Epic Games said it is laying off more than 1,000 employees, roughly 20% of its workforce, as part of a broader cost-cutting plan. The company said the move, combined with lower outsourcing costs, reduced marketing spending, and paused hiring for some roles, will save more than $500 million. After the cuts, Epic’s headcount will fall to about 4,000.
In a memo shared with employees, CEO Tim Sweeney wrote, “I’m sorry we’re here again.” The announcement marks Epic’s second major round of layoffs in under three years. In September 2023, the company cut about 830 jobs, equal to around 16% of staff at the time.
Fortnite slowdown sits at the center of the decision
Epic linked the latest cuts to sustained business pressure. The company said Fortnite engagement has been falling since 2025, leaving Epic in a position where spending has remained well above revenue for an extended period. Alongside the layoff announcement, Epic said it will shut down three Fortnite modes: Ballistic and Festival Battle Stage on April 16, and Rocket Racing in October this year.
Epic had already raised prices for its virtual currency, V-Bucks, earlier this year. The new layoffs add to signs that its financial strain extends beyond product-level changes and into its operating structure.
Sweeney rejects the AI layoff narrative
As the tech sector continues to debate whether AI is replacing workers, Sweeney addressed the issue directly. He said the layoffs are not related to AI. He added that if AI improves productivity, Epic would still want more strong developers building better content and technology.
Sweeney described the current moment as a critical transition for the company, comparing it with Epic’s shift from 2D games to 3D titles in the 1990s and its later move into online games such as Fortnite. Based on the company’s own explanation, the immediate driver behind the cuts is a structural gap between costs and revenue as Fortnite engagement weakens, not AI-driven workforce replacement.