Epic Games cuts 1,000 jobs as Fortnite 'magic' fades in 'extreme' market conditions

The Fortnite craze might have reached its crescendo.

Epic Games announced layoffs of 1,000 employees Tuesday, citing declining Fortnite engagement.

"We've had challenges delivering consistent Fortnite magic with every season," CEO Tim Sweeney admitted in a memo to staff.

"Today we're laying off over 1000 Epic employees," the memo began. "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."

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Sweeney's memo also noted broader weakness in the video-game industry weighing on the company's finances.

The cuts, along with more than $500 million in savings from lower contracting and marketing spending and unfilled roles, would put the company in "a more stable place," according to Sweeney.

The cuts are the latest in the gaming sector, where companies have faced weaker growth as consumers have been sticking with proven titles amid economic uncertainty.

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But even those, especially live services games, which depend on a steady stream of new content to keep players engaged, are now showing signs of cracks.

"Market conditions today are the most extreme" since the early days of the company founded in 1991, Sweeney wrote, adding "the layoffs aren't related to AI."

The move marks Epic's second major round of layoffs in three years. In September 2023, the company cut about 830 jobs, or roughly 16% of its workforce.

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The gaming sector has faced mounting pressure. In September, Electronic Arts laid off hundreds of workers and canceled a Titanfall game that was in development at its Respawn Entertainment unit, according to media reports. Amazon's broader job cuts late last year also affected its gaming division.

"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," Sweeney 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."

Laid-off workers at Epic Games will get "at least four months base pay" and extended "Epic-paid healthcare coverage," according to the memo.