What's behind the Epic Games layoffs
Summary
Epic Games announced layoffs of more than 1,000 employees amid declining Fortnite engagement and rising operational costs
CEO Tim Sweeney cited a "downturn in Fortnite engagement that started in 2025" as the company spends more than it earns
Monthly average playtime collapsed from 29 hours in 2023 to 15.4 hours in 2025, while Roblox surpassed Fortnite in playtime and daily visits for the first time
The cuts bring Epic's workforce back to roughly 4,000 - close to its pre-pandemic 2020 size
"This will not get any easier with another round of global inflation expected due to the U.S. and Israel war with Iran."
01
Fortnite engagement decline - the numbers behind the cuts
Peak monthly active players on PlayStation and Xbox dropped 28% since 2023
Average monthly playtime fell from 29 hours in 2023 to 15.4 hours in 2025
Seasonal updates at end of 2025 delivered significantly weaker impact than comparable 2023 and 2024 updates
Despite engagement decline, Epic Games is estimated to have brought in over $6 billion in 2025, per Statista
Revenue is still growing year-over-year, but rising operational costs are outpacing income
02
Platform overreach - the cost of building a metaverse
Epic invested heavily in Fortnite as a full platform for user-generated content and new game modes
In 2024, Epic paid out over $350 million to creators building games inside Fortnite
Players spent $400 million on third-party PC games via Epic Games Store in 2025 - a company record
Epic takes 0% revenue cut until developers hit $1 million, then applies an 88%/12% split in favor of developers
Total payouts to developers and publishers reached $2.1 billion to date
The Epic Games Store was not profitable as of 2021, with legal filings suggesting it may not be profitable for years - if ever
A $1.5 billion Disney investment in 2024 aimed to build a connected entertainment universe inside Fortnite
03
Apple lawsuit cost exceeds $1 billion - mobile bet still unproven
Epic's legal battle against Apple over third-party payment restrictions cost the company more than $1 billion
Apple removed Fortnite from the App Store after Epic added a direct payment option, bypassing Apple's 30% cut
Sweeney framed the legal fight as a long-term industry battle: "If it doesn't change, then you're just going to have Apple and Google extracting all of the profit from all apps forever." - Tim Sweeney, CEO, Epic Games
Sweeney acknowledged in his staff letter that Epic is "only in the early stages of returning to mobile"
04
Acquisitions impacted - modes shut down, studios hit hard
Harmonix (acquired 2021) is reported to be among the hardest-hit studios in the current round
Mediatonic (also acquired 2021) was heavily impacted in the 2023 layoff round
Epic is shutting down three Fortnite game modes: Rocket Racing, Ballistic, and Festival Battle Stage
Ballistic and Festival Battle Stage will be removed April 16; Rocket Racing follows in October
Rocket Racing and Festival Battle Stage were direct products of the Psyonix and Harmonix acquisitions
Epic confirmed Harmonix teams continue working on remaining music features - Festival Main Stage and Festival Jam Stage
05
Competitive pressure - Roblox overtakes Fortnite for the first time
Roblox reached its peak playerbase numbers in 2025, driven by titles like Grow A Garden and Steal A Brainrot
Roblox average playtime and daily visits exceeded Fortnite for the first time ever in 2025
"This reveals the more immediately competitive environment for attention and monetisation that Fortnite is operating in."
Fortnite still led February 2025 in monthly active users on both PlayStation and Xbox, per Circana
06
What comes next - AI, inflation, and a leaner Epic
Epic's workforce of roughly 4,000 returns the company to its approximate pre-pandemic headcount
Analysts warn that broader inflation driven by geopolitical factors will continue pressuring game company budgets
AI is expected to play a growing role in cost efficiency across the sector, with likely impact on future hiring
"Overall, while Epic has specifically mentioned that AI is not a factor in its decision making, the looming backdrop of rising inflation means that games companies of all sizes will be eager to leverage AI to become more efficient."
Epic's mobile re-entry and storefront growth remain the two primary bets for long-term revenue recovery
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