Epic Games is laying off more than 1,000 employees as declining Fortnite engagement and broader industry challenges strain the company’s finances, CEO Tim Sweeney said in a message to staff, March 24, 2026. The cuts come as the company attempts to reduce costs after spending began to exceed revenue, driven in part by a drop in player activity that started in 2025.
In the internal note, Sweeney said Epic has been “spending significantly more than we’re making,” prompting the need for major reductions. He added that the layoffs, combined with more than $500 million in cost-saving measures—including cuts to contracting, marketing and unfilled roles—are intended to stabilize the company’s financial position.
The move reflects both company-specific struggles and broader pressures across the video game industry. Sweeney pointed to slower market growth, reduced consumer spending and increasing competition for players’ time from other forms of entertainment. He also noted that current-generation console sales have underperformed compared with previous cycles, contributing to the difficult environment.
Despite Fortnite remaining one of the most popular games globally, Sweeney acknowledged that Epic has struggled to consistently deliver engaging seasonal content. “We’ve had challenges delivering consistent Fortnite magic with every season,” he said, highlighting a key factor behind declining player engagement. He also cited ongoing efforts to expand the game’s reach on mobile platforms, noting that the company is still in the early stages of optimizing Fortnite for a global smartphone audience.
Sweeney emphasized that the layoffs are not related to artificial intelligence, addressing a growing concern within the tech industry. “To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can,” he said, suggesting that AI remains a tool for growth rather than a driver of job cuts.
Looking ahead, Epic plans to refocus on strengthening its core offerings. The company aims to enhance Fortnite with new seasonal content, gameplay updates, narrative elements and live events. At the same time, it intends to accelerate development of its technology platforms, including improvements to Unreal Engine and Unreal Editor for Fortnite, as it prepares for the transition toward Unreal Engine 6.
Sweeney framed the current restructuring as part of a broader cycle of adaptation that has defined Epic’s history. He pointed to previous turning points, including the transition from 2D to 3D gaming in the 1990s with Unreal, the company’s expansion into console gaming in the 2000s with Gears of War, and its shift to online-focused titles in the 2010s with Fortnite. Each period, he said, required significant changes but ultimately led to renewed growth.
He described current market conditions as among the most challenging the company has faced, while also presenting opportunities for long-term success. “Market conditions today are the most extreme we’ve seen since those early days,” Sweeney said, adding that Epic aims to emerge stronger by focusing on innovation and collaboration with developers.
The company said affected employees will receive severance packages that include at least four months of base pay, with additional compensation based on tenure. Epic will also continue to cover healthcare costs for a limited period—up to six months for U.S.-based employees—and will accelerate stock option vesting through January 2027. Employees will have up to two years to exercise their equity options.
Epic plans to hold a company-wide meeting later this week to outline its roadmap and next steps in greater detail.
The layoffs mark one of the largest workforce reductions in Epic’s history and underscore the growing volatility in the gaming industry, even for companies behind some of the world’s most successful titles.