Epic Games Cuts Over 1,000 Jobs as Fortnite Slowdown Pressures Costs

Epic Games has opened another painful round of cuts, and this one is large even by current industry standards. In a note dated March 24, 2026, CEO Tim Sweeney said the company is laying off over 1,000 employees.

Sweeney said the immediate reason is financial pressure after a downturn in Fortnite engagement that began in 2025. According to the memo, Epic is spending significantly more than it is making. The company said the layoffs, together with more than $500 million in identified savings from contracting, marketing, and unfilled roles, are meant to put Epic on a more stable footing.

The note also frames the decision as part of a wider industry squeeze. Sweeney cited slower growth, weaker spending, tougher cost economics, lower current-console sell-through than the previous generation, and heavier competition from other forms of entertainment. At the same time, he said some pressures are specific to Epic, including difficulty delivering strong Fortnite seasons consistently and the fact that Fortnite's return to mobile is still in its early stages after years of battles with Apple and Google.

One notable section directly addressed a likely assumption inside the industry: Sweeney said the layoffs are not related to AI. He argued that productivity gains from AI should let Epic keep more developers building content and technology, not fewer.

Epic is trying to present the cut as a reset rather than a retreat. The roadmap Sweeney described focuses on fresher Fortnite seasonal content, stronger live events, better gameplay and story delivery, and faster progress on developer tools as Epic moves from Unreal Engine 5 and UEFN toward Unreal Engine 6. He also said the company has major launch plans toward the end of 2026.

For affected employees, Epic said severance will include at least four months of base pay, with additional compensation based on tenure. In the United States, Epic said it will extend company-paid healthcare coverage for 6 months, accelerate stock-option vesting through January 2027, and give workers up to two years to exercise equity. For the broader market, the story is a reminder that even a company with Fortnite and Unreal Engine is not insulated from the gaming industry's current cost reset.