Epic Games is laying off over 1,000 employees, citing declining Fortnite engagement and a broader industry slowdown. CEO Tim Sweeney explicitly stated the cuts “aren’t related to AI,” emphasizing the company is spending more than it earns. The layoffs are part of a cost-cutting effort saving over $500 million, with affected staff receiving severance packages. Despite the restructuring, Epic plans to continue investing in its technology, including the transition toward Unreal Engine 6.
Epic Games announced major layoffs affecting more than 1,000 employees. In a memo to staff, CEO Tim Sweeney directly addressed speculation, writing, “Since it’s a thing now, I should note that the layoffs aren’t related to AI.”
He explained the company had been spending significantly more than it makes. This financial pressure was linked to a decline in Fortnite engagement that began in 2025.
The layoffs are part of a broader cost-cutting effort saving over $500 million. Additional savings came from reducing contracting, cutting marketing, and leaving some roles unfilled.
Sweeney compared the moment to pivotal shifts in the company’s history, like its move into online games. He described current market conditions as the most extreme since those early days, filled with both upheaval and opportunity.
The CEO also cited a slowdown in the broader gaming industry. He noted the current console generation is selling fewer units and that games face increased competition for attention.
Sweeney acknowledged specific challenges for Epic Games, including delivering consistent quality for Fortnite seasons. The company is also in the early stages of optimizing Fortnite for mobile devices globally.
Affected employees will receive at least four months of base pay and six months of company-paid healthcare for U.S. workers. Their stock-option vesting will also be accelerated through January 2027.
Despite the cuts, Epic plans to continue investing in its core technology. The company is preparing to transition from Unreal Engine 5 toward Unreal Engine 6 as part of its next phase.
