Fortnite maker Epic cuts over 1,000 jobs as battle royale suffers slump - "We're spending significantly more than we're making"

Epic Games is implementing a workforce reduction impacting over 1,000 employees, attributing the move to a notable decline in player engagement for its leading battle royale title, Fortnite.

This latest round of layoffs comes after 830 job cuts made by the company in 2023. The decision was communicated by Epic Games CEO Tim Sweeney in a blog post, which echoed an internal memo sent to staff.

Sweeney's message stated, "Today we're laying off over 1000 Epic employees. I'm sorry we're here again." He elaborated that a significant downturn in Fortnite engagement has led to the company "spending significantly more than we're making," necessitating substantial cuts to maintain financial stability. He added that these layoffs, combined with over $500 million in cost reductions from contracting, marketing, and unfulfilled positions, are intended to put the company on a more secure footing.

Sweeney further outlined challenges, categorizing some as industry-wide: these include decelerated growth, reduced consumer spending, more stringent cost economics, lower sales of current-generation consoles compared to their predecessors, and intense competition for player time from various evolving forms of entertainment.

He also identified challenges specific to Epic: "Despite Fortnite remaining one of the most successful games in the world," he noted difficulties in "delivering consistent Fortnite magic with every season." Additionally, Epic is "only in the early stages of returning to mobile and optimising Fortnite for the world's billions of smartphones." Sweeney also highlighted their role as an "industry's vanguard," stating they "have taken a lot of bullets in a battle which is only in the early days of paying off for ourselves and all developers."

Addressing a contemporary trend, Sweeney clarified that "the layoffs aren't related to AI." He emphasized that Epic aims to retain "as many awesome developers developing great content and tech as we can" to leverage productivity improvements.

For impacted employees, Epic is providing a comprehensive severance package. This includes a minimum of four months' base pay, with supplementary funds contingent on their tenure. Healthcare coverage will be extended, offering six months of benefits for U.S.-based staff. Furthermore, stock option vesting will be accelerated through January 2027, and the window for exercising equity options will be prolonged by up to two years.

Sweeney's current remarks bear a striking resemblance to his statement during the 2023 layoffs, when 830 positions were cut. At that time, he noted, "For a while now, we've been spending way more money than we earn." Those previous reductions were also linked to Fortnite's performance and led to significant impacts on Mediatonic, the developer of Fall Guys, which Epic had acquired in 2021.

These latest job reductions follow an earlier announcement this year by Epic regarding an increase in the price of Fortnite's V-Bucks, a measure taken to "pay the bills."