Inside Epic Games's Decision to Cut 1,000 Jobs

Following declining engagement rates and decelerating industry-wide growth, Fortnite creator Epic Games has confirmed it is reducing its workforce by more than 1,000 employees.

The move represents a significant strategic shift as the company seeks to stabilise its financial position amid challenging market conditions.

Epic Games CEO Tim Sweeney announced the redundancies in a note shared with employees, revealing that the job cuts, alongside US$500m in identified cost savings across contracting, marketing and closing some open roles, would help position the company "in a more stable place".

According to Sweeney, the company is "spending significantly more than we're making" and needs to make "major cuts" in order to keep the company funded.

Decreases in engagement

The business has experienced a notable contraction in user engagement despite some positive financial indicators. While Epic Games recorded a 6% increase in total PC spending when compared to 2024, the company's engagement figures have fallen considerably.

Epic Games users expended 6.65bn hours in games across 2025, representing a 14% decline when compared to 2024. Average daily active users for Fortnite, Epic's flagship product, have decreased from 2,385,906 in January 2024 to 873,425 in March 2026.

Sweeney says that despite Fortnite "remaining one of the most successful games in the world", Epic has struggled to deliver "consistent Fortnite magic with every season".

He continues: "We're only in the early stages of returning to mobile and optimising Fortnite for the world's billions of smartphones; and in being the industry's vanguard we have taken a lot of bullets in a battle which is only in the early days of paying off for ourselves and all developers."

Previous restructuring efforts

These workforce reductions follow the company's 2023 redundancies, in which Epic cut approximately 16% of its workforce, or around 830 employees.

In a company memo, Sweeney says that he had hoped that the company could "power through" a challenging financial period for the company without layoffs, but "in retrospect I see this was unrealistic".

Alongside these job cuts, the company announced divestitures in Bandcamp, which it acquired in 2022, and some of SuperAwesome, which it acquired in 2020. At the time, Sweeney says: "Saying goodbye to those who have helped build Epic is a terrible experience for all."

The pattern of repeated restructuring could indicate deeper challenges within Epic's business model and growth strategy, as the company attempts to align its operational costs with current revenue streams.

Gaming sector challenges

According to Sweeney, many of the current challenges Epic is facing are industry-wide, including slower growth, weaker spending and tougher cost economics.

The gaming sector has experienced significant turbulence between 2022 and 2025, with approximately 45,000 jobs lost across major companies such as Microsoft Gaming, Electronic Arts, Ubisoft and Sega.

COVID-19 led to an accelerated period of growth for the gaming industry. In 2020 revenue from home console games increased 33.9%, while mobile game revenue climbed by 32.8%, according to the IDC.

This unexpected surge led to many gaming companies anticipating sustained growth, prompting investments in employee expansion and wide-scale acquisitions.

Epic Games itself increased the number of its games in its catalogue from 190 in 2019 to 471 by the end of 2020 as daily active users increased by 192%.

This rapid expansion became unsustainable for many gaming companies following the lowering of COVID restrictions, leaving many with bloated organisations that were costing too much to run and necessitating wide-scale cutbacks.

The situation highlights the risks of over-expansion during periods of exceptional growth and the importance of maintaining flexible cost structures that can adapt to changing market conditions.