Epic Games announced on Tuesday that it will be reducing its workforce by over 1,000 employees due to a decrease in player engagement with its popular game Fortnite and ongoing economic challenges impacting the video game sector. CEO Tim Sweeney addressed the issue in a memo to staff, stating that the company is spending more than it is earning and needs to implement significant cost-saving measures to ensure its sustainability. The company aims to cut costs by $500 million through reductions in contracting, marketing expenses, and the elimination of some vacant positions.
This latest round of job cuts at Epic represents the second major layoff within a span of three years. In September 2023, the company let go of around 830 employees, accounting for approximately 16% of its total workforce. Sweeney acknowledged the difficulties faced by Epic in consistently delivering what he referred to as the “Fortnite magic,” attributing the current market conditions as the most challenging since the company’s inception in 1991. He clarified that the layoffs are not linked to artificial intelligence, dispelling concerns within the industry about technology replacing human developers.
Despite Fortnite’s resilience during the pandemic, the game has experienced a decline in player engagement across various platforms. Although Fortnite led in monthly active players on PlayStation and Xbox in the US recently, the average playtime has notably decreased, as stated by Circana’s senior director Mat Piscatella. Additionally, Epic recently raised the prices of Fortnite’s in-game currency due to rising operational costs. The gaming industry has been further strained by escalating memory chip prices, with AI data centers driving up demand and semiconductor expenses, impacting console manufacturers.
Notably, other gaming companies have also faced similar challenges. Electronic Arts underwent significant layoffs and discontinued a Titanfall project in development, while Amazon’s gaming division was affected by the company’s broader job cuts last year.