"Fortnite" Developer Epic Games Announces 20% Layoffs, CEO Clarifies: It's Not an AI Issue

Epic Games, the developer of Fortnite, announced layoffs of over 1,000 employees, about 20% of its total workforce. Along with cuts in outsourcing and marketing expenses, the company saved more than $500 million. CEO Tim Sweeney emphasized that the layoffs are unrelated to AI, pointing instead to ongoing declines in Fortnite engagement and a structural dilemma where expenses far exceed revenue.
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• Saving $500 million
• Fortnite player decline “unrelated to AI”
• 90s analogy for current situation

Over 1,000 layoffs, the second major cut in three years—Epic Games officially announced on Tuesday, March 25, that the layoffs exceed 1,000 employees, about 20% of the total staff. After the layoffs, the company will have approximately 4,000 employees. In a memo shared with employees, CEO Tim Sweeney admitted, “I’m sorry we’re here again.”

Saving $500 million

Epic stated that this round of layoffs is part of broader cost-cutting measures, not a single action. By reducing outsourcing contracts, trimming marketing budgets, and pausing some hiring, the company saved over $500 million.

Severance packages include at least four months of base salary, additional compensation based on seniority, and six months of healthcare for U.S. employees.

Fortnite player decline “unrelated to AI”

Epic officials pointed out that since 2025, Fortnite’s player engagement has been steadily declining, and the company has been operating at expenses far exceeding income. Alongside the layoffs, Epic announced the closure of three Fortnite modes: Ballistic and Festival Battle Stage will shut down on April 16, and Rocket Racing will close in October.

This marks the second major round of layoffs in three years—In September 2023, Epic cut about 830 employees, roughly 16% of its workforce at the time.

Amid the wave of AI-driven layoffs in the tech industry, Sweeney responded proactively in the memo, clarifying, “Since everyone is discussing this, I want to say that the layoffs are unrelated to AI. With AI increasing productivity, we actually want more talented developers to create quality content and technology.”

Unlike some tech companies that attribute layoffs directly to AI replacing human jobs, Epic’s stance takes a different approach.

90s analogy for the current situation

Sweeney described the current challenge as a “key transition period” in Epic’s history, citing the company’s shift from 2D games in the 1990s to 3D games, and later to online games like Fortnite, implying that the company is at the start of another structural transformation.

Notably, Epic announced earlier this year a price increase for its virtual currency V-Bucks. The recent layoffs suggest that the company’s financial pressures go beyond personnel costs.

Epic’s difficulties are not unique. The gaming industry as a whole faces weak consumer spending, lower sales of current-generation consoles compared to the previous generation, and competition from short videos and streaming platforms that continue to divide players’ attention. Many large game companies are experiencing layoffs, and Epic’s major restructuring may be a sign of accelerated industry consolidation.