Epic Games is terminating 1,000 employees on Tuesday, as stated in a company memo shared on Epic’s blog.

“The decline in Fortnite engagement that began in 2025 means we’re incurring significantly higher expenses than our revenues, and we must implement substantial cuts to sustain the company,” Epic Games CEO Tim Sweeney mentioned in the memo. “This reduction in workforce, along with over $500 million in identified savings from contracting, marketing, and eliminating certain open positions, will place us in a more secure position.”

Last week, Epic also raised the price of V-Bucks, the currency used in Fortnite, citing that “operating costs for Fortnite have increased significantly.”

Sweeney indicated that the layoffs were not a result of AI making developers’ roles obsolete. However, the company may be experiencing AI-related challenges indirectly, as the RAM shortage and chip demand have created ripple effects throughout the industry, also affecting consumer spending.

Employees who are laid off will receive four months of severance pay, with additional compensation for those with longer employment durations. Epic will also cover healthcare expenses for U.S. employees for six months following the layoffs.