Epic Games lays off over 1,000 employees following “downturn in Fortnite engagement”

Epic Games is laying off more than 1,000 employees after a “downturn in Fortnite engagement” led the company to “spend significantly more” than it makes.

In a note sent to staff, CEO Tim Sweeney said Epic needed “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.”

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

Sweeney also attributed the decision to industry challenges such as slower growth, weaker spending, higher costs, and current consoles selling fewer units than in the last generation.

“Market conditions today are the most extreme we’ve seen since [the] 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 said.

“At Epic, we pride ourselves in only hiring the industry’s best, so it is very painful to part with so many talented people. The folks impacted by the layoffs will receive a severance package that includes at least four months of base pay, with more based on tenure. We’re also extending Epic-paid healthcare coverage.”

US employees will receive paid coverage for six months. Stock options will also be accelerated through to January 2027, with equity exercise options extended for up to two years.”

There will be a company meeting on Thursday “to talk about the roadmap in detail”

Epic last issued major cuts to its workforce in September 2023, when it laid off more than 800 people – roughly 16% of the company. Two-thirds of those affected were teams “outside core development.”

At the time, Epic had moved to net-zero hiring and scaled back spending on marketing and events, “but still ended up far short of financial sustainability.”

Fall Guys developer Mediatonic was also caught up in the layoffs, as were 250 employees from the sale of music storefront Bandcamp.

Last week, Epic announced that it would increase its in-game currency “to help pay the bills,” citing that the “cost of running Fortnite has gone up a lot.”