Epic Games is cutting more than 1,000 positions in a broad restructuring aimed at steadying its finances. The move follows a slowdown in engagement with its flagship game, Fortnite, and is part of a plan to reduce costs by roughly $500 million.
In a memo to employees on Tuesday, CEO Tim Sweeney outlined the factors behind the cuts, pointing to mounting financial strain. He said the situation largely stems from a drop in Fortnite engagement that began in 2025, leaving the company’s expenses well above its revenue.
Sweeney also flagged macro-level headwinds affecting the gaming sector. He pointed to decelerating industry growth, softer consumer demand for games and consoles, tightening cost dynamics, and expanding competition from alternative entertainment platforms.
Sweeney admitted some of the issues are unique to Epic itself. He said Fortnite’s return to mobile is still early, and keeping that “Fortnite magic” alive every season hasn’t been easy.
The company emphasized that the layoffs are not related to the wave of artificial intelligence-driven changes affecting other sectors. Sweeney said that as AI improves productivity, Epic’s priority is to keep as many developers as possible focused on building content and technology.
The company said impacted workers will receive a minimum of four months’ base pay, with added compensation based on tenure. They will also be offered extended healthcare benefits and faster stock option vesting.
Despite the challenges, Sweeney pointed to Epic’s track record of adapting to major industry shifts. He cited the company’s move from 2D to 3D graphics in the 1990s, its expansion into console gaming in the 2000s, and the launch of Fortnite in the 2010s.
Sweeney said the plan going forward is to get back to what Epic does best. That means new Fortnite seasons with fresh content, better stories, improved gameplay, and more live events. He also said the company will upgrade its developer tools while moving from Unreal Engine 5 and UEFN to Unreal Engine 6, and teased “huge launch plans” later this year without going into detail.
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