Epic Games is Laying Off Over 1,000 Employees Due to “Downturn in Fortnite,” But the Cuts “Aren’t Related to AI,” Says CEO

Epic Games chief executive officer Tim Sweeney has announced that the company will lay off "over 1,000 Epic employees" in a note that was sent to staff at Epic this morning and later published publicly on Epic's website. The mass layoff is directly due to "the downturn in Fortnite" according to Sweeney's note, as he says, "I'm sorry we're here again." He was also quick to claim that the cuts "aren't related to AI."

This is similar to a mass layoff Epic held back in 2023, where it cut 830 employees and raised the price of Fortnite's in-game premium currency, V-Bucks. Just two weeks ago today, Epic announced that it would be raising the price of V-Bucks once again, not by changing the price directly this time, but by lowering the amount of V-Bucks you get in each V-Buck bundle. The reason given for the increase in price was "to help pay the bills."

"Today we're laying off over 1,000 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," Sweeney's note begins.

Sweeney goes on to acknowledge that some of what Epic is dealing with is being felt across the industry, though adds that the studio also faces its own unique challenges.

"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."

It's at this point in the note where Sweeney adds the claim that these cuts "aren't related to AI," though he barely goes on to address what he means by that. He writes, "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."

Sweeney quickly moves from this point to establish what he believes Epic needs to do going forward, which is "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."

Some of Sweeney's comments here are similar to what he said in 2023. The line about Epic Games 'spending more than it makes' is essentially exactly what he said back then. Fortnite was also in a downward period at the time, and Sweeney also highlighted that as a cause then. Though his claim about the cuts not being AI-related are new.

The impacted workers will be getting four months of severance that will be at base pay, though tenured employees will get more. The company is extending its health care coverage for those impacted, with workers in the US getting another six months of coverage. Impacted workers are also getting extended equity exercise options for their stock in Epic for up to two years and the company is accelerating their stock options vesting through January 2027.

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