Epic Games lays off 1,000 employees: Fortnite losing momentum

Epic Games, the developer of the popular game 'Fortnite', has recently announced a major decision: the layoff of over 1,000 employees, representing about 20% of its total workforce. This announcement was made by CEO Tim Sweeney, who emphasized that these layoffs are not related to artificial intelligence, contrary to a trend observed in other companies in the sector.

Tim Sweeney explained that the company is facing a slowdown in player engagement on Fortnite. This phenomenon, combined with rising costs, has made these layoffs unavoidable. In a memo addressed to employees and shared online, Sweeney highlighted that these reductions reflect broader challenges in the industry, such as slower growth, decreased spending, and more difficult cost dynamics.

"Since this is a current topic, I should clarify that the layoffs are not related to AI," Sweeney wrote. "To the extent that it improves productivity, we want to have as many talented developers as possible to create quality content and technologies."

An increasing number of employers have recently cited AI as a reason for significant workforce cuts. Recent examples include Block and Atlassian. However, for Epic Games, the reasons are different.

Tuesday's layoffs come two years after Epic secured a $1.5 billion licensing deal with Disney. Joost van Dreunen, CEO of the gaming analytics firm Aldora Intelligence and a professor at the Stern School of Business at New York University, described these layoffs as significant. He stated, "This is a recognition of the change occurring in the industry, particularly among American publishers, when one of the creators of the most popular games is forced to part ways with 1,000 people. It suggests that we are witnessing a decline in American cultural dominance in the video game industry."

Although the global gaming industry experienced revenue growth of about 4.5% last year, according to Aldora, most of this growth comes from outside the United States, Van Dreunen noted. "The consumer gravity is shifting eastward," he added.

The gaming industry's workforce has decreased in recent years after a boom during the pandemic. Approximately 5,300 jobs were cut last year, and 14,600 were eliminated in 2024, according to an online tally of layoff announcements and news reports by Farhan Noor, a technical artist in California.

Epic had already conducted layoffs in 2023, affecting 16% of its workforce. These layoffs were a first for the company, founded in the 1990s. In his memo, Sweeney indicated that the latest cuts were a painful necessity. "The slowdown in engagement on Fortnite that began in 2025 means we are spending much more than we are earning, and we need to make major cuts to sustain the company's funding," he wrote. "This layoff, combined with over $500 million in savings identified in contracts, marketing, and the closure of certain open positions, puts us in a more stable situation."