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 workers advised they have been out of labor in a single devastating morning. Followers of Fortnite, which stays one of many largest video games on this planet, 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 worldwide phenomenon.
Days later, the dimensions of the layoffs continues to be sinking in. Alongside the numerous veteran builders now in search of work through social media, those that stay have stated they merely do not understand how Fortnite will look later this 12 months and past with nearly 1 / 4 of the corporate’s workers, together with a number of key figures, now not current.
However whereas there is no mistaking the really beautiful scope of Epic Video games’ choice, analysts have stated that some type of cost-reduction — seemingly layoffs — was inevitable. Asserting the information this week, Epic Video games boss Tim Sweeney blamed rising growth prices and a downturn in participant curiosity in Fortnite via 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 may proceed to upend the online game {industry}.
“Since late 2017, Epic has largely relied on the success of Fortnite to increase its enterprise and closely put money into product growth,” Piers Harding-Rolls, veteran video games {industry} analyst at Ampere Evaluation advised IGN. “Whereas the inspiration of potential future development has been laid via 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 all the way down to nearer to three,000 staff, near its dimension in 2020 firstly of the pandemic.”
Three years in the past, Epic Video games went via a equally large-scale layoff, ditching 830 workers and divesting others because the video games {industry} emerged from its Covid lockdown-era increase. Two months later, Fortnite hosted its “Large Bang” reside occasion, the sport’s try to pitch itself as a multi-genre expertise that featured Epic-developed racing, music and survival recreation modes with out weapons. Fortnite’s participant depend spiked, however the impact was momentary.
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 12 months for the sport, one thing mirrored in publicly-available consumer information. As curiosity within the recreation’s OG mode slowed and its non-shooter parts have been sidelined, Fortnite’s foremost battle royale spent its summer season months internet hosting an unpopular alien bug season. It was unlucky timing, too, simply as the recognition of rival metaverse recreation Roblox went stratospheric, as mini-games corresponding to Develop a Backyard and Steal the Brainrot turned 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 massive an impression as updates on the finish of 2023 and 2024,” Harding-Rolls agreed. “The OG map return had a serious 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 intently aggressive titles have began to exceed Fortnite. Particularly, Roblox had a surge of recognition from April 2025 onwards and noticed common playtime and day by day visits develop above Fortnite for the primary time. This reveals the extra instantly aggressive setting for consideration and monetisation that Fortnite is working in. As revenues have dropped, so has the necessity to minimize prices to defend revenue margins and with staffing being the biggest price 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 recreation {industry} consultancy agency Kantan Video games. “We have to assume that is true and that the enterprise mannequin just isn’t working anymore, so Epic pulled out the hammer as a substitute 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 fallacious route, firing individuals is probably the most impactful option to cease bleeding purple ink. Boosting income and earnings in a tricky market like the present one is far more durable than slicing prices, so Epic reacted in the way in which they did.”
In fact, growing 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 recreation platform has met with blended fortunes).
Talking to IGN final 12 months, in a quote which has been resurfaced and extensively shared this week within the wake of the layoffs, Epic Video games boss Tim Sweeney stated his firm had misplaced an enormous sum of money whereas combating Apple and Google, although he had “no regrets” about it. “The battle towards Apple and Google has definitely denied us a billion {dollars} of income, maybe a number of billion,” Sweeney stated, earlier than suggesting Epic Video games had a large enough battle chest to proceed its campaigns lengthy into the longer term. “I believe we’d 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,” stated Adam Good, World Director of Product – Gaming at cellular analytics agency AppsFlyer. “Whereas Tim Sweeney has acknowledged a softening in Fortnite engagement since 2025, reflecting broader {industry} developments, 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 massively consequential for the {industry} — significantly in opening up the dialog round direct-to-consumer funds — however in addition they got here at an infinite monetary price.”
Half a decade on from Fortnite’s preliminary spat towards Apple and Google, has the fee in authorized charges and misplaced earnings been definitely 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 wider ecosystem,” Good continued. “The Epic Video games Retailer has required sustained funding throughout PC, console, and cellular, with cellular particularly nonetheless not absolutely realised regardless of years of effort tied to those self same authorized challenges. On the identical time, the corporate has explored extra initiatives, together with potential B2B direct-to-consumer cost options. Even the place these have not absolutely materialized, they characterize important upfront price by way of 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 harder macroeconomic setting.”
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 recreation peaks after which begins declining sooner or later. It appears even Fortnite’s greatest days could also be behind it. Their UGC initiative by no means turned 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 workers this week discussing basic {industry} developments that Epic Video games, regardless of its dimension and Fortnite’s reputation, stays susceptible to. These add additional to the sophisticated image of an organization experiencing what looks 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 throughout the pandemic, competitors for expertise throughout this era fuelled wage inflation and ballooned the prices concerned in video games growth. This was compounded by basic wage will increase to cowl excessive inflation because of the pandemic and Ukraine battle. This has put broader stress on margins throughout the {industry}, therefore a rise in costs throughout consoles, paid video games, subscriptions and in-game objects and battle passes. In opposition to this backdrop any drop in revenues will put a major stress on margins and would require price financial savings to right course.”
AppsFlyer’s Adam Good, in the meantime, pointed to the truth that Epic Video games has not (outdoors of its 2023 layoff) gone via the identical cyclical, project-based scaling up and down of groups normally seen within the online game {industry}. “Components of the {industry} — significantly on the PC and console facet — have traditionally operated in a extra cyclical, project-based method, not not like movie manufacturing,” Good famous. “Groups scale up throughout growth and sometimes 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 price 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 newest amongst a collection 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 modify its prices, rising the value of its growing older 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 won’t get any simpler with one other spherical of worldwide inflation anticipated because of the U.S. and Israel battle with Iran. Sadly, staffing prices are the place massive price financial savings might be made, however that has implications for basic job safety and workforce morale. Total, whereas Epic has particularly talked about that AI just isn’t a think about its choice making, the looming backdrop of rising inflation implies that video games firms of all sizes shall be desperate to leverage AI to develop into extra environment friendly. That’s more likely 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 price remembering what Sweeney advised IGN lower than 12 months in the past at Unreal Fest 2025, when he stated that the corporate’s largest problem was nonetheless convincing a wider viewers that it had made an “the whole lot recreation” that wasn’t only a battle royale. In his notice to workers this week, Sweeney stated 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 larger 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 12 months.” Has the agency lastly solved the issue of constructing 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,” Good concluded. “It simply seems larger when it is Epic.”
Tom Phillips is IGN’s Information Editor. You’ll be able to attain Tom at tom_phillips@ign.com or discover him on Bluesky @tomphillipseg.bsky.social
