“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,” said Tim Sweeney, CEO of Epic Games, as the company announced plans to lay off over 1,000 employees. This decision, which represents about 20% of Epic’s workforce, comes in response to a significant decline in player engagement with Fortnite, a game that once boasted 650 million registered players in 2025.
The layoffs, which will affect a substantial portion of Epic’s 4,000 remaining employees, are part of a broader strategy to cut $500 million in costs. This is not the first time Epic has faced such challenges; the company previously laid off around 830 employees in September 2023, citing a broader industry slowdown as a contributing factor.
As Epic Games prepares to transition from Unreal Engine 5 to Unreal Engine 6, the current market conditions have been described by Sweeney as the most extreme since the company’s early days. “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,” he remarked, highlighting the dual nature of the current landscape.
Epic’s struggles are compounded by a decline in console sales, which are lagging behind the previous generation, and ongoing antitrust lawsuits with major tech companies like Apple and Google over in-app payment fees. These factors have created a challenging environment for the company, which has been trying to optimize Fortnite for mobile platforms while delivering consistent content updates.
In an effort to support those affected by the layoffs, Epic Games has committed to providing at least four months of base pay and six months of company-paid healthcare for U.S. workers. Sweeney expressed the emotional toll of the decision, stating, “It is very painful to part with so many talented people.” This sentiment reflects the difficult choices facing many companies in the gaming industry as they navigate a rapidly changing market.
As Epic Games moves forward, the company is in the early stages of returning to mobile platforms, which could present new opportunities for growth. However, the immediate focus remains on stabilizing the company and ensuring its financial health in the wake of these significant layoffs.
What observers say
Industry analysts suggest that while the layoffs are a painful necessity, they may ultimately position Epic Games to emerge stronger in a competitive landscape. Sweeney noted that each time the company has faced adversity, it has managed to rebuild its foundations and regain a leadership position in the industry. “Each time, we rebuilt our foundations and earned a renewed leadership position,” he stated, indicating a belief in the company’s resilience.
As the gaming industry continues to evolve, the future of Epic Games and Fortnite remains uncertain. Details remain unconfirmed regarding how the company will adapt to these changes and what new strategies will be implemented to regain its footing in a challenging market.
