Epic Games is cutting more than 1,000 jobs and plans to save $500 million after Fortnite saw a big drop in player engagement. The move signals growing pressure on the gaming giant as it navigates a tougher market.

Fortnite’s Decline Hits Epic Hard

Fortnite used to dominate the gaming world, but its popularity has dropped, pushing Epic Games to make significant cuts. The company said it’s spending far more than it’s earning, prompting CEO Tim Sweeney to announce layoffs that will affect more than 1,000 employees.

Since Fortnite launched in 2017, Epic has ridden its success, turning it into a cultural hit with concerts and viral dances. But player engagement dipped significantly last year, hitting the company’s bottom line hard.

Sweeney acknowledged the challenge in keeping Fortnite fresh, saying the company struggled to deliver the consistent excitement players expect each season. Despite Fortnite still topping monthly active users on platforms like PlayStation and Xbox, players are spending less time in-game.

Cost Cuts and Industry Troubles

Along with layoffs, Epic plans to save $500 million by cutting contracting, marketing costs, and open roles.

This is Epic’s second major workforce reduction in three years, after cutting roughly 830 jobs in late 2023.

Epic isn’t the only one struggling. Companies like Electronic Arts and Xbox have also cut staff due to slower growth and higher costs. The industry faces rising memory chip prices, fueled by AI data center demand, pushing hardware prices up and squeezing margins.

Epic’s CEO stressed that the layoffs aren’t because of AI fears, even though that worry is growing in tech.

Challenges Beyond Fortnite

Epic’s problems aren’t just about Fortnite’s decline. They’ve been slow to get the game ready for mobile, which matters a lot with billions of smartphone users. Legal battles with Apple and Google over app store policies forced Fortnite’s mobile app removal shortly after its 2018 debut, stalling Epic’s mobile ambitions.

Sweeney said the company is still in the early stages of bringing Fortnite back to mobile. The shift is essential for growth, but Epic faces an uphill battle adapting the game for smaller screens and different user habits.

Beyond Fortnite, Epic is famous for its Unreal Engine, which is used a lot in games and movies. The engine has powered effects for shows such as "The Mandalorian" and "Westworld," showcasing Epic’s broader influence beyond gaming.

Hollywood Ties and Future Moves

Epic’s deal with Disney highlights its plans beyond just video games. Disney invested $1.5 billion for a stake in Epic and is collaborating on an entertainment universe featuring Star Wars, Marvel, and Pixar properties inside Fortnite.

New Disney CEO Josh D’Amaro, who previously led parks and experiences, helped forge this collaboration. The deal aims to blend gaming with immersive storytelling, but it hasn’t shielded Epic from the harsh realities of the gaming market.

Even with these efforts, Epic is feeling pressure from changing player habits, economic worries, and higher costs. Sweeney’s message to staff made clear that the company must trim expenses to stay afloat.

Epic’s latest layoffs come amid a wider industry slowdown impacting major players. Fortnite’s drop in engagement and the company’s mobile challenges leave questions about how Epic will adapt in a crowded, costly gaming landscape.