Analyst says Epic Games layoffs send a clear signal: 'This will not get any easier'
Epic Games CEO Tim Sweeney announced Tuesday that the Fortnite and Unreal Engine maker is laying off more than 1,000 employees. Sweeney said the layoff is due to a "downturn in Fortnite engagement that started in 2025," which led to the company spending more cash than it's bringing in.
Fortnite, however, remains one of the biggest, most successful games globally–something even Sweeney alluded to in his Tuesday memo to staff. The layoff comes after Epic Games announced a price increase for its in-game currency, V-Bucks. "The cost of running Fortnite has gone up a lot," Epic Games said in the announcement earlier this month.
It's similar messaging to Sweeney's note to staff in 2023, in which the CEO said Epic Games has been "spending way more than we earn" as the company "[invests] in the next evolution of Epic and growing Fortnite as a meta-verse inspired ecosystem for creators."
Fortnite is often cited as the ultimate success story. The benchmark that others are modeled after. If it cannot help Epic Games stave off layoffs, what does that mean for the industry at large?
"It tells us that all companies, whatever size or success, are in a battle to manage their costs," Ampere Analysis research director Piers Harding-Rolls told Game Developer. "This will not get any easier with another round of global inflation expected due to the U.S. and Israel war with Iran."
Like the rest of the industry, Epic Games experienced a boom during the COVID-19 pandemic, reaching a peak for its player base in 2024. Throughout that time, Fortnite grew not only as the free-to-play battle royale, but as a platform itself. In 2024, Epic Games received a $1.5 billion investment from The Walt Disney Company to create an "entertainment universe." Beyond Disney and its partners using Unreal Engine to create their own games, Disney properties, like Star Wars or Marvel, have become marquee events in Fortnite.
Epic Games' success with Fortnite meant it could invest in the title as a platform for both user-generated content and its own new modes and experiences. In 2024, for instance, Epic Games paid out more than $350 million to creators who used the Fortnite system to build their own games. Epic Games did not release those numbers for 2025, though the company did say that players spent $400 million on third-party PC games on the Epic Games Store—a record for the company.
Epic Games takes no revenue from developers until they hit $1 million, then uses an 88%/12% split. It has paid out $2.1 billion to developers and publishers so far, per its own numbers. As of 2021, the Epic Games Store was not profitable, and lawyers for the company, in filings for the Apple vs. Epic Games case, said at the time that it would not be profitable for at least multiple years, if ever.
Fortnite, of course, remained the top game on the Epic Games Store platform.
Circana industry analyst Mat Piscatella wrote on LinkedIn on Tuesday, following Epic Games' layoff announcement, that Fortnite led February in monthly active users on PlayStation and Xbox
Has the rise of Roblox created a "more immediately competitive environment" for Fortnite?Though Fortnite's remained successful—Epic Games' top success, in fact—Harding-Rolls said that since 2023, Fortnite's annual peak monthly active players across PlayStation and Xbox dropped by 28 percent. It's been a slow decrease, overall, since Fortnite's OG returned to the game.
"Fortnite's recent seasonal updates at the end of 2025 have not had as big an impact as updates at the end of 2023 and 2024," he said. On top of the drop in active players, engagement time is diminishing. The average monthly playtime was 29 hours in 2023 and is now 15.4 hours in 2025, Harding-Rolls said.
While Fortnite's engagement and playerbase was dropping, its competition saw surges: Roblox—and, particularly, games like Grow A Garden and Steal A Brainrot—helped the platform reach its peak playerbase numbers in 2025. Harding-Rolls said Roblox's average playtime and daily visits were above Fortnite for the first time. Despite the dips, however, Epic Games is estimated to have brought in more than $6 billion in 2025, per Statista. By Statista's numbers, Epic Games is still growing its revenue year-over year, despite the apparent rising cost of making Fortnite (and dwindling interest in the title).
"This reveals the more immediately competitive environment for attention and monetisation that Fortnite is operating in," he said. "While the foundation of potential future growth has been laid through its platform and storefront strategy, a drop in engagement for Fortnite in 2025 has meant an immediate need to cut costs once again following layoffs in 2023. This brings its workforce down [...] close to its size in 2020 at the start of the pandemic."
Addressing that point specifically, Epic Games told Game File it will have roughly 4,000 employees following the latest layoffs.
Epic Games' self-professed righteous legal crusade against Apple has also made a massive dent in the Fortnite makers' wallet. Sweeney said in 2025 that the lawsuit cost Epic Games more than $1 billion. The company took Apple to court to fight some of its policies, including one that restricted third-party payment systems. Apple takes a 30 percent cut on every purchase, and Epic Games wanted to process its own payments and, thus, bypass Apple's cut. Epic Games added a direct payment option to Fortnite, and Apple yanked Fortnite off the App Store.
"I think freedom cannot be purchased at too dear a price," Sweeney told Business Insider when discussing the financial impact of the lawsuit. "The world needs to change here. And if it doesn't change, then you're just going to have Apple and Google extracting all of the profit from all apps forever. And there will be no proper digital economy. It will just be monopolization."
Sweeney alluded to the Apple situation in his letter to staff on Tuesday: "We're only in the early stages of returning to mobile and optimizing 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."
In the wake of all this, it's the more than 1,000 now laid off staff—which Sweeney called in a post on X "once-in-a-lifetime quality folks"—that feel the brunt of the company's decision-making. Epic Games has not said exactly where the layoffs hit hardest, though Harmonix, acquired by Epic Games in 2021, appears to be hit particularly hard, according to LinkedIn posts and Game Developer sources. (Mediatonic, also acquired in 2021, was greatly impacted in the 2023 layoff round.)
Epic Games is also shutting down several of Fortnite's game modes: Rocket Racing, Ballistic, and Festival Battle Stage. Ballistic and Festival Battle Stage will be removed from the game on April 16, followed by Rocket Racing in October. Rocket Racing and Festival Battle Stage are products of Epic Games' acquisitions of Psyonix and Harmonix in 2019 and 2021, respectively.
"The teams at Harmonix and Mediatonic have been integrated into the Epic development team for a while," an Epic Games representative told Game Developer. "They work on a range of games and experiences, and the Harmonix team continues to work on music features in Fortnite like Festival Main Stage and Festival Jam Stage. Music remains a major part of Fortnite."
Layoffs, though, seemingly span the entire company. Developers who worked on crucial safety systems, designed iconic characters, and Fortnite's important (and lucrative) partnerships have all been cut loose. The impact of the widespread redundancies will surely impact Fortnite—both the game and the teams that support and maintain it. The fallout from such massive layoffs is sure to be felt for some years to come.
"Unfortunately, staffing costs are where big cost savings can be made, but that has implications for general job security and workforce moral," Harding-Rolls said. "Overall, while Epic has specifically mentioned that AI is not a factor in its decision making, the looming backdrop of rising inflation means that games companies of all sizes will be eager to leverage AI to become more efficient. That is likely to have some impact on sector hiring in the future."
