Fortnite maker Epic Games fires over 1,000 employees

Epic Games is eliminating more than 1,000 jobs, the company announced on Tuesday, citing declining engagement for its flagship title Fortnite and broader economic pressures affecting the video game industry.

According to a report by Reuters, CEO Tim Sweeney informed employees in a memo that the company is spending significantly more than it earns and needs to make major cuts to sustain the business. The company expects to save $500 million by reducing spending on contracting and marketing, as well as eliminating some unfilled roles.

The move marks the second major round of layoffs at Epic in three years. In September 2023, the company cut approximately 830 jobs, or about 16% of its workforce.

Sweeney noted that the company has struggled to consistently deliver what he called "Fortnite magic" and described current market conditions as the most extreme since Epic was founded in 1991, according to the Reuters report. Sweeney added that the layoffs are not related to artificial intelligence, addressing industry concerns about technology replacing developers.

Fortnite, a first-person shooter game that proved resilient after the pandemic, has seen engagement decline even for major franchises. The game topped monthly active players on PlayStation and Xbox in the US last month, but average playtime fell sharply, according to Circana senior director Mat Piscatella, as per the Reuters report.

Earlier this month, Epic raised the price of Fortnite's in-game currency, citing higher operating costs. Rising memory chip prices have also added to industry difficulties, with demand from AI data centres absorbing supply and pushing up semiconductor costs, affecting console makers as well.

Other gaming companies have also faced cutbacks. Electronic Arts laid off hundreds of workers last month and cancelled a Titanfall game that was in development, according to media reports. Amazon's broader job cuts late last year also affected its gaming division.