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Epic Games has laid off over 1,000 employees today. In an internal memo sent to staff and subsequently made public on Epic's website, CEO Tim Sweeney was blunt about the reason: Fortnite engagement has been declining since 2025, and the company is burning through more money than it is bringing in.
"The downturn in Fortnite engagement that started in 2025 means we're spending significantly more than we're making," Sweeney wrote, adding that today's cuts, combined with over $500 million in identified savings across contracting, marketing, and open roles, are necessary to stabilise the business.
Sweeney acknowledged both industry-wide and company-specific factors. He pointed to slower growth across the games market, weaker consumer spending, current-gen PlayStation 5 and Xbox consoles underperforming when compared to their predecessors, and gaming increasingly competing for time against other forms of entertainment.
On Epic's own side, he cited inconsistent Fortnite seasonal quality and the ongoing effort to return the game to mobile as areas where the company has not delivered.
He also stated directly that Epic isn't replacing people with AI. "Since it's a thing now, I should note that the layoffs aren't related to AI."
Affected employees will receive at least four months of base pay, with more depending on tenure, along with six months of paid healthcare coverage in the US, accelerated stock option vesting through January 2027, and extended equity exercise options for up to two years.
Sweeney closed the memo by framing this as another inflection point in Epic's history, comparing it to the company's transitions in the 1990s, 2000s, and early 2010s, and hinting at "huge launch plans towards the end of the year." Unreal Engine 6 was also referenced as part of the path forward.
Over 1,000 people lost their jobs today. Whatever comes next for Epic, that is where the story starts.
