Epic Games to Cut Over 1,000 Jobs, CEO Says AI Not the Cause

Epic Games Announces Major Layoffs

Epic Games announced on Tuesday that it is laying off more than 1,000 employees, representing about 20% of its workforce. The cuts were detailed in a memo to employees shared online by founder and CEO Tim Sweeney.

CEO Denies AI as Factor

In the memo, Sweeney explicitly stated that the layoffs are not related to artificial intelligence. He noted that while AI can improve productivity, the company still needs software developers to create content and technology. This contrasts with other companies that have cited AI as a reason for workforce reductions.

Reasons Behind the Cuts

Sweeney attributed the layoffs to a downturn in Fortnite engagement that began in 2025, which has led to the company spending significantly more than it earns. He also pointed to broader industry challenges, including slower growth, weaker consumer spending, tougher economics, and increased competition from other forms of entertainment. Additionally, current game console sales are trailing the previous generation, and Epic's legal battles with Apple and Google over mobile app store policies have taken a toll.

Cost Savings and Future Focus

Alongside the layoffs, Epic has identified over $500 million in cost savings across contracting, marketing, and unfilled roles. Sweeney indicated that these measures will put the company in a more stable place. Looking ahead, Epic plans to focus on building Fortnite experiences with fresh seasonal content, gameplay, story, and live events.

Industry Context

The layoffs come two years after Epic struck a $1.5 billion licensing deal with Disney. The gaming industry has been contracting following a pandemic-era boom, with an estimated 5,300 jobs cut last year and 14,600 in 2024, according to an online tally by Farhan Noor. Epic last had layoffs in 2023, affecting 16% of its workforce.

Scaling Back Fortnite Modes

In addition to the layoffs, Epic announced it is shutting down several Fortnite modes, including Rocket Racing, Ballistic, and Festival Battle Stage. The company stated that it failed to build some modes that could attract and retain a large player base.

Expert Commentary

Joost van Dreunen, CEO of Aldora Intelligence and a professor at NYU Stern, commented that the cuts reflect significant changes in the industry, particularly among American publishers. He noted that while the global games industry grew revenue by roughly 4.5% last year, most growth came from outside the US, suggesting a shift in consumer gravity eastward.

Sources

• Epic Games Is Laying Off 1,000 Staff. Its CEO Says AI Isn't to Blame. - Business Insider
• Epic Games Laying Off 1,000+ Employees, Swears AI Is Not to Blame