Epic Games CEO Tim Sweeney confirmed on Tuesday that the company is laying off over 1,000 employees, representing as much as 23% of its total workforce, pointing directly to a drop in Fortnite engagement as the primary driver.
"I'm sorry we're here again," Sweeney wrote in a note to staff. “The downturn in Fortnite engagement that started in 2025 means we're spending significantly more than we're making, and we have to make major cuts to keep the company funded.”
The numbers behind the cuts
The layoffs arrive alongside more than $500 million in identified cost savings across contracting, marketing, and unfilled open roles. Affected employees will receive a severance package covering at least four months of base pay, with additional compensation based on tenure.
This is not the first time Epic has been here. In 2023, the company cut 830 employees, which was 16% of its workforce at the time. That round was also tied to Fortnite revenue concerns. The fact that a second, larger wave has followed just two years later signals the engagement problem hasn't been solved.
What the engagement data actually shows
Circana senior director Mat Piscatella offered some concrete numbers on Bluesky. According to Circana's Player Engagement Tracker, Fortnite led US Monthly Active Users in February 2026 on both PlayStation (35% of active players) and Xbox (31%). The problem is how long those players are actually staying.
The average PlayStation player spent 16 hours in Fortnite that month, down from 21 hours in February 2025. Xbox players averaged 15 hours, down from 19 the previous year. Still the most-played game on consoles. Just played for noticeably less time per person.
Epic's own Year in Review retrospective, released last month, quietly flagged the issue too, noting that "while overall gameplay hours declined year over year, hours in third-party titles increased by 4%" on the Epic Games Store. The math there points straight at Fortnite.
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Three Fortnite modes are being shut down as part of this restructuring: Rocket Racing, Ballistic, and Festival Battle Stage, according to a concurrent announcement from the FortniteStatus account.Mode shutdowns and V-Bucks price hikes
The layoffs don't exist in isolation. Earlier this month, Epic raised the price of V-Bucks in Fortnite, stating plainly that "the cost of running Fortnite has gone up a lot and we're raising prices to help pay the bills." Combine that with today's workforce reduction and the mode shutdowns, and the picture is of a company actively cutting its surface area to reduce operating costs.
Epic Games Store general manager Steve Allison recently told Polygon that the store is only "marginally profitable," due to thin margins on third-party games and the costs of its weekly free game program. PC players spent $1.16 billion on the store last year, but Statista estimates Epic's total gross revenue at $6.21 billion for the same period. Significant numbers, but clearly not enough to offset what Fortnite's engagement decline is costing.
Sweeney's plan going forward
Sweeney was explicit that AI is not behind the job cuts. "To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can," he wrote.
He also acknowledged broader industry headwinds: slower growth, weaker consumer spending, current-gen consoles selling below last generation's pace, and games competing for attention against other entertainment platforms. But he framed Epic's situation as partly self-inflicted, noting the company has "had challenges delivering consistent Fortnite magic with every season" and is still in the early stages of returning to mobile after years of legal battles with Apple and Google over app store fees.
His stated path forward centers on stronger seasonal Fortnite content, accelerating developer tools as Epic transitions from Unreal Engine 5 and UEFN toward Unreal Engine 6, and what he described as “huge launch plans towards the end of the year.” Make sure to check out more:
