This week, Epic Video games introduced one of many largest rounds of layoffs the video video games {industry} has ever confronted, with greater than 1,000 employees instructed they have been out of labor in a single devastating morning. Followers of Fortnite, which stays one of many largest video games on the earth, have been blindsided by the information. However nobody was extra shocked than the workers themselves — a few of whom had devoted a decade of their lives to Epic and Fortnite, and established the breakout battle royale as a world phenomenon.
Days later, the dimensions of the layoffs continues to be sinking in. Alongside the numerous veteran builders now on the lookout for work by way of social media, those that stay have mentioned they merely do not know the way Fortnite will look later this yr and past with virtually 1 / 4 of the corporate’s employees, together with a number of key figures, now not current.
However whereas there is not any mistaking the really beautiful scope of Epic Video games’ choice, analysts have mentioned that some type of cost-reduction — doubtless layoffs — was inevitable. Saying the information this week, Epic Video games boss Tim Sweeney blamed rising growth prices and a downturn in participant curiosity in Fortnite by means of 2025. However, talking to IGN, analysts say there is a broader image right here of an organization now paying the value for its prolonged and expensive bets that it could possibly proceed to upend the online game {industry}.
“Since late 2017, Epic has largely relied on the success of Fortnite to broaden its enterprise and closely put money into product growth,” Piers Harding-Rolls, veteran video games {industry} analyst at Ampere Evaluation instructed IGN. “Whereas the muse of potential future development has been laid by means of its platform and storefront technique, a drop in engagement for Fortnite in 2025 has meant an instantaneous want to chop prices as soon as once more following layoffs in 2023. This brings its workforce down nearer to its dimension in 2020 firstly of the pandemic.” Epic Video games has not given a particular determine for its headcount following the layoffs, although a spokesperson for the corporate has instructed IGN that over 4,000 employees nonetheless remained.
Three years in the past, Epic Video games went by means of a equally large-scale layoff, ditching 830 employees and divesting others because the video games {industry} emerged from its Covid lockdown-era increase. Two months later, Fortnite hosted its “Huge Bang” reside occasion, the sport’s try and pitch itself as a multi-genre expertise that featured Epic-developed racing, music and survival sport modes with out weapons. Fortnite’s participant depend spiked, however the impact was non permanent.
Fortnite’s fortunes have at all times been cyclical, with some battle royale seasons touchdown higher than others, and an annual bump in participant numbers every fall as a brand new battle royale Chapter arrives. However 2025 felt a very gradual yr for the sport, one thing mirrored in publicly-available consumer information. As curiosity within the sport’s OG mode slowed and its non-shooter parts have been sidelined, Fortnite’s principal battle royale spent its summer time months internet hosting an unpopular alien bug season. It was unlucky timing, too, simply as the recognition of rival metaverse sport Roblox went stratospheric, as mini-games corresponding to Develop a Backyard and Steal the Brainrot grew to become larger than Fortnite’s battle royale mode on their very own.
“Fortnite’s current seasonal updates on the finish of 2025 haven’t had as huge an impression as updates on the finish of 2023 and 2024,” Harding-Rolls agreed. “The OG map return had a significant impression on the finish of 2023 seeing MAUs [monthly active users] throughout PlayStation and Xbox enhance by 51% month-on-month following the discharge, however Chapter 2 OG noticed diminishing returns with a 15% MAU enhance month-on-month, and the late 2025 updates noticed peak MAUs at 14% decrease than on the finish of 2024.
“Since its excessive in 2023, Fortnite’s annual peak MAUs throughout PlayStation and Xbox have decreased by 28%,” he continued. “Engagement has additionally steadily fallen, dropping from a mean month-to-month playtime in December 2023 of over 29 hours, to fifteen.4 hours in 2025. In the meantime engagement on carefully aggressive titles have began to exceed Fortnite. Specifically, Roblox had a surge of recognition from April 2025 onwards and noticed common playtime and every day visits develop above Fortnite for the primary time. This reveals the extra instantly aggressive atmosphere for consideration and monetisation that Fortnite is working in. As revenues have dropped, so has the necessity to lower prices to defend revenue margins and with staffing being the most important value it’s maybe inevitable that Epic has needed to scale back the workforce.”
“Epic says they’re spending more cash than they’re incomes,” famous Dr. Serkan Toto, CEO of Japan sport {industry} consultancy agency Kantan Video games. “We have to assume that is true and that the enterprise mannequin is just not working anymore, so Epic pulled out the hammer as an alternative of saying a bunch of small cuts over a protracted time period. If income falls, firms have a look at prices, and right here, personnel is usually the most important block. So if the ship sails into the mistaken course, firing individuals is probably the most impactful solution to cease bleeding purple ink. Boosting income and income in a tricky market like the present one is way more durable than reducing prices, so Epic reacted in the way in which they did.”
After all, creating Fortnite is only one of Epic Video games’ prices. Alongside the event of its industry-dominating Unreal Engine toolkit, Epic has spent years waging excessive profile campaigns towards Apple (which it’s nonetheless combating), Google (which it has settled, permitting Fortnite absolutely again on Android telephones), and Steam (the place its bid to launch a rival PC sport platform has met with blended fortunes).
Talking to IGN final yr, in a quote which has been resurfaced and broadly shared this week within the wake of the layoffs, Epic Video games boss Tim Sweeney mentioned his firm had misplaced an enormous sum of money whereas combating Apple and Google, although he had “no regrets” about it. “The struggle towards Apple and Google has definitely denied us a billion {dollars} of income, maybe a number of billion,” Sweeney mentioned, earlier than suggesting Epic Video games had a large enough conflict chest to proceed its campaigns lengthy into the longer term. “I believe we would run into severe monetary issues after a pair extra many years of this.”
“Epic’s current redundancies are understandably being linked by many to Fortnite, however that framing is probably going too simplistic,” mentioned Adam Sensible, World Director of Product – Gaming at cell analytics agency AppsFlyer. “Whereas Tim Sweeney has acknowledged a softening in Fortnite engagement since 2025, reflecting broader {industry} traits, that is just one a part of a a lot larger image. Epic has spent the final a number of years investing closely throughout a number of fronts, most notably in its extended authorized battles with Apple and Google. These circumstances have been vastly consequential for the {industry} — notably in opening up the dialog round direct-to-consumer funds — however additionally they got here at an infinite monetary value.”
Half a decade on from Fortnite’s preliminary spat towards Apple and Google, has the associated fee in authorized charges and misplaced income been well worth the battle? It is a query that may certainly be on the minds of Epic staff this week — these nonetheless on the agency, and people now unemployed, as Sweeney blames layoffs on the corporate spending greater than it has been incomes.
“Past that, Epic has been constructing out a much wider ecosystem,” Sensible continued. “The Epic Video games Retailer has required sustained funding throughout PC, console, and cell, with cell specifically nonetheless not absolutely realised regardless of years of effort tied to those self same authorized challenges. On the similar time, the corporate has explored extra initiatives, together with potential B2B direct-to-consumer fee options. Even the place these have not absolutely materialized, they signify important upfront value when it comes to product, partnerships, and go-to-market efforts. Whenever you layer all of that collectively, the redundancies begin to look much less like a response to a single product, and extra like the results of cumulative strategic funding assembly a more durable macroeconomic atmosphere.”
Added Toto: “The authorized prices of the year-long campaigns towards two of the most important firms that ever existed are certainly astronomical, however each live-service sport peaks after which begins declining at some point. It appears even Fortnite’s greatest days could also be behind it. Their UGC initiative by no means grew to become a hazard for Roblox, Steam continues to be a lot larger than the Epic Video games Retailer and their numerous M&A offers during the last years apparently didn’t contribute to income considerably sufficient both.”
Sweeney devoted a big portion of his message to employees this week discussing normal {industry} traits that Epic Video games, regardless of its dimension and Fortnite’s reputation, stays weak to. These add additional to the sophisticated image of an organization experiencing what seems like an actual turning level, as Fortnite’s momentum and Epic Video games’ prices intersect with pressures felt throughout the online game {industry}.
“Epic expanded its workforce quickly over a five-year interval beginning in 2019,” Ampere Evaluation’ Piers Harding-Rolls famous. “Like different video games firms that adopted the same course in the course of the pandemic, competitors for expertise throughout this era fuelled wage inflation and ballooned the prices concerned in video games growth. This was compounded by normal wage will increase to cowl excessive inflation as a result of pandemic and Ukraine conflict. This has put broader strain on margins throughout the {industry}, therefore a rise in costs throughout consoles, paid video games, subscriptions and in-game gadgets and battle passes. In opposition to this backdrop any drop in revenues will put a major strain on margins and would require value financial savings to appropriate course.”
AppsFlyer’s Adam Sensible, in the meantime, pointed to the truth that Epic Video games has not (exterior of its 2023 layoff) gone by means of the identical cyclical, project-based scaling up and down of groups often seen within the online game {industry}. “Elements of the {industry} — notably on the PC and console aspect — have traditionally operated in a extra cyclical, project-based means, not in contrast to movie manufacturing,” Sensible famous. “Groups scale up throughout growth and infrequently contract post-launch, which might make monetary efficiency seem stronger as soon as these prices come off the books.
“Whereas live-service fashions like Fortnite have shifted that dynamic, the {industry} continues to be in transition between these two approaches. In the end, what we’re seeing with Epic is a convergence of things: long-term strategic bets, the excessive value of difficult platform incumbents, evolving enterprise fashions, and a harder international financial backdrop.”
Certainly, quite a few online game firms have skilled layoffs over the previous few years, with Epic Video games’ personal simply the most recent amongst a sequence of brutal cuts by Microsoft, a gradual drip feed of exits at Ubisoft, and the lack of numerous studios owned by PlayStation. Nintendo, too, has needed to regulate its prices, rising the value of its getting old Swap console and Swap 2 equipment, and saying plans to quickly begin promoting bodily video games at the next worth than digital copies.
“All firms, no matter dimension or success, are in a battle to handle their prices,” Harding-Rolls added. “This is not going to get any simpler with one other spherical of world inflation anticipated as a result of U.S. and Israel conflict with Iran. Sadly, staffing prices are the place huge value financial savings might be made, however that has implications for normal job safety and workforce morale. General, whereas Epic has particularly talked about that AI is just not a consider its choice making, the looming backdrop of rising inflation signifies that video games firms of all sizes can be desirous to leverage AI to turn into extra environment friendly. That’s prone to have some impression on sector hiring sooner or later.”
What subsequent for Fortnite? If Epic Video games continues down its present path, it is maybe value remembering what Sweeney instructed IGN lower than 12 months in the past at Unreal Fest 2025, when he mentioned that the corporate’s largest problem was nonetheless convincing a wider viewers that it had made an “every thing sport” that wasn’t only a battle royale. In his word to employees this week, Sweeney mentioned that what Epic Video games wanted to do now was “clear: construct superior Fortnite experiences with recent seasonal content material, gameplay, story, and reside occasions; speed up developer instruments with better stability and functionality as we evolve from Unreal Engine 5 and UEFN to Unreal Engine 6.” In different phrases, Fortnite must be higher as a battle royale, whereas its metaverse ambitions must have a stronger technological base. Intriguingly, Sweeney additionally famous that the corporate can be “kicking off the subsequent era of Epic with large launch plans in direction of the top of the yr.” Has the agency lastly solved the issue of creating Fortnite one thing larger than a battle royale, for actual this time?
“The redundancies really feel much less like a sign of a single failure and extra like the results of an organization that spent years betting it may reshape the economics of the complete video games {industry} — a interval of consolidation was most likely inevitable,” Sensible concluded. “It simply seems larger when it is Epic.”
Tom Phillips is IGN’s Information Editor. You possibly can attain Tom at tom_phillips@ign.com or discover him on Bluesky @tomphillipseg.bsky.social
