Epic Games is laying off over 1,000 employees as engagement around “Fortnite” slows, marking another setback for a video game industry already grappling with softer growth amid economic uncertainty.
In a note to staff on Tuesday, CEO Tim Sweeney said the company is also tightening its belt more broadly, aiming to cut about $500 million in costs. That will come from scaling back on contractors, trimming marketing expenses, and scrapping some unfilled positions.
“We’re spending significantly more than we’re making, and we have to make major cuts to keep the company funded,” as per him.
Big-ticket titles like the first-person shooter “Fortnite” had held their ground after the pandemic, even as demand weakened for much of the rest of the gaming market beyond the biggest franchises.
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But that resilience is starting to fade. Engagement is slipping even for these heavyweights, especially live-service games that depend on a steady, and expensive, stream of new content to keep players coming back.
Tim Sweeney acknowledged the company’s recent struggles, saying, “We’ve had challenges delivering consistent Fortnite magic,” and describing the current environment as unlike anything Epic Games has faced since its early days in 1991. “Market conditions today are the most extreme,” he added.
Addressing concerns around automation, Sweeney was clear that “the layoffs aren’t related to AI,” pushing back against fears across the industry that the technology could displace developers.
Earlier this month, Epic raised the price of Fortnite’s in-game currency, pointing to higher operating costs as the reason.
The latest cuts mark the company’s second major round of layoffs in three years. Back in September 2023, Epic had let go of about 830 employees, roughly 16% of its workforce, in a bid to improve profitability. It’s still unclear what share of staff will be affected by Tuesday’s announcement.
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The broader picture reflects a shifting industry. Data from Circana’s Mat Piscatella showed that “Fortnite” was the most-played game in the U.S. last month across PlayStation and Xbox, but average playtime dropped sharply, suggesting engagement is thinning even at the top.
Other companies are feeling the strain as well. Electronic Arts reportedly cut hundreds of jobs in September and scrapped a “Titanfall” project that was in the works. Amazon, too, saw its gaming division impacted as part of broader layoffs late last year.
Rising costs are adding to the pressure. Memory chips have become more expensive as demand from AI data centers soaks up supply, pushing up semiconductor prices and, in turn, forcing console makers to hike prices.