those earlier periods, with massive upheaval paired with significant opportunity for the companies that adapt successfully. Sweeney expressed confidence that Epic can position itself among the winners while helping other like-minded developers build a more open and vibrant future for entertainment.
For players, the cuts are unlikely to have an immediate visible impact on Fortnite, which remains one of the most popular live-service games. The focus now turns to whether the reduced workforce and cost-saving measures will allow the studio to deliver the consistent seasonal “magic” Sweeney referenced while continuing to push forward on mobile, Unreal Engine 6, and new projects.
A company-wide meeting is scheduled for Thursday to discuss the roadmap in greater detail. In the meantime, Sweeney’s note underscores the difficult balance Epic faces: maintaining its position as an industry innovator while contending with the same economic realities affecting the rest of the sector.
For those wanting the whole letter, here it is:
"Today we’re laying off over 1000 Epic employees. I'm sorry we're here again. 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. This layoff, together with over $500 million of identified cost savings in contracting, marketing, and closing some open roles puts us in a more stable place.
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.
And some of our challenges are unique to Epic. Despite Fortnite remaining one of the most successful games in the world, we’ve had challenges delivering consistent Fortnite magic with every season; we're only in the early stages of returning to mobile and optimizing Fortnite for the world's billions of smartphones; and in being the industry's vanguard we have taken a lot of bullets in a battle which is only in the early days of paying off for ourselves and all developers.
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.
What we now need to do is clear: build awesome Fortnite experiences with fresh seasonal content, gameplay, story, and live events; accelerate developer tools with greater stability and capability as we evolve from Unreal Engine 5 and UEFN to Unreal Engine 6. And we'll be kicking off the next generation of Epic with huge launch plans towards the end of the year.
This isn't our first time being here. Epic survived upheavals in 1990's with the move from 2D to 3D with Unreal 1; in the 2000's building console games with Gears of War; and in 2012 moving to online gaming with Paragon and Fortnite. Each time, we rebuilt our foundations and earned a renewed 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. That's what we're aiming to do for our players, and we aim to bring other like-minded developers in the industry along on the journey to build an increasingly open and vibrant future of entertainment together.
At Epic, we pride ourselves in only hiring the industry's best, so it is very painful to part with so many talented people. The folks impacted by the layoffs will receive a severance package that includes at least four months of base pay, with more based on tenure. We’re also extending Epic-paid healthcare coverage.
For example, in the U.S., they’ll receive paid coverage for 6 months. We’ll also accelerate their stock options vesting through January 2027 and extend equity exercise options for up to two years.
We'll have a company meeting Thursday to talk about the roadmap in more detail.
-Tim"
The gaming landscape continues to evolve rapidly, and Epic’s latest moves reflect the tough decisions many studios are making to stay viable. While the loss of more than 1,000 talented people is painful, the company is betting that these changes will create a stronger foundation for the future. Fortnite players and the wider industry will be watching closely to see how Epic rebuilds once again.