Epic Games has announced sweeping layoffs of more than 1,000 employees. 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 company funded," CEO Tim Sweeney said in a memo to workers on Tuesday.Sweeney wrote that, combined with over $500 million of identified cost savings in contracting, marketing, and closing some open roles," the layoffs will give Epic more stability. He added that the layoffs are not related to AI.Back in 2023, Epic laid off 830 employees. At the time, that was 16 percent of its workforce, suggesting around 4,000 employees remained at the company. If those numbers haven't changed too much in the meantime, that means Epic is culling around a quarter of its headcount this week.Along with a dip in Fortnite engagement, Sweeney pointed out that Epic isn't immune from systemic issues the games industry is contending with, such as a slowdown in growth, reduced spending, tougher cost economics" and a battle with other types of media for consumer's attention.However, Epic has some issues of its own to deal with. Despite Fortnite remaining one of the most successful games in the world, we've had challenges delivering consistent Fortnite magic with every season; 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," Sweeney wrote. (He previously said Epic spent over $100 million in legal fees alone on its App Store battle with Apple.)The path forward for the company, per its CEO, is to create awesome Fortnite experiences with fresh seasonal content, gameplay, story and live events," perhaps in an attempt to recapture some of that magic" he's referring to. Speeding up work on developer tools amid the transition to Unreal Engine 6 is important as well, Sweeney indicated.He said that the workers Epic is laying off will receive at least four months of their base pay, though they'll get more depending on the length of their tenure at the company. Epic will pay for extended healthcare coverage, including for six months for affected workers in the US. The company - which is not publicly traded - will speed up the vesting of stock options through next January and extend equity exercise options for up to two years," Sweeney said.Epic announced the layoffs days after it increased the price of Fortnite's V-bucks currency. The cost of running Fortnite has gone up a lot and we're raising prices to help pay the bills," it said.As part of the changes at the company, Epic is killing off three Fortnite modes. Rocket Racing (which was built by Rocket League developer Psyonix) will shut down in October. Fortnite Ballistic - a 5v5 tactical shooter mode - and Festival Battle Stage, which is a competitive version of the Fortnite Festival rhythm game, will vanish on April 16. We've built a lot of Fortnite modes, and in some cases we failed to build something awesome enough to attract and retain a large player base," Epic said on X.The company noted in its Year in Review recap last month that although the hours that players spent in third-party titles on the Epic Games Store increased by four percent in 2025, overall gameplay hours declined year over year," hinting at a dip in Fortnite numbers. The company said PC players spent $1.16 billion on the store in 2025, an increase of six percent from the previous year. Of that, $400 million was spent on third-party PC games. However, Epic Games Store vice president and general manager Steve Allison told Polygon in February that, factoring in first-party revenue and the 12 percent cut the company takes from third-party games, the store is already - even with all this stuff - marginally profitable now."Here is the full memo Sweeney shared with Epic's employees on Tuesday: