Epic Games announced that it was laying off more than 1,000 employees, but the “Fortnite” maker’s CEO says it’s not because of AI.
Tim Sweeney said in a memo to employees shared online Tuesday that the cuts, affecting about 20% of its workforce, reflect industry-wide challenges, including slower growth, weaker spending, and tougher cost dynamics.
“Since it’s a thing now, I should note that the layoffs aren’t related to AI,” he wrote. “To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can.”
A growing number of employers have recently cited AI as a reason for making deep cuts to their head counts. Recent examples include Block and Atlassian.
Tuesday’s cuts, which come two years after Epic struck a $1.5 billion licensing deal with Disney, are significant, said Joost van Dreunen, CEO of the game-analytics firm Aldora Intelligence and a professor at New York University’s Stern School of Business.
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“It’s an acknowledgement of the change in the industry that’s taking place, particularly among American publishers, when one of the most popular game makers is finding itself having to let go of 1,000 people,” he said. “It suggests that we’re witnessing the decline of American cultural dominance in the video games industry.”
Though the global games industry grew revenue — roughly 4.5% last year, according to Aldora — most of that growth came from outside the US, said Van Dreunen. “The consumer gravity point is moving eastward,” he said.
The game industry’s workforce has been contracting in recent years following a pandemic-era boom. An estimated 5,300 jobs were cut last year and 14,600 were axed in 2024, according to an online tally of termination announcements and news reports by Farhan Noor, a technical artist in California.
Epic last had layoffs in 2023, affecting 16% of its workforce. Those layoffs were a first for the company, which was founded in the 1990s. In his memo, Sweeney indicated that the cuts were a painful necessity.
“The downturn in Fortnite engagement that started in 2025 means we’re spending significantly more than we’re making, and we have to make major cuts to keep the company funded,” he wrote. “This layoff, together with over $500 million of identified cost savings in contracting, marketing, and closing some open roles puts us in a more stable place.”