Fortnite maker Epic Games has announced layoffs of over 1,000 employees “to keep the company funded,” according to an internal memo from chief executive Tim Sweeney on Tuesday, 24 March. “I’m sorry we’re here again,” Sweeney told staff.
He said the job cuts, along with over $500 million in identified cost savings across contracting, marketing and closing open roles, would help put Epic Games in a “more stable place”.
The layoffs come shortly after the company’s recent decision to increase the price of Fortnite’s in-game currency V-Bucks, for the first time since the video game’s launch in 2017.
Why is Epic Games laying off employees? Is it because of AI?
Sweeney explained that Epic Games is facing industry-wide challenges such as 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,” he wrote.
He added that some challenges were unique to Epic Games. “Despite Fortnite remaining one of the most successful games in the world, we’ve had challenges delivering consistent Fortnite magic with every season.”
Emphasising that these layoffs were “not related to AI,” Sweeney said, “To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can.”
Epic severance package
“At Epic, we pride ourselves in only hiring the industry’s best, so it is very painful to part with so many talented people,” Sweeney wrote about the severance package.
Epic Games employees who are being laid off in the current cycle will receive a severance package that includes at least four months of base pay. They will also get an extended Epic-paid healthcare coverage, Sweeney said. “For example, in the U.S., they’ll receive paid coverage for 6 months.”
Epic Games will also accelerate stock options for laid-off employees that are vesting through January 2027 and extend equity exercise options for up to two years, he added.
Read full memo sent to Epic employees on 24 March:
“Today we’re laying off over 1000 Epic employees. 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. 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.
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.
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.
Since it’s a thing now, I should note that the layoffs aren’t related to AI. To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can.
What we now need to do is clear: build awesome Fortnite experiences with fresh seasonal content, gameplay, story, and live events; accelerate developer tools with greater stability and capability as we evolve from Unreal Engine 5 and UEFN to Unreal Engine 6. And we’ll be kicking off the next generation of Epic with huge launch plans towards the end of the year.
This isn’t our first time being here. Epic survived upheavals in 1990’s with the move from 2D to 3D with Unreal 1; in the 2000’s building console games with Gears of War; and in 2012 moving to online gaming with Paragon and Fortnite. Each time, we rebuilt our foundations and earned a renewed leadership position.
Market conditions today are the most extreme we’ve seen since those early days, with massive upheaval in the industry accompanied by massive opportunity for the companies that come out as winners on the other side. That’s what we’re aiming to do for our players, and we aim to bring other like-minded developers in the industry along on the journey to build an increasingly open and vibrant future of entertainment together.
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.
For example, in the U.S., they’ll receive paid coverage for 6 months. We’ll also accelerate their stock options vesting through January 2027 and extend equity exercise options for up to two years.
We’ll have a company meeting Thursday to talk about the roadmap in more detail.
-Tim”
