Epic Games is preparing for one of its biggest workforce reductions yet, announcing plans to lay off more than 1,000 employees across the company. The decision, according to Epic, comes after a notable drop in Fortnite engagement that began in 2025, creating a financial gap large enough that the company says it has been “spending significantly more” than it earns.
Epic CEO Tim Sweeney explained to staff that the layoffs are part of a broader effort to stabilize the business, alongside roughly $500 million in additional cost savings. Those savings are expected to come from cutting back on contracting, reducing marketing spend, and eliminating some open roles that had not yet been filled. The goal, Sweeney said, is to put Epic in a more sustainable position as the broader games industry faces tougher conditions.
In the message to employees, Sweeney pointed to several challenges affecting the gaming market overall. He cited slower industry growth, weaker consumer spending, and rising cost pressures. He also noted that current-generation console sales are reportedly trailing the previous generation, while games are increasingly competing for attention against other fast-growing entertainment options that pull people’s time in different directions.
At the same time, Epic acknowledged that some of its difficulties are unique to its own situation. While Fortnite remains one of the world’s most successful games, Sweeney said the company has struggled to consistently deliver the kind of standout seasonal moments that keep players coming back. He also described Epic as being in the early stages of returning to mobile and continuing to optimize Fortnite for smartphones—an important step considering the massive global mobile audience the company wants to reach.
Sweeney also addressed speculation around automation, stating that the layoffs are not related to AI. He emphasized that if productivity tools improve workflows, Epic’s priority is still to have strong developers building new content and technology.
Looking ahead, Epic’s stated plan is to refocus on what keeps Fortnite thriving: new seasonal content, fresh gameplay, story updates, and major live events designed to reignite player excitement. The company also plans to accelerate work on developer tools as it transitions from Unreal Engine 5 and Unreal Editor for Fortnite toward Unreal Engine 6, with Sweeney describing this as a key step in the next evolution of Epic’s ecosystem.
Epic is also teasing “huge launch plans” toward the end of the year, framing the changes as groundwork for what Sweeney called the “next generation of Epic.” In his note, he compared the current moment to other major transitions the company has navigated in the past—from the shift to 3D in the 1990s, to console-era growth in the 2000s, to its pivot toward online gaming in the 2010s. He argued that the industry is facing extreme market conditions, but that the shakeup also creates opportunities for companies that can adapt quickly and build for the future.
For employees affected by the layoffs, Epic says it will provide severance packages that include at least four months of base pay, with additional compensation depending on tenure. The company is also extending Epic-paid healthcare coverage, including six months of paid coverage in the U.S. Epic plans to accelerate stock option vesting through January 2027 and extend the window to exercise equity options for up to two years.
Epic will hold a company meeting later this week to provide more detail on its roadmap and what comes next.
