Epic Games to lay off 1,000 employees as Fortnite engagement drops

Epic Games will lay off more than 1,000 employees as declining engagement in its flagship title Fortnite weighs on revenues and forces cost cuts.

The move marks one of the largest layoffs in the gaming sector this year, underscoring the continued pressure on companies even as flagship titles remain globally popular.

Chief executive Tim Sweeney informed employees of the decision in a note, saying the company had been “spending significantly more than we’re making” following a downturn in Fortnite engagement that began in 2025, according to Digit.

“This layoff… puts us in a more stable place,” Sweeney said, adding that the company has also identified over $500 million in cost savings across contracting, marketing and unfilled roles.

Despite Fortnite remaining one of the most successful games globally, Epic has struggled to sustain consistent player engagement across seasons. Sweeney said the company is still in the early stages of expanding Fortnite’s mobile presence and optimising it for a broader user base.

The layoffs also reflect broader industry challenges, with game developers facing slowing growth after pandemic-era highs and rising development costs. Since 2024, job cuts have swept across both large studios and smaller developers.

Epic said affected employees will receive at least four months of base pay as severance, with additional compensation linked to tenure. Healthcare coverage will also be extended, including up to six months of paid coverage for US-based employees.

The company will accelerate vesting of employee stock options, allowing workers to fully own their shares by January 2027, and has extended the exercise window to up to two years after departure.

Sweeney said the layoffs were driven both by industry-wide pressures and challenges specific to Epic, including the need to sustain innovation while managing costs in a competitive market.

The decision comes as Epic continues to invest in long-term bets, including platform expansion and developer ecosystems, even as it trims its workforce to stabilise finances.

For the gaming industry, the cuts reinforce a broader reset, as companies shift from growth at all costs to profitability and operational discipline.