This past month, more than 10 different companies have reported employee layoffs, with Ubisoft doing the same just last week. There seems to be a recent wave of industry-wide cost-cutting efforts, with live-service games and studios showing up prominently because of revenue challenges. Today, a note was sent to employees from the CEO and co-founder of Epic Games. Tim Sweeney cited a drop in Fortnite engagement beginning in 2025 as a key reason for the decision to lay off over 1,000 employees.

The letter states that the company will be in a more stable financial condition following the layoffs and a separately identified $500 million in cuts across contractor spending, marketing, and unfilled positions. Although Fortnite is one of the most successful games in the world, it is not immune to the challenges of the industry: what Sweeney describes as slower growth, weakened spending, rising cost pressures, current consoles under-performing relative to the previous generation, and games struggling to hold attention against a broader entertainment landscape. The CEO adds that AI is not one of the contributing factors to the layoffs, framing it as something that supports the work rather than drives the headcount down.

This coincides with the shutdown of three Fortnite modes that struggled to draw and keep a dedicated following. Rocket Racing, Ballistic, and Festival Battle Stage are all being taken offline, with Ballistic and Festival Battle Stage going dark on April 16, 2026, and Rocket Racing following in October. Epic acknowledged the underperformance directly, stating that in some cases they did not build something strong enough to keep players coming back. The remainder of Fortnite Festival, including Main Stage and Jam Stage, will not be affected.

https://t.co/oT6KJ9RgcD

— Fortnite Status (@FortniteStatus) March 24, 2026

Looking ahead, Sweeney outlines plans to reinvest in Fortnite through refreshed seasons built around new gameplay, storytelling, and live events, alongside a push to improve the reliability and scope of Epic’s developer tools as the company moves toward Unreal Engine 6, with a significant launch window targeted for later this year.

Towards the end of the note, the CEO explains that employees affected by the cuts will receive a minimum of four months of base pay, with additional compensation tied to their time at the company. Healthcare will be covered by Epic for six months in the U.S., employees will gain access to their stock options sooner through January 2027, and those with equity will have up to two years to exercise it.