Epic Games lays off around 20 percent of its workforce, with over 1000 employees

Epic Games is cutting more than 1,000 jobs as the software company is currently experiencing more expenses than revenue, as explained by Epic Games founder and CEO Tim Sweeney. He cites the slump in the still very successful free-to-play game “Fortnite,” which is currently generating less revenue than before, as the reason. Furthermore, the entire video game industry is under pressure. Through layoffs and other cutbacks, such as in marketing and external contracts, Epic Games aims to save more than 500 million US dollars.

These measures have been foreshadowed. Two weeks ago, Epic made the in-game currency in “Fortnite” more expensive due to significantly increased operating costs. Epic Games stated at the time: “We have to raise prices to cover rising costs.” Tim Sweeney also points to rising costs in his recently published note to Epic employees, in which he apologizes for the dismissal of over 1000 employees: “We're spending significantly more than we're making, and we have to make major cuts to keep the company funded.”

Fortnite Playtimes Significantly Decreased

Sweeney primarily justifies the savings with the decline in player activity in Fortnite, which began in 2025. Although Fortnite remains one of the most successful games in the world, his company has not managed to deliver “consistent Fortnite magic.” Market researchers confirm this. For example, Mat Piscatella from Circana on LinkedIn explains that US Fortnite players are spending less time with the game. Fortnite playtime for PlayStation users has thus decreased from 21 to 16 hours per month within a year, and for Xbox players from 19 to a recent 15 hours.

In addition, the video game industry as a whole is suffering, says Sweeney: “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.” Overall, “market conditions today are the most extreme we've seen since those early days,” for example, with the transition from 2D to 3D games, such as with the first “Unreal” in 1998.

Severance pay and continued health insurance contributions

This round of layoffs at Epic Games is the second within three years. In September 2023, Epic Games laid off 16 percent of its workforce. Sweeney also justified this dismissal of 830 employees at the time by stating that they had spent too much money and earned too little. The current dismissals are on a slightly larger scale, as they affect around 20 percent of employees. This is because “the remaining number of Epic employees is just over 4,000 after today's layoffs of just over 1,000,” as an Epic spokesperson explained to Variety.

As in 2023, Epic Games is providing severance pay to the dismissed employees. Those who have to leave now will receive their base salary for at least four months, and for longer tenure, it may be longer. In addition, health insurance contributions will continue to be covered, for example, for six months in the USA. In a town hall meeting on Thursday of this week, Tim Sweeney will discuss details of the company's future plans.

(fds)