More than 1,000 Epic Games employees were laid off last week.
Announced in a press release, the layoff was related to a reported decline in Fortnite engagement which began last year. The company pointed to challenges in maintaining Fortnite’s “magic” every season and the ongoing process of bringing the game back to mobile users as the reason for the decline.
In the statement, the CEO, Tim Sweeney, emphasized that the cuts were not due to AI use, highlighting the importance of developers’ creativity. Issues that Epic Games is currently faced with include slower growth, higher costs and a lack of purchasing for current consoles. The company also pointed to more competition with other entertainment forms.
Moving forward, Epic Games confirmed plans to upgrade to Unreal Engine 6 and to announce projects later this year.
“This isn’t our first time being here. Epic survived upheavals in the 1990s with the move from 2D to 3D with Unreal 1; in the 2000s, building console games with Gears of War; and in 2012, moving to online gaming with Paragon and Fortnite,” said Sweeney in his statement. “Each time, we rebuilt our foundations and earned a renewed leadership position.”
EPIC GAMES LAYS OFF OVER 1,000 EMPLOYEES
— HYPEX (@HYPEX) March 24, 2026
"Today we’re laying off over 1000 Epic employees. I'm sorry we're here again. 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… pic.twitter.com/Ibrsl1IFn3
“At Epic, we pride ourselves in only hiring the industry’s best, so it is very painful to part with so many talented people,” he added.
In his statement, Sweeney highlighted the increasingly difficult market conditions amongst video game development.
According to the 2026 State of the Game Industry report, approximately 28% of survey respondents reported being laid off in the past two years. Half of the group reported that the company they currently worked for had conducted layoffs in the past year.
Incoming students who are looking to study video game development also report a higher concern for their future. Approximately 74% of college students expressed worry about their ability to obtain entry-level jobs after graduating.
As for AI, only 30% of respondents said that game studios were incorporating it in their creative process. The rate is less than the reported usage rate by publishing companies, marketing firms, PR firms and support teams.
The report also found that more than a third of the respondents relied on their own funds to get their creative projects off the ground. Others reported a reliance on publishing deals, private investments and venture capital.
Still, the Boston Consulting Group predicts improving conditions.
“By 2030, we should see an explosion of gaming content, an expansion of the global audience for games, and broadening expectations for omniplatform gaming,” said the company. “We anticipate a healthy, growing market, although there will be on the AAA business model will experience continued pressure, and top-tier developers will need to invest further in strategies related to brand, franchise, intellectual property, platform curation, subscription, and windowing.”
