‘I’m sorry we’re here again’: Epic Games is laying off over 1,000 employees due to ‘Fortnite downturn’

Epic Games has announced it’s laying off over 1,000 employees, which could represent as much as 23% of its workforce.

In a note sent to staff on Tuesday,  Epic Games CEO Tim Sweeney partially blamed a “downturn in Fortnite engagement” on the decision. The game’s Rocket Racing, Ballistic, and Festival Battle Stage modes will soon be shut down, Epic concurrently announced.

Despite remaining “one of the most successful games in the world”, Fortnite has seen inconsistent engagement between seasons, Sweeney said, and is at the early stages of returning to mobile following years of legal battles.

“Today we’re laying off over 1000 Epic employees,” Tuesday’s note reads. “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.”

Staff impacted by layoffs will get a severance package “that includes at least four months of base pay, with more based on tenure,” Sweeney said.

The CEO claimed that while the current state of the games industry as a whole was partly responsible for the decision, he said the company’s role as “the industry’s vanguard” – likely a reference in its long legal battles against Apple and Google store fees – meant that Epic had been “taking a lot of bullets”.

“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,” he wrote.

“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.”

The Epic cuts follow a previous wave of layoffs in 2023, when Epic said it had cut 830 employees for similar reasons, which was 16% of its workforce at the time.

Sweeney took effort to emphasize that the layoffs “aren’t related to AI”, saying: “To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can.”

“This isn’t our first time being here,” he added. “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.”

Last month Epic released a Year in Review retrospective which stated that “while overall gameplay hours declined year over year, hours in third-party titles increased by 4%”, implying that Fortnite’s numbers had dropped.

Earlier this month, the company also announced that it was increasing the price of V-Bucks in Fortnite, saying: “The cost of running Fortnite has gone up a lot and we’re raising prices to help pay the bills.”

As part of its Year in Review, Epic also announced that PC players spent $1.16 billion on the Epic Games Store last year, while Statista estimates that Epic Games generated $6.21 billion in gross revenue last year overall.

However, general manager Steve Allison recently told Polygon that the Epic Games Store was only “marginally profitable”, due to a low profit margin on third-party games and the fees paid to developers and publishers for its weekly free game deal.

Circana senior director and video game industry advisor Mat Piscatella noted on Bluesky that Fortnite was still the most popular game on consoles last month, but that engagement had dropped compared to the previous year.

“According to Circana’s Player Engagement Tracker, Fortnite led in US [February 2026] Monthly Active Users across both PlayStation (35% of actives playing) and Xbox (31%),” he wrote. “The average PlayStation player engaged with Fortnite for 16 hours in the month (vs 21 last Feb), with Xbox players averaging 15 hours (vs 19 last Feb).”

In his note to employees, Sweeney stated: “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.”