‘Fortnite’ maker Epic Games lays off 1,000 employees

Epic Games, the developer of the popular video game “Fortnite,” is laying off more than 1,000 employees and cutting costs by $500 million.

Chief executive Tim Sweeney announced the reductions Tuesday morning in a message to employees. He said it had nothing to do with artificial intelligence and instead highlighted what he called “Fortnite’s” lack of engagement last year.

“Even though Fortnite remains one of the most successful games in the world, we have struggled to deliver consistent Fortnite magic each season,” Sweeney said in a statement.

The company’s flagship game was first released in 2017. Since then, it has become a key part of internet culture – where character-specific dances have become widespread trends and major musicians, such as Travis Scott and Ariana Grande, have held concerts in the virtual realm.

But Epic has been slow to optimize the computer game for mobile gaming. A “Fortnite” app was first introduced in 2018, but was quickly removed due to a legal battle with Apple and Google over App Store practices. Sweeney said the company was still in the “early stages of returning to mobile and optimizing Fortnite for the billions of smartphones around the world.”

Many of Epic’s woes also stem from industry-wide challenges such as “slower growth, lower spending, and tougher cost economics,” Sweeney wrote. And Epic isn’t the only one suffering. In recent years, gaming companies including Electronic Arts and Microsoft’s Xbox division have all cut staff.

This year, the Game Developers Conference’s State of the Gaming Industry report found that about a third of workers in the U.S. video game industry have been laid off in the past two years.

Epic Games was founded in 1991 and is headquartered in Cary, North Carolina. It has dozens of offices around the world, including in Los Angeles. Beyond “Fortnite,” the company is known as a leader in 3D engine technology and interactive entertainment.

Over the years, Epic Games has gradually become a major player in Hollywood. Its 3D creation tool, Unreal Engine, has been used to produce visual effects and virtual worlds for shows including Walt Disney Co. and Lucasfilm’s “The Mandalorian” and HBO’s “Westworld.”

In 2024, Disney signed a deal with Epic Games to create a gaming and entertainment universe with the company’s brands including Star Wars, Marvel and Pixar. Disney invested $1.5 billion in Epic Games for a minority stake in the company. New Disney CEO Josh D’Amaro managed the collaboration with Epic Games in his previous role as parks chief to create a Disney world within the popular game “Fortnite.”

Looking ahead, Sweeney plans to focus the company on creating “great Fortnite experiences” with new content and continuing to accelerate its development tools, such as Unreal Engine.