Fortnite developer Epic Games announced a 20% layoff, with CEO stating: "It's not an AI problem."

Epic Games officially announced on Tuesday, March 25th, that it will lay off more than 1,000 employees, representing approximately 20% of its workforce. This will reduce the company's headcount to approximately 4,000. CEO Tim Sweeney stated in a memo simultaneously released to employees, "I'm sorry we're here again."

Cut $500 million

Epic stated that the layoffs are part of a broader cost-cutting plan, not an isolated measure. By simultaneously reducing outsourcing contracts, cutting marketing budgets, and suspending hiring for some positions, the company saved an additional $500 million.

The compensation package for departing employees includes: at least four months' base salary, additional compensation based on seniority, and six months of health insurance for U.S. employees.

Fortnite player churn "has nothing to do with AI".

Epic Games officially stated that since 2025, player engagement in Fortnite has been declining, and the company has consistently experienced expenses far exceeding revenue. Along with the layoff announcement, Epic also announced the closure of three Fortnite game modes: Ballistic and Festival Battle Stage will be removed on April 16th, while Rocket Racing will be shut down this October.

This marks Epic's second round of large-scale layoffs in nearly three years—in September 2023, the company cut approximately 830 employees, representing about 16% of its total workforce at the time.

Amid a wave of AI layoffs in the tech industry, Sweeney proactively addressed external concerns in a memo, stating clearly: "Since everyone is discussing this issue, I want to clarify that layoffs are unrelated to AI. In fact, with AI boosting productivity, we hope to have more outstanding developers creating high-quality content and technology."

Unlike some tech companies that attribute layoffs directly to AI replacing human labor, Epic's statement takes a completely different approach.

Analogy between the 1990s and the current situation

Sweeney positioned the current predicament as a "critical turning point" in Epic's history, citing the company's transition from 2D games to 3D games in the 1990s, and later to online games such as Fortnite, suggesting that the company is standing at the starting point of the next structural transformation.

It's worth noting that Epic announced a price increase for its virtual currency V-Bucks earlier this year, and the subsequent announcement of layoffs indicates that the company's financial pressures extend beyond personnel matters.

Epic's predicament is not an isolated case. The gaming industry as a whole faces structural challenges such as weak consumer spending, current-generation console sales lagging behind the previous generation, and the continued consumption of player time by short videos and streaming platforms, putting widespread pressure on game companies. Layoffs have already spread to many large game companies, and Epic's large-scale restructuring may be a microcosm of the accelerated industry reorganization.