Epic Games CEO Time Sweeney lays off over 1,000 employees as Fortnite engagement declines

Epic Games has announced it is laying off more than 1,000 employees. This marks the second major layoff in the company in three years.

The layoff is attributed to the declining Fortnite engagement, which negatively influences its finances.

CEO Tim Sweeney delivers the news in an internal memo on Tuesday, March 24, stating: “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.”

Sweeney also cites major challenges that the industry faces including “slower growth, weaker spending, and tougher cost economics.”

Despite wider issues, the CEO also quoted that the “current consoles selling less than last generation’s; and games competing for time against other increasingly engaging forms of entertainment.”

The video game company that created the global gaming sensation Fortnite and the popular game engine Unreal Engine is based in Cary, North Carolina.

The challenges that Epic Games is facing are both industry-wide and company-specific in nature.

Sweeney said that the growth rate in the gaming industry has been slower, consumer spending has been down, and competition in other forms of entertainment has increased.

“Current consoles selling less than last generation’s, and games competing for time against other increasingly engaging forms of entertainment,” he wrote.

The company is also still in the early stages of returning to mobile platforms after a years-long legal battle with Apple and Google over app store policies.

While explicitly mentioning that the layoffs are not related to AI, he stated: “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.”

The company promised that affected employees would receive severance packages, including four months of base pay with additional amounts on the basis of tenure.

The employees in the U.S. will also receive six months of paid healthcare coverage, accelerated stock option vesting, and extended equity exercise options.