Epic Games layoffs: Fortnite maker to slash 1,000 jobs, says ‘sorry’ — What we know so far; Read full memo to employees

Fortnite maker Epic Games said they would lay off 1,000 employees “to fund the company.” “I’m sorry we’re here again,” company CEO Tim Sweeney said in a memo to employees.

Sweeney noted that this layoff, along with other factors such as identified cost savings of over $500 million and a hiring freeze, will help put Epic Games “in a more stable place.”

This comes shortly after the company increased the price of Fortnite’s in-game currency, V-Bucks, for the first time since the video game’s launch in 2017.

Why is Epic Games laying off its employees? Because of artificial intelligence?

Tim Sweeney said the company faces challenges including slower growth, weaker expenses and tougher cost economics, some industry-wide. “Current consoles are selling for less than the previous generation, and games are competing for time against other increasingly engaging forms of entertainment,” he said.

But Sweeney said some of the challenges were unique to Epic Games: “While Fortnite remains one of the most successful games in the world, we have faced challenges in delivering consistent Fortnite magic season after season.”

Emphasizing that these layoffs “are not about Artificial Intelligence,” Sweeney said, “We want to have great developers developing great content and technology, as long as it increases productivity.”

Epic severance package

“At Epic, we pride ourselves on hiring only the best in the industry, so it’s heartbreaking to be leaving so many talented people,” Tim Sweeney said in announcing the severance package.

Epic Games employees laid off in the current cycle will be provided with a severance package that includes at least four months of base salary. They will also have expanded health insurance coverage paid for by Epic, Sweeney said. “For example, in the USA, they will receive paid insurance for 6 months.”

He added that Epic Games will also accelerate stock options for laid-off employees through January 2027 and extend equity exercise options for up to two years.

Read the full memo sent to Epic employees on March 24:

“We’re laying off over 1,000 Epic employees today. I’m sorry we’re here again. The decline in Fortnite engagement that begins in 2025 means we’re spending far more than we make, and we need to make major cuts to protect the company’s finances. This layoff, along with cost savings of over $500 million identified in contracting, marketing and closing some open positions, puts us in a more stable place.”

Some of the challenges we face are industry-wide: slower growth, weaker spending and tougher cost economics; current consoles are selling less than the previous generation; and games competing for time against other increasingly engaging forms of entertainment.

And some of our challenges are unique to Epic. While Fortnite remains one of the most successful games in the world, we have struggled to deliver consistent Fortnite magic season after season; We’re still in the early stages of going back to mobile and optimizing Fortnite for billions of smartphones around the world; and as a pioneer in the industry, we took too many bullets in a war that paid off for ourselves and all developers in the early days.

Since this is now an event, I should point out that the layoffs are not related to AI. We want to have great developers developing great content and technology to the extent that it increases productivity.

Now it’s clear what we need to do: create amazing Fortnite experiences with new seasonal content, gameplay, story and live events; As we progress from Unreal Engine 5 and UEFN to Unreal Engine 6, we will accelerate developer tools with more stability and capabilities. And we’ll be launching the next generation of Epic with massive launch plans towards the end of the year.

This isn’t our first time here. Epic survived the turmoil of the 1990s with the transition from 2D to 3D with Unreal 1; In the 2000s, in developing console games with Gears of War; and in 2012 we move into online gaming with Paragon and Fortnite. Each time, we rebuilt our foundations and gained a renewed leadership position.

Today’s market conditions are the most extreme we have seen since those early days; Great turmoil in the sector is accompanied by great opportunities for winning companies. That’s what we aim to do for our players, and we aim to bring together other like-minded developers in the industry on a journey to build together an increasingly open and vibrant future of entertainment.

At Epic, we pride ourselves on hiring only the best in the industry, so it’s heartbreaking to leave so many talented people. Those affected by the layoffs will receive a severance package containing at least four months’ basic pay, with more depending on tenure. We’re also expanding Epic’s paid health insurance coverage.

For example, in the USA, they will provide paid insurance coverage for 6 months. We will also accelerate the vesting of stock options by January 2027 and extend equity exercise options by up to two years.

We will have a company meeting on Thursday to discuss the road map in more detail.