Epic Games has announced a major restructuring that includes laying off over 1,000 employees, representing a significant portion of its global workforce.
In a memo sent to staff on March 24 and published online, 2026, CEO Tim Sweeney attributed the decision to a “downturn in Fortnite engagement” that began in 2025, leading to a financial imbalance where the company was spending significantly more than it was earning.
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Beyond the workforce reduction, Epic has identified over $500 million in cost savings by scaling back on contracting, marketing, and closing open roles. Sweeney noted that the company is facing a “massive upheaval” in the industry, characterized by slower growth, weaker consumer spending, and lower console sales compared to previous generations.
Despite these hurdles, Sweeney clarified that the layoffs are not related to AI productivity, noting that the company still intends to hire “awesome developers” as productivity improves. Instead, the cuts are a direct response to the “vanguard” position Epic has taken—likely a reference to its expensive legal and regulatory battles to open up mobile ecosystems—which Sweeney admits are only in the “early days of paying off.”
The memo outlines a pivot toward technical evolution and fresh content to stabilize the ship. Key priorities for the “next generation of Epic” include accelerating the transition from Unreal Engine 5 and UEFN to a more stable and capable Unreal Engine 6, a return to “Fortnite magic” with a focus on fresh seasonal content, live events, and mobile optimization for global smartphone users, and “huge launch plans” for the end of 2026 to kick off its next era.
Epic is offering a relatively robust severance package to those affected, including at least four months of base pay, extended healthcare (six months in the U.S.), and accelerated stock option vesting through January 2027. Impacted employees will also have up to two years to exercise their equity options.
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