Epic Games has laid off over 1,000 employees amid decreasing player engagement inside Fortnite.
Epic announced the layoff today, March 24, sharing the news in an internal memo authored by Epic Games CEO Tim Sweeney that the company published on its website this morning. In the memo, Sweeney wrote that the decision was the result of a mixture of industry-wide and company-specific challenges, including a general downturn in spending on games and increased competition against other increasingly interactive forms of entertainment, as well as a slow start rolling Fortnite out on smartphones following Epic’s legal battles against Apple and Google in recent years. He stressed that the decision was not a result of AI technology.
“Despite Fortnite remaining one of the most successful games in the world, we’ve had challenges delivering consistent Fortnite magic with every season,” Sweeney wrote in the memo. “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.”
Sweeney wrote in the memo that today’s layoff is intended to put Epic Games in a “more stable place,” alongside further cost reductions of over $500 million in areas of contracting and marketing, as well as reduced hiring. He projected confidence, pointing out that Epic has survived previous upheavals in the past such as its move from 2D to 3D with Unreal 1 and the shift to online gaming with Fortnite.
“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,” Sweeney said. “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.”
Epic Games is giving laid-off employees a severance package that includes at least four months of base pay, as well as extended healthcare coverage, with employees in the United States receiving coverage for six months, per the memo. Epic is also planning to accelerate laid-off staffers’ stock options vesting through January 2027, allowing former employees to extend equity exercise options for up to two years following the layoff.
Gaming layoffs have come hard and fast in 2026, with a rough total of over 2,800 layoffs so far this calendar year, according to the website GamingLayoffs.com, which tracks staff cuts in the industry. Today’s announcement marks Epic Games’ first major layoff since a cut of roughly 16 percent of the company’s staff — roughly 830 employees — in September 2023, which prompted a similar memo from Tim Sweeney.
“While Fortnite is starting to grow again, the growth is driven primarily by creator content with significant revenue sharing, and this is a lower margin business than we had when Fortnite Battle Royale took off and began funding our expansion,” Sweeney wrote at the time. “Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.”
Michael Pachter, a longtime analyst at Wedbush, said he didn’t have access to Epic’s financials as it’s a private company. But he said, “They have never gotten the store off the ground, have too many projects not generating cash, and I’m sure that they are trying to be more profitable.”
Epic previously laid off around 830 people in 2023. At that time, it cut 16% of staff. It also shed additional roles as it divested Bandcamp and spun out SuperAwesome.
At that time, Sweeney also said the company had been spending more than it earned and was trying to “power through this transition without layoffs.” Back then, the company gave laid-off employees six months of salary and healthcare as severance pay and it hired for critical roles.
For those looking for job resources, check out Always Supporting the Game Industry.
Mat Piscatella, an analyst at Circana, said in a message to GamesBeat that, according to Circana’s Player Engagement Tracker (as detailed in his Bluesky post), “We have seen a dip in average hours per U.S. Fortnite player across both PlayStation and Xbox consoles. However, it remains the game with the highest monthly active users across both platforms. So yes, there has been a bit of a U.S. engagement decline (at least on PS and XBX).”
He noted the Player Engagement Tracker does not currently incorporate EGS, so PC stats are not available.
“However, from the statement itself, I think the “…we’re spending significantly more…” may be doing the heavy lifting. However, I have no insight on those costs, and I am unsure how literally to take the comments around AI not being a factor,” Piscatella said.
He also said the big live service games (which include Fortnite) also take up significant player count and time share on the consoles. The top 10 live service games on PlayStation and Xbox comprise just shy of half of all U.S. gaming hours on these platforms every month.
“I imagine the question everyone has is if Fortnite can’t make it, what chance do other games have? I do not have a good answer to that question,” Piscatella said.