Epic Games lays off 1,000 employees as Fortnite engagement declines

Epic Games is laying off 1,000 employees on Tuesday, according to a company memo shared on Epic’s official blog.

In the memo, CEO Tim Sweeney explained that a decline in Fortnite engagement, which began in 2025, has significantly affected the company’s financial position. He noted that the company’s expenses have exceeded its revenue, necessitating substantial cost reductions to maintain financial stability.

“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,” Sweeney wrote.

The announcement follows a recent move by Epic to raise the price of V-Bucks, the in-game currency used in Fortnite. The company attributed the increase to rising operational costs associated with maintaining the game.

Sweeney clarified that the layoffs are not a result of artificial intelligence replacing developer roles. However, broader industry challenges tied to AI demand may still have indirect effects. Increased demand for computing resources, including RAM and chips, has contributed to supply constraints and higher costs across the tech sector, which in turn may be influencing consumer spending patterns.

Employees affected by the layoffs will receive four months of severance pay, with additional compensation for those who have been with the company longer. Epic also stated that it will continue to cover healthcare costs for U.S.-based employees for six months following the layoffs.

The workforce reduction is a significant change for the company as it adapts to changing market conditions and stabilises its operations.