Epic Games lays off more than 1,000 employees

Epic Games is laying off more than 1,000 employees due to declining user engagement in Fortnite. CEO Tim Sweeney said in an internal letter to employees that "large-scale reductions are unavoidable in order to manage the company's finances."

CEO Sweeney explained that along with these layoffs, the company is seeking to reduce costs by more than $500 million (approximately KRW 680 billion) through contracts, marketing, and the elimination of some vacant positions. “This move will place the company in a more stable position,” he added.

In particular, CEO Sweeney drew a line, saying, “This layoff has nothing to do with AI.” “As AI increases productivity, we want to secure as many outstanding developers as possible to develop great content and technology,” he said.

Structural crisis throughout the gaming industry

CEO Sweeney pointed to difficulties across the industry as the background to this decision. The analysis is that a combination of factors such as slowing growth, shrinking consumption, rising costs, and the fact that current generation console sales are lower than the previous generation.

He predicted, “The current market situation is the most extreme since the company’s early days,” and added, “There is a large-scale upheaval occurring throughout the industry, but it will be a tremendous opportunity for companies that overcome it.”

Employees subject to dismissal will be paid at least four months' base salary and additional severance pay based on years of service. For U.S. employees, company-paid health insurance will be maintained for six months, stock options can be exercised early until January 2027, and the exercise period is extended by up to two years.

Second large-scale layoff following 2023

This is not the first time Epic Games has had large-scale layoffs. In September 2023, more than 800 people, equivalent to about 16% of the total workforce, were fired. At that time, two-thirds of those fired were from teams other than the core development department.

At the time, Epic Games halted new hiring and reduced marketing and event spending, but CEO Sweeney acknowledged that the company was "far short of being financially sustainable." 'Fall Guys' developer Mediatonic was also included in the job cuts, and an additional 250 people were affected by the sale of music store Bandcamp.

Epic Games plans to share its future roadmap in detail at a company-wide meeting on Thursday.