Analyst says Epic Games layoffs ship a transparent sign

Epic Games CEO Tim Sweeney introduced Tuesday that the Fortnite and Unreal Engine maker is shedding greater than 1,000 staff. Sweeney mentioned the layoff is because of a “downturn in Fortnite engagement that began in 2025,” which led to the corporate spending more money than it is bringing in.

Fortnite, nevertheless, stays one of many greatest, most profitable video games globally–one thing even Sweeney alluded to in his Tuesday memo to workers. The layoff comes after Epic Games introduced a worth enhance for its in-game foreign money, V-Bucks. “The price of working Fortnite has gone up loads,” Epic Games mentioned within the announcement earlier this month.

It’s related messaging to Sweeney’s word to workers in 2023, through which the CEO mentioned Epic Games has been “spending way more than we earn” as the corporate “[invests] within the subsequent evolution of Epic and rising Fortnite as a meta-verse impressed ecosystem for creators.”

Fortnite is usually cited as the last word success story. The benchmark that others are modeled after. If it can’t assist Epic Games stave off layoffs, what does that imply for the business at giant?

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“It tells us that all companies, whatever size or success, are in a battle to manage their costs,” Ampere Analysis analysis director Piers Harding-Rolls instructed 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 remainder of the business, Epic Games skilled a growth in the course of the COVID-19 pandemic, reaching a peak for its participant base in 2024. Throughout that point, Fortnite grew not solely because the free-to-play battle royale, however 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 companions utilizing Unreal Engine to create their very own video games, Disney properties, like Star Wars or Marvel, have turn into marquee occasions in Fortnite.

Epic Games’ success with Fortnite meant it might put money into the title as a platform for each user-generated content material and its personal new modes and experiences. In 2024, for example, Epic Games paid out greater than $350 million to creators who used the Fortnite system to construct their very own video games. Epic Games didn’t launch these numbers for 2025, although the corporate did say that gamers spent $400 million on third-party PC video games on the Epic Games Store—a report for the corporate.

Epic Games takes no income from builders till they hit $1 million, then uses an 88%/12% split. It has paid out $2.1 billion to builders and publishers up to now, per its own numbers. As of 2021, the Epic Games Store was not worthwhile, and legal professionals for the corporate, in filings for the Apple vs. Epic Games case, mentioned on the time that it could not be worthwhile for at the very least a number of years, if ever.

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Fortnite, in fact, remained the highest sport on the Epic Games Store platform.

Circana business analyst Mat Piscatella wrote on LinkedIn on Tuesday, following Epic Games’ layoff announcement, that Fortnite led February in month-to-month energetic customers on PlayStation and Xbox

Has the rise of Roblox created a “more immediately competitive environment” for Fortnite?

Though Fortnite‘s remained profitable—Epic Games’ prime success, in actual fact—Harding-Rolls mentioned that since 2023, Fortnite‘s annual peak month-to-month energetic gamers throughout PlayStation and Xbox dropped by 28 p.c. It’s been a gradual lower, total, since Fortnite‘s OG returned to the sport.

“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 mentioned. On prime of the drop in energetic gamers, engagement time is diminishing. The common month-to-month playtime was 29 hours in 2023 and is now 15.4 hours in 2025, Harding-Rolls mentioned.

While Fortnite‘s engagement and playerbase was dropping, its competitors noticed surges: Roblox—and, significantly, video games like Grow A Garden and Steal A Brainrot—helped the platform attain its peak playerbase numbers in 2025. Harding-Rolls mentioned Roblox’s common playtime and every day visits had been above Fortnite for the primary time. Despite the dips, nevertheless, Epic Games is estimated to have introduced in additional than $6 billion in 2025, per Statista. By Statista’s numbers, Epic Games continues to be rising its income year-over 12 months, regardless of the obvious rising price of creating Fortnite (and dwindling curiosity within the title).

Related:Fortnite Rocket Racing and extra are being sunsetted amidst layoffs

“This reveals the more immediately competitive environment for attention and monetisation that Fortnite is working in,” he mentioned. “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 time particularly, Epic Games told Game File it should have roughly 4,000 staff following the newest layoffs.

Epic Games’ self-professed righteous authorized campaign towards Apple has additionally made a large dent within the Fortnite makers’ pockets. Sweeney mentioned in 2025 that the lawsuit price Epic Games greater than $1 billion. The firm took Apple to courtroom to combat a few of its insurance policies, together with one which restricted third-party fee techniques. Apple takes a 30 p.c minimize on each buy, and Epic Games wished to course of its personal funds and, thus, bypass Apple’s minimize. Epic Games added a direct fee choice 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 monetary affect 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 state of affairs in his letter to workers 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 is the greater than 1,000 now laid off workers—which Sweeney called in a post on X “once-in-a-lifetime quality folks”—that really feel the brunt of the corporate’s decision-making. Epic Games has not mentioned precisely the place the layoffs hit hardest, although Harmonix, acquired by Epic Games in 2021, seems to be hit significantly onerous, in keeping with LinkedIn posts and Game Developer sources. (Mediatonic, additionally acquired in 2021, was vastly impacted within the 2023 layoff spherical.)

Epic Games can also be shutting down a number of of Fortnite‘s sport modes: Rocket Racing, Ballistic, and Festival Battle Stage. Ballistic and Festival Battle Stage will likely be faraway from the sport on April 16, adopted by Rocket Racing in October. Rocket Racing and Festival Battle Stage are merchandise 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 consultant instructed 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, although, seemingly span your entire firm. Developers who labored on essential security techniques, designed iconic characters, and Fortnite‘s vital (and profitable) partnerships have all been minimize unfastened. The affect of the widespread redundancies will certainly affect Fortnite—each the sport and the groups that help and keep it. The fallout from such large layoffs is certain to be felt for some years to return.

“Unfortunately, staffing costs are where big cost savings can be made, but that has implications for general job security and workforce moral,” Harding-Rolls mentioned. “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.”